Whether you or a loved one was injured in a car accident, or you were injured on the job, or harassed at work or suffered from any one of many injuries—emotional or physical—we are here to help. The members of the National Structured Settlements Trade Association are passionate about assisting injured people in navigating through the often arduous settlement process and educating them about structured settlements.
Settlement Consultants are available to discuss your needs and hopes for resuming your life after your injury. They will educate you about what a structured settlement is and if it is a suitable solution to meet your needs and future goals. Since structured settlements offer flexible payment design, it is possible to meet a variety of needs you may have.
Additionally, structured settlement consultants will assist both the plaintiff and defense attorneys in drafting the settlement documents in order to make sure the appropriate language is contained in those documents to comply with the Tax Code provisions that govern structured settlements and to ensure the tax-free or tax-deferred nature of the periodic payments.
Benefits of Structured Settlement Payments:
- Security. Structured settlements provide two kinds of security. One has to do with lack of volatility. A structure can generate a planned, dependable cash flow. The second kind of security has to do with what might be called the safety of principal: the confidence that the payments will, in fact, be made.
- Tax Treatment. Under § 104(a) of the Internal Revenue Code, payments received in settlement of personal physical injury claims, worker’s compensation claims and some disability claims are income tax free, whether they are received in cash or in the form of periodic payments.
- Flexible Payment Design. Structured settlement annuities are extremely flexible in design. Future periodic payments can be period certain (guaranteed for a known number of years), life only (commonly called “straight life” elsewhere in the insurance industry), a combination of lifetime with some number of years certain, and joint life or future lump sum payments. Payments can begin immediately (i.e., within thirty days) or can be deferred until sometime in the future. For example, if the claimant is a minor, the future payments may begin years into the future, when the claimant reaches the age of majority.
- Spendthrift Protection. Other than the fact that structures from personal, physical injury cases are income tax free, the most often quoted benefit of structures is spendthrift protection. A severely injured claimant needs to know that he or she has an income which will always be there and a structured settlement provides that assurance.
Questions Frequently Asked by Injured Parties
What if I misplace or lose the paperwork on my settlement?
Normally, if you have misplaced your paperwork, a copy can be obtained from a variety of sources. Contact the company that is responsible for administering your payments, your attorney, the company that settled your case, or the broker that assisted you with the structured settlement during the settlement.
What if my check doesn’t arrive when it is supposed to?
Checks are typically mailed several days in advance of the due date. Structured annuity companies will usually ask you to wait a few days beyond the due date to account for occasional slow mail delivery. It will then stop payment and reissue a check. Exceptions can be made, but reasonable period of time usually is required before the company reissues a check. Many annuitants find that using EFT (electronic funds transfer) or direct deposit is convenient and eliminates a concern of lost or late checks. Ask your payment provider if EFT is available.
Can I use my benefits as collateral for a loan?
Normally, you may not use your structured settlement payments as collateral for a loan. The reason is that the federal law designed to provide these benefits to you on an income tax-free basis also prohibits you from assigning or encumbering them.
Can I restructure my payments into a lump sum?
Again, the federal law that assures the payments you receive are on a tax-free basis also prohibits converting your payments into a lump sum.
Someone has offered to purchase my structured settlement payments. What should I know before I agree to sell them or use them as collateral?
It is important that you seek the advice of a trusted attorney. If you do not have an attorney, you may wish to consult with the attorney who originally negotiated your case. If you cannot reach that person, you might also want to consider contacting the office of your state’s attorney general.
Forty-seven states and the federal government have enacted structured settlement protection statutes that establish strict conditions for "structured settlement factoring transactions." Under the federal law, court oversight and approval is required for injury victims who choose to sell payments from a structured settlement to a third-party company.
If you have additional questions, please contact us at NSSTA.