Structured Settlement is a litigation recovery management alternative that involves settling claims using a qualified funding vehicle ( a single premium structured settlement annuity or a trust fund which invests only in obligations of the United States Government ) resulting in a customized stream of periodic payments that are tailored to the plaintiff's particular financial needs. A structured settlement is an innovative settlement negotiating and planning tool, which, if effectively used, provides significant benefits to all parties in litigation. By agreeing to a structured settlement, plaintiffs can receive future periodic payments free of income taxes on the plaintiffs, provided their claim qualifies under Sections 104(a)(1) and 104(a)(2) of the Internal Revenue Code.

A structured settlement definition^** appears in the Internal Revenue Code at Section 5891(C) (1), as "an arrangement"—

    (A) which is established by (1) suit or agreement for periodic payment of damages excludable from gross income of the recipient under section 104(a)(2), or (ii) agreement for periodic payment of damages under any workers’ compensation law excludable from gross income of the recipient under section 104(a)(1), and

    (B) under which the periodic payments are (i) of the character described in subparagraphs (A) and (B) of section 130(c)(2), and (ii) payable by a person who is a party to the suit or agreement or the workers’ compensation claim or by a person who has assumed the liability for such periodic payments under a qualified assignment in accordance with section 130...

Internal Revenue Code §104

Internal Revenue Code §130

4structures.com, LLC hopes that you take the time to read the content of this web site to explore how a structured settlement may be used effectively for your case, or your client's case. Or simply call 888-325-8640 or send us an email if you'd like, and we will be ready to answer your questions about structured annuities, treasury bond structured settlements , settlement planning or other litigation recovery management issues.

Footnote ** note that structured settlement definition at IRC 5891(c)(1), effective January 2002, is preceded by the words "for the purposes of this section" (expressly to do with the imposition of an excise tax on structured settlement factoring transactions). Despite this limitation the use of the definition is often expanded by settlement planners, structured settlement brokers and industry commentators. Structured settlements had been in existence for over 20 years prior to the enactment of the Victims of Terrorism Tax Relief Act of 2001, which created IRC 5891 ostensibly to curb factoring company abusive business practices and to provide a regulatory framework for exceptions to the excise tax.