Structured Settlement Payment

Benefits of Structured Settlement Payments

A structured settlement payment can be designed to match individual needs. It can be set up so that an individual receives sufficient tax-free cash at the time of settlement in order to cover costs, medical liens, expenses, attorney fees and to provide initial liquidity. Structured settlement payment agreements are very unique. The structured settlement payments are tax-free pursuant to §§ 104(a)(2) of the Internal Revenue Code (Title 26 U.S.C.) if based on personal physical injury or sickness, or to fund future payments for a workers' compensation claim under §§ 104(a)(1).

Structured settlement payments provide the highest after-tax return with low risk today. If a person believes that rates may increase in the future, payments can be returned in intervals (as lump sums) in order to be reinvested at the prevailing rate. For individuals with a little risk tolerance, a structured settlement payment option can be funded with a variable annuity, which may use securities portfolios as the underlying assets. This does capture the long-term market performance, and all gains are income tax-free! However, future growth is not guaranteed. Most important, a structured settlement payment reduces the potential of dissipation of the settlement proceeds. It has been noted that 90% of recipients of large settlements have nothing left after five years.

Return