Settlement, Bail Bond and Bankruptcy Resources
Custom Search
Home Structured Settlement Life Settlement Bail Bonds Bankruptcy Attorneys Resources Links


Structured Settlement Guide

A structured settlement is a financial or insurance arrangement, including periodic payments, that 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 and the United States during the 1970s as an alternative to lump sum settlements. Structured settlements are now part of the statutory tort law of several common law countries including: Australia, Canada, England and the United States. Although some uniformity exists, each of these countries has its own definitions, rules and standards for structured settlement. Structured settlements may include income tax and spendthrift requirements as well as benefits.

Structured settlement payments are sometimes called “periodic payments”. A structured settlement incorporated into a trial judgment is called a “periodic payment judgment”.

The United States has enacted structured settlement laws and regulations at both the federal and state levels. Federal structured settlement laws include sections of the Federal Internal Revenue Code. State structured settlement laws include structured settlement protection statutes and periodic payment of judgment statutes. Medicaid and Medicare laws and regulations impact structured settlements. To preserve a claimant’s Medicare and Medicaid benefits, structured settlement payments may be incorporated into “Medicare Set Aside Arrangements” and “Special Needs Trusts”.

The United States defines “structured settlement” for Federal income taxation purposes in Internal Revenue Code Section 5891 (c) (1) as an "arrangement" that meets the following requirements:

  • A structured settlement must be established by:
    • A suit or agreement for periodic payment of damages excludable from gross income under Internal Revenue Code Section 104(a)(2); or
    • An agreement for the periodic payment of compensation under any workers’ compensation law excludable under Internal Revenue Code Section 104(a)(1); and
  • The periodic payments must be of the character described in subparagraphs (A) and (B) of Internal Revenue Code Section 130(c)(2) and must be payable by a person who:
    • Is a party to the suit or agreement or to a workers compensation claims; or
    • By a person who has assumed the liability for such periodic payments under a Qualified Assignment in accordance with Internal Revenue Code Section 130.

Related Articles:


Home Structured Settlement Life Settlement Bail Bonds Bankruptcy Attorneys Resources Links
© Copyright by 101settlement.com. All rights reserved. (Site Map)