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Lucas Sanders
Lucas Sanders

Structured Settlement Payments

Structured settlementsStructured SettlementA legal settlement, funded by an annuity or another qualified funding asset, such as a government obligation. are simple. Many civil lawsuits result in someone or some company paying money to another to right a wrong. Those responsible for the wrong may agree to the settlement on their own, or they may be forced to pay the money when they lose the case in court.

structured settlement payments

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If the amount of money is small enough, the wronged party may have the option to receive a lump sum settlement. For larger sums, however, a structured settlement annuityAnnuityAn insurance product that earns interest and generates periodic payments over a specified period of time, typically with the purpose of providing income in retirement. may be arranged.

The agreement details the series of payments the person who was wronged will receive as compensation for the harm done to them. Spreading the money over a longer period of time offers a better future guarantee of financial security because a single payout can be spent quickly.

Settlement payments to the injured party did not count towards their gross income, and thus they were not required to pay taxes on any money received. Likewise, after the recipient passed away, payments to the estate continue to be excluded from taxation.

Legal settlements can be paid out in a one-time lump sum or through a structured settlement where periodic payments are made through a financial product known as an annuity. The key differences between these settlement options are in the areas of long-term financial security and taxes.

When a plaintiffPlaintiffThe party who initiates a lawsuit. receives a settlement through a one-time lump sum, they might spend it too quickly, robbing them of the long-term financial security that future payments could provide.

If you elect to receive your lawsuit payout through a structured settlement, you can determine whether to begin to receive the funds immediately or at a later date. Immediate payments can be beneficial if you require medical care, for example, or have lost your source of income. You may decide to postpone the payments until a later time, such as after you retire. During the waiting period, the annuity will grow as it earns interest.

You can also determine whether the annuity should be paid for the rest of your life, no matter how long that may be, or for a specified number of years, as well as the schedule for receiving payments and the payment amounts and adjustments.

Often, plaintiffs will need money for a variety of expenses before they receive their settlement. If you find your expenses mounting as you await your first structured settlement payment or initial lump sum, you may want to consider pre-settlement funding options to tide you over.

Structured annuities are ideally suited for many different types of cases. Although these scheduled payments offer several advantages, it is important to understand the benefits along with the risks when deciding on any financial investment.

Annuity owners should carefully consider their options before selling payments. You can learn more at Selling Structured Settlement Payments, and download our free step-by-step Guide to Selling Your Structured Settlement Payments.

American General is highly-rated by the rating agencies for financial strength and is part of Sun America Financial Group, one of the largest insurance companies in the world. We are an industry leader in structured settlements, not only are we one of the first companies to write structured settlements but we have written more premium than any other company. Our customer service area services more than 60,000 structured settlement annuitants annually.

Structured settlements have the support of attorneys, legislators, judges and disability advocates because they have seen first-hand what happens to injury victims whose financial security has eroded due to unforeseen circumstances.

American General insurers are market leaders in providing structured settlement annuities to victims of personal, physical injury or physical sickness. The income tax free periodic payments made under these annuities provide for future medical expenses and basic living needs, and can last for the lifetime of the injury victim and their family.

Structured settlements have drawn strong support from the federal government as well as plaintiff attorneys, state attorneys general, legislators, judges, disability advocates, and many others that have seen their power to protect injury victims from quickly dissipating or otherwise outliving their income, after which time they would most certainly turn to various forms of government or public assistance.

We offer funding agreement contracts to facilitate the resolution of settlements that are not based on physical injury or physical sickness. Examples include property disputes, environmental cleanup, construction defect claims, liability policy buy-outs, and many other types of claims.

Competitive pricing and the ability to adjust future payments upon the occurrence of anticipated events are two compelling reasons to consider the use of our funding agreement product to help resolve these often large and complex dispute settlements.

After notification of a death, the payments on the annuity may be placed on "hold" while the policy is reviewed. If a payment was made to the annuitant after the date of death and the payments were only due while the annuitant was living the payment will need to be recovered.

If there are remaining payments to be made to the beneficiary or the estate (if there is no named beneficiary), American General will send additional forms to be completed and returned. When the completed forms are returned and processed the beneficiary or estate will receive a payment that includes any payments that were held and the beneficiary or estate will then continue to receive future payments as they become due.

The agreement you or your legal representative entered into to receive future payments will provide you with specific and detailed information. American General was not a party to that agreement, however, we can provide you with an annuity contract certificate that will outline the payments that you will receive from the annuity. If you require a copy of your settlement agreement, you will need to contact one of the parties involved with the settlement, your attorney, or the agent.

"Assignee" means a person acquiring or proposing to acquire structured settlement payments from a structured settlement purchase company or transferee after, or concurrently with, the transfer of the structured settlement payment rights by the payee to the structured settlement purchase company or transferee.

"Discounted present value" means the present value of future payments, as determined by discounting the payments to the present using the most recently published applicable federal rate for determining the present value of an annuity, as issued by the United States Internal Revenue Service.

"Effective annual interest rate" means the effective rate of interest per year the payee will be paying the transferee based on the net advance amount that a payee will receive from the transferee and the amounts and timing of the structured settlement payments that the payee is transferring to the transferee.

"Gross advance amount" means the sum payable to the payee or for the payee's account as consideration for a transfer of structured settlement payment rights before any reductions for transfer expenses or other deductions to be made from such consideration.

"Interested parties" means the payee, a beneficiary irrevocably designated under the annuity contract to receive payments following the payee's death or, if the designated beneficiary is a minor, the designated beneficiary's parent or guardian, the annuity issuer, the structured settlement obligor, and any other party to the structured settlement that has continuing rights or obligations to receive or make payments under the structured settlement.

"Prospective payee" means an individual who is receiving tax-free payments under a structured settlement pursuant to United States Code, title 26, section 130, and who has been personally and individually solicited by and has not yet proposed to transfer all or a portion of the structured settlement payment rights to a structured settlement purchase company.

"Structured settlement payment rights" means rights to receive periodic payments under a structured settlement, whether from the settlement obligor or the annuity issuer, where: (1) the payee or any other interested party is domiciled in the state; or (2) the structured settlement agreement was approved by a court or responsible administrative authority in the state.

"Structured settlement transfer proceeding" means a court proceeding initiated by the filing of an application by a structured settlement purchase company seeking court approval of a transfer in accordance with sections 549.30 to 549.41.

"Terms of the structured settlement" means the terms of the structured settlement agreement, the annuity contract, a qualified assignment agreement, and an order or approval of a court, responsible administrative authority, or other government authority authorizing or approving the structured settlement.

"Transfer" means a sale, assignment, pledge, hypothecation, or other form of alienation or encumbrance made by a payee for consideration. A transfer does not include the creation or perfection of a security interest in structured settlement payment rights under a blanket security agreement entered into with an insured depository institution, in the absence of any action to redirect the structured settlement payments to such insured depository institution, or an agent or successor in interest thereof, or otherwise to enforce such blanket security interest against the structured settlement payment rights.

One option to resolve your claim is with a structured settlement. This is when you, L&I, and sometimes your employer, agree to close your claim for a sum of money you would receive in a series of fixed cash payments. 041b061a72


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