VANFLEET STRUCTURED SETTLEMENTS

 Structured settlements are a unique and innovative method of compensating injury victims (“claimant/plaintiffs”) using streams of payments, exempt from gross income taxes, which are tailored to meet the claimants/plaintiff’s future medical expenses and basic living needs. Encouraged by the U.S. Congress since 1982, structured settlements are mutually agreed upon between the claimant/plaintiff and the defendant and/or the defendant’s insurer at the time of a tort settlement. Structured settlements are a proven, effective solution for the needs of the claimant/plaintiff, and are promoted by judges, attorneys, claims professionals, and the public at large.
 

 Structured settlements provide guaranteed streams of income to the claimant/plaintiff that are completely tax-free. The claimant/plaintiff avoids the risk of mismanagement of their funds which can result in financial loss and hardship. This security and stability enables the claimant/plaintiff to have peace of mind, knowing that their payments will be received on the scheduled dates, and further allows them to tailor the annuity to meet their specific life needs in the future. With the use of a lifetime annuity, a claimant/plaintiff can ensure that he/she will never outlive the stream of income as the payments will continue until the time of death. 

 The traditional tax-free structured settlement can be used in any case resulting in physical injury or sickness to the claimant/plaintiff as a result of a tort action. It can also be used in wrongful death actions, where surviving family members are involved in litigation. In most states, traditional structured settlements can also be used in Worker’s Compensation cases; however, the use of Qualified Assignments needs to be evaluated on a case-by-case basis due to specific state and federal regulations.
Cases involving minors should always consider the use of a structured settlement, as it provides payments to coincide with important life events such as college, the need to purchase reliable transportation, a home and start a family. 

 In the Periodic Payment Settlement Act of 1982, the U.S. Congress adopted specific tax rules to encourage the use of structured settlements to resolve physical injury tort cases. Internal Revenue Code Section 104(a)(2) was amended to clarify that periodic payments constitute damages which are tax-free to the injured party. Furthermore, Internal Revenue Code Section 130 was adopted to provide a process where injured parties could receive a stream of income into the future from a financially secure and experienced institution through a “Qualified Assignment”. In order to protect the public, Congress specified in IRC Section 130 the requirements to establish a qualified assignment.