structured settlements: considerations for defense counsel
Structured Settlements, What Should Consider One?
If you have Structured Settlements due to a severe personal injury because of the fault of someone else, you may be able to make a claim against that person or their insurer for compensation. A lawyer can advise you whether or not you have a valid claim. You may be entitled to receive your compensation in the form of a lump sum or a structured settlement.
You can arrange to receive your compensation in the form of a structured settlement only in certain types of cases and only if your compensation is suffi ciently large. You can only enter into a structured settlement if the lump sum compensation payment that you would be awarded if your case was decided by a court would be a tax-free capital payment. Also note, structured settlements are not available for workers’ compensation type claims.
What is a structured order?
A structured order is made by a court, often without the agreement of the parties. The outcome is similar to a structured settlement, as compensation will be paid to you in the form of tax-free periodic payments. A structured order must satisfy the same conditions that structured settlements require to be tax-free.
When can I get a structured settlement?
You can only arrange a structured settlement before your personal injury case has settled. It is not possible to arrange a structured settlement after you have settled your case or if a court has given fi nal judgment for a lump sum.
How long will I receive payments?
The periodic payments from a structured settlement are designed to provide you with the maximum amount of compensation money while you are alive. If you live longer than expected, the payments will continue to be made for as long as you live. However the periodic payments will stop when you die, unless you have arranged a guarantee period as outlined below. When you set up your structured settlement you can arrange to have your personal injury annuity payments guaranteed for up to 10 years. If you choose to have a guarantee period of 10 years, for example, this will mean that if you die within 10 years from the date of settlement then the remaining payments (that would have been paid if you had lived out the 10 years) can be paid tax-free to your dependants. If your dependants wish to, they can take the remaining payments as a single lump sum. If the remaining payments are to be paid to your estate, they must be paid as a lump sum. If the personal injury annuity commences after the date of the settlement the guarantee will be a period less than 10 years. It will not be possible to have a guarantee period if the personal injury annuity is to commence later than 10 years after the date of settlement. The guarantee period only applies to personal injury annuities.