Striking a Balance with Structured Settlements
Since 1982, structured settlements, also known as annuities, have been available to provide funding for the settlement of personal injury claims. Structures can be a partial alternative to a lump-sum cash payment. They provide a stream of income on a periodic basis, typically monthly. There is a 100% exemption from federal income tax on the structure payments.
Structures are most effective in the context of an agreed settlement, such as a mediation. For example, in a medical malpractice case involving an injury to an individual, when agreement has been reached on the benefits due to the injured person, the defendant will agree to fund that amount. The settling parties may still have very different opinions about the individual’s reasonable life expectancy.
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