Finance Corner


Posted by: Andrew Fisher on Feb 27, 2018
#1: What a Structured Settlement is
 
A structured settlement is a voluntary agreement between a plaintiff and a defendant in which the plaintiff receives a series of future periodic payments for a fixed period of time, for their lifetime or both. 
 
Typically funded with an annuity, structured settlements provide tax-free growth (for personal injury cases) per Sections 104(a)(1), 104(a)(2) of the U.S. Tax Code. Section 130 was added with the Periodic Payment Settlement Act of 1982, which allows for a qualified assignment of a liability provided: 
 
1. The assignee assumes the liability from a person who was a party to the suit or agreement;
 
2. The periodic payments are fixed and determinable as to amount and time of payment; 
 
3. The periodic payments cannot be accelerated, deferred, increased or decreased by the recipient of the payments;
 
4. The assignee's obligation on account of the personal injuries or sickness is no greater than the obligation of the person who assigned the liability; 
 
5. The periodic payments are excludible from the recipient's gross income under Sec. 104(a)(1), 104(a)(2); and 
 
6. The amount received by the assignee for assuming a periodic payment obligation must be used to purchase a "qualified funding asset."
 
#2: What a Qualified Funding Asset is
 
A qualified funding asset is simply an annuity contract issued by a company licensed to do business as an insurance company under the laws of any State, or any obligation of the United States. The qualified assignment company funds the assigned periodic payment obligation via the qualified funding asset. 
 
Structured settlements provide guaranteed payments that address future needs while offering security and protection to catastrophically injured plaintiffs.
 Types of cases utilizing structured settlements include but are not limited to: workers compensation, general liability, medical malpractice, and minor's settlements. Structured settlements can also be used for a wide variety of non-physical injury settlements to provide tax deferred payments.
 
#3: Where you can get a Structured Settlement Annuity
 
Structured settlement annuities are placed with the most highly-rated life insurance companies, providing unparalleled security to clients. Structured settlement annuities are available through any properly licensed/appointed consultant of the Integrated Financial Settlements family of agencies: Arcadia Settlements Group, JMW Settlements, Millennium Settlements, Inc., and Structured Financial Associates, Inc.