Q. When is a Structured Settlement appropriate?
A. It is most advantageous when the plaintiff requires funds over a period of time. Typical examples include:
· Plaintiffs who require continuing future medical expenses
· Plaintiffs who require replacement of lost future income
· Plaintiffs who require a secure lifetime tax-free income
· Plaintiffs who are uncomfortable with managing money
· Cases involving a minor
· Workers' compensation total disability or death claims

Q. What advantages does a Structured Settlement offer the Plaintiff?
A. Major advantages are:
· The Internal Revenue Service in Code Sections 104 and 130 provides for periodic payments in personal injury and workers' compensation cases to be tax-free to the plaintiff.
· A Structured Settlement prevents the plaintiff from squandering settlement proceeds. Studies show that most recipients dissipate their funds from a cash settlement within five years, while their fixed financial needs continue.
· Receipt of a much larger amount of money than would be obtained in a cash settlement.
· Guaranteed regular payments.
· Competitive long-term returns on the settlement principal.

Q. Why are payments to the plaintiff tax- free?
A. Section 104(a)(2)of the U.S. Internal Revenue Code states that compensation for personal injuries or sickness--whether paid as a lump sum or as periodic payments--is excludable from the taxpayer’s gross income.

Q. Who purchases and owns the annuity policy?
A. The defendant, the defendant’s insurer, or the defendant’s assignee purchases and owns the annuity policy. The defendant’s ownership and control of the annuity policy is the reason the plaintiff receives tax-free payments, not only on the invested premium but on all interest income generated during the term of the annuity policy.

Q. What is a “qualified assignment?”
A. The Periodic Payments Settlement Act of 1982 (IRS 130) authorizes a “qualified assignment” of a defendant’s obligations to make future periodic payments. This assignment is accomplished through a contract between the defendant or the defendant’s insurer (assignor) and a third party, usually the holding company or a sister company of the life insurance company (assignee). Once executed, an assignment removes the defendant or the defendant’s insurer from the obligation to make future periodic payments and may give the plaintiff greater protection by replacing a relatively small defendant and/or its insurer with a large life insurance company, which then is obligated to make the payments.