Structured Settlements Definition

A structured settlement pays out money owed from a legal settlement through periodic payments in the form of a financial product known as an annuity. Often the periodic payments will be funded through the purchase of one or more annuities that generate the future payments.

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Structured settlement payments are sometimes called periodical payments and when incorporated into a trial judgment may be called a structured.

Structured settlement annuity payments. Structured settlements are usually paid through annuities that are owned by insurance companies. Annuity and structured settlement buyers must comply with state and federal laws also known as structured settlement protection acts sspas that safeguard your rights while providing rules covering the transfer of structured settlement payment rights to a third party. Tax advantages of structured settlement annuities. Section 104 a2 the following emphasized words whether by suit or agreement and whether as lump sums or as periodic payments. The tax free status of structured settlement payments restricts the transfer of the settlement and therefore the bank cant seize it without court approval which it is not likely to get. As usual its advisable to consult a qualified tax professional before selling annuity payments. However many legal settlements offer a lump sum payment option which provides a one time sum of money. However in some instances there is tax liability when those annuity payments are sold so its important to plan accordingly. Structured settlements provide a steady stream of income as opposed to a one time lump sum settlement. Structured settlements may include income tax and spendthrift provisions. Structured settlements come in many more shapes and sizes than the typical annuities people purchase for retirement income. 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. The sale of annuity payments from a structured settlement will not be taxable as income in general. To encourage their use congress passed the federal periodic payment settlement act in 1982 which exempts structured settlement revenue from. Selling the rights to future annuity payments is a legal process.

Lawmakers see structured settlements as a way to help people who have been harmed or are otherwise unable to care for themselves. Structured settlement annuities became popular beginning after the 1982 passage of the periodic payment settlement act ppsa as congress added to irc. In many cases the settlement amount is large and may be difficult for the defendant to pay all at once so the two parties reach an agreement where the at fault party will fund an annuity guaranteeing regular payments over time. Qualification for 100 gift card is contingent upon the annuity ownerseller providing sufficient proof to the satisfaction of drb of a valid annuity or structured settlement with available payments and verifying full name address cellular and home phone numbers and current email address.