What is a Structured Settlement?
Structured Settlement Companies
A structured settlement is a legal, financial arrangement whereby tax-free periodic payments are made to a claimant as resolution for a personal injury tort claim.
Lump sum payments alternatively are made all at once and are taxed by the government. Structured settlements became more widespread over 30 years ago, in 1982. Congress passed legislation that amended the federal tax code that advocated for the use of structured settlement in physical injury cases as each payment wouldn’t be taxed. The action was called the Periodic Payment Settlement Act of 1982
What is the situation today?
Today, property & casualty insurance companies having the responsibility of paying out funds as per the structured settlement arrangement can transfer its obligation to a third party (or a qualified assignment). If the claimant consents to the transfer of the periodic payment obligation, the property & casualty company will not have to make future payments.