Structured Settlement Definition and Professional Explanations ...

Here are some high quality professional definitions and explanations of what a structured settlement is from the leading sources within the field. From wikipedia, to the IRS, to SettlementsAnnuities.com, the experts explain this complex topic in a very straightforward way that is easy to understand.

Structured Settlement

A structured settlement is a financial or insurance arrangement, defined by Internal Revenue Code as periodic payments; a claimant accepts to resolve a personal injury tort claim or to compromise a statutory periodic payment obligation. Structured settlements were first utilized in Canada after a settlement for children affected by Thalidomide.[1] Structured settlements are widely used in product liability or injury cases (such as the birth defects from Thalidomide). Benefits of a structured settlement can be to reduce legal and other costs by avoiding trial. [2] Structured settlement cases became more popular in the United States during the 1970s as an alternative to lump sum settlements.[3] The increased popularity was also due to several rulings by the IRS, an increase in personal injury awards, and higher interest rates. The IRS rulings changed policies such that if the requirements were met then claimants could have federal income tax waived.[4] Higher interest rates resulted in lower present values, hence annuity premiums, for deferred payments versus a lump sum.

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Is a Structured Settlement Agreement right for you?

Structured Settlement Process

A structured settlement is an agreement between you, L&I, and in some cases, your employer, to resolve the future non-medical benefits on a claim.

This typically closes your claim, and you are paid a fixed amount of compensation in periodic payments spelled out in the agreement.

You may still be eligible to receive medical treatment for conditions allowed on your claim.

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Structured Settlement Factoring Audit Technique Guide

Structured settlements have enjoyed widespread acceptance and have become an established part of our legal landscape over the past twenty-five years. More than $6 billion is now paid each year to fund new structured settlements in the United States, and an estimated $100 billion or more has been paid in the aggregate to fund structured settlements that are in force today. Little controversy attended the development of structured settlements. Much controversy has accompanied the development of a secondary market, in which structured settlement ?factoring? companies acquire from settlement recipients their rights to receive future payments.

Since 1997, the controversy surrounding structured settlement factoring has led thirty-eight states to enact statutes that make transfers of payment rights under structured settlements ineffective unless those transfers receive advance court approval. Since 2002, the Internal Revenue Code (IRC) has reinforced the state statutes by imposing a 40 percent federal excise tax if a transfer of structured settlement payment rights does not receive the required court approval.

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What is a Structured Settlement?

In short, a structured settlement is simply a customized payment stream. That?s the short version. However, there are different variants of customized streams, and there are insurance and tax regulations involved as well. Rather than try to reinvent the wheel, we?ve simply brought together some expert definitions professionals within the field. Listed below are what we feel are the best answers to the question, ?What is a structured settlement??

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Source: http://heavenlytrain.com/structured-settlement-definition-and-professional-explanations/

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