A structured settlement annuity (“structured settlement”) is a type of financial arrangement that allows a claimant to receive all or part of a settlement for personal injury, wrongful death, or workers' compensation in a series of periodic income tax-free payments. Structured settlements are typically funded through an annuity contract with a life insurance company, but annuities can also be used for other purposes, such as providing income security during retirement. Structured settlements are designed to provide an injured person or the family of someone who was harmed by another person's negligence with the ability to pay for life's necessities. To make these periodic payments, the defendant usually purchases an annuity from an insurance company.
This way, the defendant can transfer responsibility for the payment to a company with experience in handling periodic payments. A Structured Settlement Annuity (SSA) is a type of financial agreement that provides periodic, tax-free payments over a period of time, specifically tailored to meet the needs of the injured party. Specialized consultants facilitate the liquidation process and help design and negotiate the structure. Structured settlement payments are secured and irrevocable; however, annuity settlement options may differ from typical revenue contracts.
Structured agreements are governed by federal and state laws and must be closed by court order. If the state takes the community property route, the state can divide the agreement regardless of whether it was received before or during marriage. It is important to consider alternatives and get sound advice from a certified financial planner. Instead of paying you directly, the defendant sends the settlement money to a subsidiary of the life insurance company, called the cession company.
Your structured settlements may provide certain payments during childhood, additional disbursements to pay for college, etc. Structured settlements are usually used in cases involving serious injury or death. There is also an additional commutation clause in some agreements that allow the inherited annuity to be paid in a single payment, so it is important to check this as well. If you need cash quickly, you can sell your settlement payments at a deep discount through a settlement transfer in exchange for a lump sum of cash. Structured settlements have received strong support from various parties due to their ability to protect injury victims from rapidly dissipating or exceeding their incomes. The key difference between adults and minors is that minors cannot control their settlement payments, so parents are in charge.
If the state uses the equitable distribution method and the agreement was obtained before marriage, it is likely that it will stay with the owner of the agreement. The biggest difference between structured settlements and annuities is that structured settlements are not taxable whereas annuities are.