Traditional Structured Settlements

A Structured Settlement is a unique form of settlement. The defendant pays 100% of the settlement cost immediately, providing the plaintiff with payments over time that are substantially greater than the defendant’s cost. 

 

Unlike a lump-sum settlement, a structure creates the opportunity for the plaintiff to take some cash immediately and structure the balance to provide tax free benefits and a shield from market volatility. All while achieving current and future financial goals.

 

Structured settlements have been used successfully for many years in Physical Injury Cases & Workers' Compensation Claims. In addition, other types of cases also benefit.

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Physical Injury Cases 

Both the plaintiff and defendant in physical injury cases can greatly benefit from a structured settlement. 

 

Benefits for  Plaintiff:

• Eliminates investment risk and management fees.

• Offers flexibility to design a custom payment stream..

• 100% tax free.

• COLAs are always available.

• Structured settlement indexed annuities benefit from future interest rate increases.

• Annuity-based periodic payments may be exempt from creditors in certain states.

• Affords protection from dissipation of funds.

• Government benefits protected when combining a structure with a trust.

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Benefits for Defendant/Insurer:

• Saves through the ability to settle quickly and avoid ongoing litigation expenses.

• Eliminates responsibility for future payments through assignment of obligation.

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Workers' Compensation Claims 

A traditional structured settlement with a Qualified Assignment on workers’ compensation claims offers increased benefits for both the claimant and employer/insurer.

 

Benefits are the same as a Personal Injury Claimant - PLUS:

• Benefit payments continue after returning to work.

• Benefit payments continue after death.

• Availability to designate anyone as beneficiary.

 

Benefits for Employer/Insurer:

• Eliminates legal obligations through a Qualified Assignment under I.R.C. Section 130(c).

• Removes the liability from their books and releases reserves.

• Closes the gap in expectations with the claimant for a timelier settlement.

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Structured Settlements (Employment & Other Claims)

Approved by the IRS in a 2008 ruling, structured settlements in employment cases create ways to achieve income averaging, a long sought-after goal of the Plaintiffs’ Bar. 

 

Structures in employment cases allow plaintiffs to spread payments over time on a tax-deferred basis, often achieving significant savings. Plaintiffs can also earn tax-deferred income on their settlement.

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The success of the traditional structured settlement with a novation is available for a wider range of situations. Learn More >