Delaware Finance

Dec 24 2017

Structured Settlements: Defined

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structured settlements: defined

Designed by the plaintiff and tailored to meet his or her future needs, a structured settlement is created through an agreement between a plaintiff and a defendant whereby all or a portion of a settlement is paid to the plaintiff in the form of periodic payments rather than in one lump sum. A structured settlement may be agreed to privately (i.e. in a pre-trial settlement or mediation agreement), or it can be made pursuant to a court order, which often occurs in judgments involving minors.

Structured settlement payments are guaranteed These Guarantees are based on the ability of the issuing life company to satisfy their financial obligations. The regulations that pertain to Life Insurance companies and the products they sell are some of the strictest in the financial marketplace today. and backed by highly rated and regulated life insurance companies. These secure, income-tax free payments are not subject to market fluctuations and provide for surprisingly high rates of return. The U.S. Congress amended the federal tax code in an effort to encourage structured settlements by explicitly providing that money received on account of a personal physical injury through a structured settlement annuity is 100% exempt from income taxation Money received on account of non-physical injuries can be received over time via a non-qualified structured settlement annuity. Because money received on account of injuries that fall outside the scope of a personal physical injury is taxable, any such money that is placed into a non-qualified structured settlement annuity is also subject to taxation. Note: a non-qualified annuity can serve as a great tax deferral and income producing investment, so please contact Forge to learn more about this structured settlement annuity alternative. This exemption includes both the original amount invested and any interest earned on it over time. The combination of security and tax-exempt status and the ability to achieve investment yields that are typically associated with far riskier investments makes the structured settlement a key component of any settlement plan.

Call Forge Consulting today to learn more about structured settlements.


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