Structured settlement

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Structured settlement
A structured settlement is a
financial or insurance
arrangement, defined by Internal
Revenue Code as periodic
payments; a claimant accepts to
resolve a personal injury tort
claim or to compromise a
statutory periodic payment
obligation. Structured
settlements were first utilized in
Canada after a settlement for
children affected by Thalidomide.
[1] Structured settlement cases
became more popular in the
United States during the 1970s
as an alternative to lump sum
settlements.[2] The increased
popularity was also due to
several rulings by the IRS and an
increase in personal injury
awards. The IRS rulings changed
policies such that if the
requirements were met then
claimants could have federal
income tax waived.[3]
Structured settlements have
become part of the statutory tort
law of several common law
countries including Australia,
Canada, England and the United
States. Structured settlements
may include income tax and
spendthrift requirements as well
as benefits and are considered to
be an asset-backed
security.[citation needed]Often
the periodic payment will be
created through the purchase of
one or more annuities, which
guarantee the future payments.
[4] Structured settlement
payments are sometimes called
“ periodic payments” and when
incorporated into a trial
judgment is called a “periodic
payment judgment." These
payments are also called a
coupon for a regular bond.[5]

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