The Advantages of a Structured Settlement
- 100% income tax-free payments: avoid income tax liability and capital gains on the growth of settlement proceeds with a structured settlement, and possibly prevent future increase in tax bracket
- Guaranteed, fixed rate of return: return is not subject to market fluctuation
- Flexible payment design: can arrange for payments to be made on a monthly, quarterly, semi-annual, or annual basis, or in the form of a lump sum
- No ongoing fees or expenses: unlike typical settlements, there are no administrative fees or annual management expenses
- Protection from dissipation of settlement award: safeguard against excessive spending and poor investment decisions
Structured Settlement Payments
- Can be made monthly, quarterly, annually, or in deferred lump sums
- Can be made for lifetime or any certain period of years
- Can be fully guaranteed to beneficiaries if annuitant dies prematurely
- Are fully customizable to meet medical and financial needs
- Are valuable planning tools to preserve wealth, stabilize future income, satisfy future medical needs, fund college for children/grandchildren,
supplement retirement income, and much more
The government allows those who receive a financial award in a personal injury, workers’ compensation, or wrongful death settlement to invest a portion or the entirety of their monetary recovery in a creditor-protected and guaranteed structured settlement annuity. This financial vehicle provides a secure stream of 100% tax-free payments and can be funded with as little as $10,000. However, because the IRS allows claimants a one-time opportunity to make this decision, it is very important to review all options for settlement prior to finalizing any paperwork and signing the settlement release.
More specifically, Internal Revenue Code Sections 104(a)(2) and 130(c) specify that the funds received on account of a personal physical injury within qualified structured settlement annuity are 100% tax-exempt. The IRS requires precise language that must be included in the settlement agreement and release in order to qualify for the special tax treatment. Furthermore, a qualified assignment must be completed to assign future periodic payments. The language for the release and the execution of a qualified assignment are necessary prior to the receipt of any settlement funds by the claimant OR their attorney.
Guiding You Through the Structured Settlement Process
At The Settlement Alliance, it is our duty to shop the options chosen by our clients among the highest rated structured settlement carriers to ensure the highest possible payout for the claimant. Once the terms are confirmed between the client and the insurance company, our firm reviews the settlement release documents and qualified assignment for accuracy. After the paperwork has been signed, the annuity is funded by the defendant or qualified settlement fund. Our job doesn’t just end there – The Settlement Alliance remains committed to providing assistance for the life of the settlement plan, whether questions arise 5, 10, or 20 years down the line.
To learn more about our structured settlement services, contact us for a free consultation.