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What is a Structured Settlement and Can I Sell My Payments?

We are, for the most part, not really prepared or very good at handling large amounts of money, like what is usually awarded in suits for personal injury or wrongful deaths. Du to this ever-known truth, structured settlements came into existence. They came a long way in ensuring that winning a case like this truly yielded financial security for the winners as was intended.

Congress passed the Periodic payment Settlement Act in 1982 which made settlements surge in popularity. The legislation promoted using structured settlements in cases involving personal injury as it offered notable tax breaks for money received from structured settlements.

What is a Structured Settlement?

Structured Settlements are a type of annuity. This means that the money for the payouts of a structured settlement is disbursed through an insurance company. They manage and own the payments. These installments received from said insurance company are exempt from federal income tax as well as state and local income taxes.

So, a structured settlement is a lawsuit settlement free of tax which is arranged to be later distributed to the claimant through set, recurring payments. The only people eligible to receive structured settlements are those of personal injury. The agreement decides the terms of the settlement. The annuity holds the amount of money the victim will receive over time.

Can I Sell My Payments?

A personal injury case where someone might receive a structured settlement can include:

Workplace injury Car accident Pharmaceutical drug side effects Slip and fall in public or private area

The first use of structured settlements was in Canada after a huge lawsuit concerning a drug taken by many pregnant women in the 50s-60s to alleviate morning sickness. They became the common alternative to lump sum payments in the 70s because:

They allow for notable increases in some personal injury awards Changes in the Internal Revenue Code allowed the receiver to waive tax liability (subject to specific conditions)

A structured settlement assures the recipient will get installments for income throughout the entirety of the settlement. Many structured settlement negotiations allow claimants to have a beneficiary they name in case of an untimely death, a clause that says any payments would be transferred in such an instance.

Structured Settlements are assets; they can be sold or assigned to be transferred through a court process. If facing expenses, renovations, a large purchase, education expenses, or any other sensitive financial obligations, selling your structured settlement is something you should consider.

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