by John Darer® CLU ChFC MSSC CeFT RSP CLTC
What is a Divorce Structured Settlement?
Having the stable income stream that a structured settlement provides, as a foundation, can be helpful in a financial transition to the new normal
- The parties negotiate the terms of settlement of marital property.
- The Paying Spouse agrees to settle the marital property interest in the form of periodic payments to the Payee Spouse.
- The Divorce Settlement Agreement creates an obligation for the Paying Spouse to make the negotiated periodic payments for a stated number of months or years.
- Following the execution of the Marital Settlement Agreement, the Payor Spouse assigns his/her periodic payment 0bligation to an assignment company.
- In this case we are speaking of a non qualified assignment. The Payor Spouse transfers a lump sum, representing the discounted value of the payment stream due under the Marital Settlement Agreement.
- In return, the assignment company agrees to assume the Payor Spouse’s payment obligations. The assignment company is a subsidiary or an affiliated company of a highly rated life insurer which issues the annuity contract to the assignment company, which makes all periodic payments required by the Marital Settlement Agreement.
- In this way, the Recipient Spouse will not be financially dependent on the Payor Spouse, but rather, on a highly rated, well-capitalized life insurer.
When Does a Divorce Structured Settlement Work Best?
- A divorce structured settlement works best if there is enough liquidity in divisible assets and/or the Paying Spouse has sufficient resources to fund a future payment stream for some element of the divorce today. This is critical to get off squere one;
- Where the amount of future payments can be quantified at the time of settlement. One cannot for example quote a divorce structured settlement for a payment that may vary from one payment to the next, or may otherwise vary over time; AND
- Where the Recipient Spouse would like the security of core income stability that is unaffected by the Paying Spouse’s employment status, solvency or income reporting integrity.
- Where the Recipient Spouse would like the security of core income stability that is unaffected by the death of the Paying Spouse.
- Where the Paying Spouse and the Recipient Spouse want to keep things simple.
Read more about Divorce Structured Settlements
Divorce Structured Settlements 888-325-8640 | 4structures.com
Last updated December 1, 2025