VIEWS: 9 PAGES: 2 CATEGORY: Other POSTED ON: 4/12/2012
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. Structured settlement cases became more popular in the United States during the 1970s as an alternative to lump sum settlements. The increased popularity was also due to several rulings by the IRS, an increase in personal injury awards, and higher interest rates. The IRS rulings changed policies such that if the requirements were met then claimants could have federal income tax waived. Higher interest rates resulted in lower present values, hence annuity premiums, for deferred payments versus a lump sum. 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. Often the periodic payment will be created through the purchase of one or more annuities, which guarantee the future payments. Structured settlement payments are sometimes called “periodic payments” and when incorporated into a trial judgment is called a “periodic payment judgment."
==== ==== Hello. rakaysanjaya.co.cc ==== ==== Structured Settlement Implications of structured settlements: The legislatures at state and federal level have realized the importance of structured settlement laws and regulations. While the Internal Revenue Code works at the federal level to ensure the application of structured settlement laws, the state structured settlement laws are taken care of via structured settlement protection statutes and structured settlement payments of judgment statutes that are made periodically. Even the medicare regulations exert a major impact on structured settlements and in order to ensure the benefits, structured settlement payments are now being incorporated within the special 'Set Aside Arrangements' and 'Special Needs Trusts'. This mode of settlement ahs been endorsed by many disability rights organizations, to make it easier on the special needs of the beneficiaries under their care. The 'structured settlements' arrangement: The meaning of structured settlements have been clearly defined and explained to meet the application requirements for federal income taxation. It has been understood as an arrangement that must be established via an agreement for periodic payment towards damages that are not included within the established 'excludables' of the gross income under the legislation applicable in the Internal Revenue Code. It is viewed as an agreement or arrangement for the segmented or periodic payment of compensation, with regards to workers' compensation law that is not included as per the Internal Revenue Code. Structured settlements are payable by an entity who is part of the suit or agreement or a claim to workers' compensation. It is applicable to a person who has taken on the liability involved in segmented payments, in accordance with Internal Revenue Code. The legal implications in a structured settlement: The legal implications in a structured settlement typically involve the request for a structured settlement by the injured party, who is also the claimant, who agrees to a settlement with the defendant or the insurance carrier, in order to dismiss the existent lawsuit in return for a series of periodic or pre-set segmented payments over a stipulated period of time. Under such an agreement, the insurer ends up with a long term payment obligation towards the claimant. In order to fund the established obligation, the insurer can adopt any of the two approach roads. The insurer can either purchase an annuity from some life insurance company or assign and delegate the accepted periodic payment obligation to some third party. The latter is referred to as an 'Assigned case'. Understanding the 'assigned case' of a structured settlement: In an assigned case, the company basically prefers to refrain from the long term segmented periodic payment obligation issued and accepted within the paradigms of law. Accordingly, the insurer transfers this obligation via a 'qualified assignment' to some third party or the 'assignment company'. The assignment company, which most of the time is the life insurance company from which the annuity is purchased, requires the company to make a payment towards its securing an annuity to fund the periodic payment obligation. However, if the claimant agrees to the transfer of the segmented payment obligation, then the defendant and the company do not bear the liability of payment. The 'assigned case' method is sought by companies that do not wish to carry the periodic payment obligation. on their books. Understanding the 'unassigned case' of a structured settlement: In an unassigned case, the insurer bears the periodic or segmented payment obligation issued by law and takes care of the obligation by purchasing an annuity from a life insurance company. The annuity works like an asset that helps the company to fulfill its obligation. The payment option agreed upon with the purchase of the annuity is exact to the legal acceptance, with regard to time and amount. The property or casualty company owns the annuity and declares the claimant as the payee, making arrangements for the stipulated payments to be sent directly to the claimant. In the case of the segmented payment option being dependent on someone continuing to be alive, then the claimant becomes the 'measuring life' under the annuity.
Pages to are hidden for
"Structured Settlement.txt"Please download to view full document