by John Darer® CLU ChFC MSSC RSP CLTC
Check out this structured settlement flow chart which helps explain how a structured settlement works when a structured settlement is funded with one or more structured annuities.
How Structured Settlements Work by 4structures.com®
The flow chart introduced as part of 4structures' efforts during National Financial Literacy Month may be helpful to attorneys, plaintiffs, judges, claims adjusters and even some settlement professionals to better understand the sequence of events that occur when a structured settlement is created with a qualified assignment. Without a clear understanding of the sequence of events there is a risk that settlement documents will contain flaws.
What is a Structured Settlement? How Do You Get a Structured Settlement?
Types of Structured Settlement Payments
Structured settlements provide core income stability with the safety, security and guarantees from well capitalized life insurance companies, or Treasury Funded Structured Settlement payments.
A structured settlement is like getting a paycheck from a "job" that you can never be fired from. That's just one reason why plaintiffs choose structured settlements for part of their recovery. Structured settlement payments are income tax-free, if they represent payment of damages from physical injury, physical sickness, wrongful death or workers compensation under IRC §104(a)(1) or IRC §104(a)(2).
Structured settlements established for taxable damages offer tax deferral. See What are Non Qualified Structured Settlements and Non Qualified Assignments for Tax Deferral? (4structures.com)
Last updated February 4, 2025
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