Structured Settlements
A Proven Approach To Long-Term Financial Security
A structured settlement is a financial arrangement that provides settlement proceeds through a series of scheduled payments rather than—or in addition to—a single lump-sum payment.
Structured settlements are commonly used in personal injury, wrongful death, workers’ compensation, and other types of claims. Payment plans can be customized around an individual’s anticipated needs, providing financial flexibility today and dependable income for the future.
For decades, structured settlements have been supported by federal law as a way to help injured individuals and their families achieve greater long-term financial security.
What is a Structured Settlement?
A structured settlement is a stream of periodic payments paid to an injured party by the defendant through the purchase of an annuity (fixed and determinable) issued directly by highly-rated life insurance companies. Structured settlements provide victims of physical injury and wrongful death lawsuits security and guaranteed long-term income tax-free payments.
How Structured Settlements Work
Instead of receiving the entire settlement in cash, an individual can choose to allocate some or all of the settlement to future payments.
Those payments can be designed in many ways, including:
- Monthly or annual income
- Payments for future medical or care expenses
- Larger payments at specific milestones
- Education funding
- Future housing or major purchases
- Income beginning at retirement
- Lifetime payments
- A combination of immediate cash and future payments
Once established, the payment schedule is fixed, providing certainty about when and how much will be received.
The History of Structured Settlements
The modern structured settlement industry developed in the United States during the 1970s, initially gaining prominence in cases involving children born with severe birth injuries linked to the drug thalidomide
Rather than resolving these cases solely through lump-sum payments, periodic payment arrangements were used to provide funds over time to help address the injured individuals’ continuing needs.
As structured settlements became more widely used in personal injury cases, the federal government established a formal legal and tax framework supporting them.
A Foundation in Federal Law
A significant milestone came with the Periodic Payment Settlement Act of 1982, which established important federal tax rules for structured settlements.
Under Section 104(a)(2) of the Internal Revenue Code, damages received on account of personal physical injuries or physical sickness generally may be excluded from the recipient’s gross income, subject to applicable requirements and exceptions.
The Act also added Section 130, creating the framework for a qualified assignment. Through a qualified assignment, the obligation to make future structured settlement payments can be transferred to a qualified assignment company, which typically purchases an annuity from a life insurance company to fund those payments.
Together, these provisions helped establish the framework that continues to support qualified structured settlements today.
Built for
the Individual
One of the greatest advantages of a structured settlement is its flexibility at the time the settlement is designed.
A payment plan can be created around anticipated medical expenses, income needs, education, retirement, or other important milestones. Structured settlements can also be coordinated with Special Needs Trusts, Medicare Set-Asides, professional administration, and other settlement planning strategies when appropriate.
The result is more than a payment schedule—it is a settlement designed around the individual’s future.
Experience Matters
Structured settlements involve important financial, legal, and tax considerations, and the decisions made before a settlement is finalized can have long-term consequences.
Ringler Consultants work with injured parties, attorneys, claims professionals, and other settlement professionals to explain available options, model payment scenarios, and help develop settlement strategies tailored to the circumstances of each case.
With decades of experience and a nationwide network of Consultants, Ringler helps bring clarity, expertise, and thoughtful planning to the settlement process.
Start the Conversation
A structured settlement can provide much more than future payments. When designed thoughtfully, it can help provide predictability, financial security, and confidence about what comes next.
A settlement resolves the case. A structured settlement can help provide for the future.
