Structured Settlements Definition

A structured settlement is not an annuity. When used properly they can be a very effective tool for protecting a settling plaintiffs long term financial security.

Are Payments From A Structured Settlement Annuity Taxable

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Annuities Structured Settlements

A structured settlement annuity ssa provides tax free periodic payments over a period of time specifically designed to meet an injured partys needs.

Structured settlement annuity and. A structured settlement is a way of settling a lawsuit using a combination of cash and customized stream or streams or future periodic payments. With a structured settlement a defendants insurer typically funds an annuity policy for the plaintiff. An annuity is one of the types of qualified funding assets for a structured settlement. If the amount of money is small enough the wronged party may have the option to receive a lump sum settlement. The key difference between an adult owning a structured settlement and a minor owning one is control. Structured settlements for minors are usually paid through an annuity from a life insurance company just as for adults. When an annuity is chosen as a settlement a structured settlement broker helps analyze the employees needs to determine how the periodic payments should be made. Structured settlement annuities are designed to offer the benefits of a structured settlement while reducing or eliminating the potential drawbacks. As part of the settlement negotiation process a qualified structured settlement broker can design an annuity contract to meet the present and future needs of the recipient and their family. An annuity produces a continuous stream of income over the term of the structured settlement. Taxable structured settlement non physical injury the taxable structured settlement annuity applies many of the same features of a tax free structured settlement annuity to a wide range of cases providing guaranteed and reliable payments with a competitive rate of return on a tax deferred basis to the claimant. Specialized consultants facilitate the settlement process as well as help design and negotiate the structure. Around one third of injured persons choose this option over a cash lump sum according to the national structured settlements trade association. For larger sums however a structured settlement annuity may be arranged. A structured settlement is a negotiated financial or insurance arrangement through which a claimant agrees to resolve a personal injury tort claim by receiving part or all of a settlement in the form of periodic payments on an agreed schedule rather than as a lump sumas part of the negotiations a structured settlement may be offered by the defendant or requested by the plaintiff.

In this case the at fault party puts the money toward an annuity which is a financial product that guarantees regular payments over time from an insurance company. Annuity contracts can be quite complex to cover a variety of expected expenses. Structured settlements come in many more shapes and sizes than the typical annuities people purchase for retirement income.