Structured Settlements

What is a structured settlement?

A structured settlement is the method of financially compensating an injury victim or wrongful death beneficiary in lieu of litigation or an all-cash settlement. The settlement usually consist of two components: an up-front cash payment to provide for immediate needs and future periodic payments designed to meet the future identifiable needs of the plaintiff. These periodic payments are funded by the purchase of a structured annuity designed to provide payment directly to the payee. Payment schedules may include:

  • Immediate cash and monthly income
  • Deferred cash payments or other income provision for basic living expenses, future medical needs, and other special circumstances
  • A combination of the above methods

When should you consider a structured settlement annuity?

A structured settlement is appropriate in virtually all person physical injury and wrongful death settlement situations, especially in cases in which the following goals need to be met:

  • Replacement of lost future income
  • Catastrophic case management
  • Payments of future medical expenses
  • Educational pursuits
  • Protection for minors

What are the benefits of structured settlement?

  1. Payment schedules designed to individual client needs: Annuity payments can be tailored to meet the individual or family needs of the client, taking into consideration the medical and educational needs as well as basic living requirements. Payments can be designed to pay monthly, quarterly, semi-annually, annually or as future lump sum.
  1. Tax exempt funds: Section 104(a)(2) of the Internal Revenue Code states that compensation for personal physical injuries or sickness – whether paid as a lump sum or as periodic payments – is excludable from the taxpayer’s gross income.
  1. More money over time than an up-front lump sum settlement: The tax-free nature of a structured settlement annuity can often provide the injured party with a more generous overall settlement than the investment of a lump-sum settlement. Coupled with the tax advantage, the injured party’s lack of exposure to fluctuation markets or investment failures also helps ensure a sound financial future.
  1. No exposure to market risk: Other investments may carry risks of market and interest rate fluctuations. Structured settlement annuities offer guaranteed payments to the injured party under the terms of the contract with no investment risks. The annuity company absorbs the risk of any market fluctuations.

Ferlisi Jolley Services

Personal Physical Injury or Wrongful Death

Determine the client’s financial needs, design the proper Structured Settlement plan to deliver those funds, and select the most competitive and secure life insurance companies entrusted to provide those funds.

Attorney Fee Structures – Deferred Compensation

An excellent opportunity for attorneys to take advantage of deferring current year income tax liability and creating an income stream for a secure future. This option is available even if you client accepts a cash settlement.

Medicare Set-Asides (MSAs)

Protecting Medicare’s interest as secondary payer in Worker’s Compensation and/or Third-Party Liability cases.

Qualified Settlement Funds {IRC Sec. 468(B)}

Established to resolve or satisfy one or more contested or uncontested claims — a court ordered “safe harbor” advantageous to the plaintiffs and their attorneys, giving them control in the selection of various funding vehicles available to them, including structured annuities.

Non-Qualified Annuities

Settling employment or other non-physical injury claims by providing the client the benefit of a stream of guaranteed periodic payments instead of an upfront, lump sum payment which may cost them money.

If you would like more information about how Ferlisi Jolley Associates, Inc. can help you, call us at 205.803.6200.