16 November 2010

What Is a Structured Settlement?


A structured settlement is an insurance or financial arrangement (periodic payments include) that a claimant accepts to compromise a statutory periodic payment obligation or to resolve a personal injury tort claim. That's why structured settlement payments are sometimes called “periodic payments”. A structured settlement can provide for payment in any schedule the parties choose. It may be paid in periodic lump sums for a few years or annual installments over a number of years. A structured settlement is called a “periodic payment judgment" if incorporated into a trial judgment.

As an alternative to lump sum settlements, structured settlements were first utilized in Canada and the United States (during the 1970s). Australia, Canada, England and the United States have made Structured Settlements as part of the statutory tort law of several common law countries. Each of these countries has its own definitions, standards and rules for structured settlements, although some uniformity exists. Structured settlements may include spendthrift requirements and income tax as well as benefits. To guarantee the future payments, often the structured settlement will be created through the purchase of one or more annuities.

Source: Wikipedia.
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