Structured Settlements Authority

How to Get Cash for a Structured Settlement

Increasing Use of Structured Settlements

The past few years have witnessed an increase in the number of compensation awards to accident victims to cover damages that they incurred due to personal injury or product liability accidents. Headlines featuring large personal injury awards due to a wide range of accidents resulting from a single personal injury case to large scale product liability cases, such as faulty tires, have become a norm nowadays. With the increasing number of personal injury awards, structured settlements are slowly gaining popularity because of the significant guarantees that they provides as well as the favorable tax benefits that are made available to claimants.

A structured settlement is a voluntary, contractual, agreement to resolve the damage compensation in a personal injury or product liability case. A structured agreement involves a series of periodic and lump sum payments as compensation for damages over a set period of time based upon the future needs of the injured party.

A structured settlement agreement takes into account immediate medical and legal obligations that the claimant might incur as well as annuity payments to provide for on going medical expenses and the loss of income. Current and existing obligations might require an immediate cash settlement payment. Future and on going payments for items such as medical, surgical, and hospital bills, home and automobile modifications, rehabilitation, homemaker and custodial services, job retraining, and equipment and service expenses are typically considered in a capital needs analysis.

Structured settlements are frequently used with a special needs trust in order to further ensure financial security and preserve government benefit eligibility for Social Security and Medicaid. Trusts involving structured settlements should, however, be carefully drafted so as to qualify and normally require the advice of an expert in that area.

The Periodic Payment Settlement Act of 1982 limited the qualified funding options for structured settlements to annuities and government bonds via IRC §130. IRC §130 reinforced and expanded §104(a). Further modifications to IRC §130 were done through the Tax Reform Act of 1986 so as to include cases of wrongful death.

Structured settlements are being widely used today even on non personal-injury cases that involves the necessity to resolve issues regarding financial needs. Examples of such cases are lottery winnings, employment severance and workers compensation cases, and divorce. It must be noted however that the tax-free benefits are not available to non personal injury cases such as those aforementioned.

Legal Aspects of Getting Cash for a Structured Settlement