by Structured Settlement Watchdog
Jim Sterling’s take on structured settlements fits right in with the Internet’s brigade of non-credentialed writers. These folks flood the web with content—much of it eyebrow-raising to experts—on sites seemingly handcrafted for Google Adsense profits (because who needs accuracy when there’s ad revenue?).
Instances where “Sterling” takes a tumble in the credibility department
Sterling In your financial planning, structured settlements are utilized to pay out a large sum of money over time. Much the same way that you pay your credit card bill every month, a creditor uses a structured settlement to pay out what they owe to a person on a regular schedule. Most structured settlements are purchased annuities, paying out over time on an annual basis.
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- Structured settlement payment designs are very flexible and can accommodate multiple payment streams. The annual frequency is not the most popular. See Types of Structured Settlement Payments | Structured Settlement Payment Options
- While structured settlements may pay a large cumulative sum over time, there are other reasons that make structured settlements compelling.
Sterling The most spectacular form of structured settlements are lottery payments.
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- A lottery payment is not a structured settlement.
- Structured settlements ARE NOT spectacular.
- A structured settlement may not be the life of the party, but it’s a surprisingly adaptable financial tool that delivers rock-solid certainty for those who crave predictability.
- A structured settlement provides a contractually guaranteed income option that they cannot outlive (longevity insurance), if a lifetime option is selected.
- The tax advantages of a structured settlement enhance the value of the recovery funds assigned to it. Check out Structured Settlements | Tax Benefits of Structured Settlements.
- A structured settlement can be funded with annuities OR United States Treasury obligations.
- If you enjoy sinking into quicksand or find the chaos of the 2008-2009 U.S. stock market thrilling, then a structured settlement might not be your cup of tea.
Sterling A plaintiff wins a judgment in court for damages and the defendant will typically buy an annuity to pay out the damages on an annual basis, putting the payment schedule in the hands of the annuity holder.
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- Only in states where the laws provide for periodic payment of judgments (such as New York CPLR 50A and 50B) are annuities used in judgments.
- Using New York as an example, compensation for damages is disbursed on a monthly basis.
Sterling From a corporate tax purpose, purchasing the annuity is a one-time-charge and there are several advantages to doing this.
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Purchasing an annuity is a one time expense (it’s a single premium annuity) but from a tax standpoint the event triggering the tax benefit to the corporation occurs at the time of the qualified assignment when the novation occurs.
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