When the defendant and plaintiff agree to resolve a lawsuit with a structured agreement, the parties negotiate a cash amount payable by the defendant in exchange for the plaintiff to withdraw the lawsuit. The money is distributed as a series of periodic payments, usually financed through an annuity. Courts use structured settlements in many different types of cases to replace or supplement income that was lost through someone else's fault. Because they are carried out by a third party, it also means that someone does not need to systematically associate with the person or entity that hurt them.
To perform a structured settlement annuity on behalf of an injured customer, you must be part of the settlement agreement with the defendant. The first step is to contact your structured settlement planner and come up with the right annuity design. Your payment planner will work with you and the customer to develop a plan with payment dates and amounts that fit the customer's needs. This step also involves choosing the right annuity company that will handle future client payments (Pacific Life, USAA, AIG, MetLife, etc.).
Additional investment options are available to claimants who are not interested in a structured settlement annuity. If you have any questions about the mechanics and process of how to set up a structured settlement annuity for your client, don't hesitate to call us. If you find that your expenses increase while you wait for your first structured settlement payment or initial lump sum, you may want to consider pre-settlement financing options to help you. And if the settlement just isn't that big, you won't get a significant advantage from a structured settlement.
Structured annuity contracts are protected by your state's guarantee association, in which life insurance companies must reserve a reserve with the SGA in the event of the company's insolvency. By 1985, the National Structured Settlement Trade Association was formed to preserve and promote structured settlements for injury plaintiffs through education. Facing a crisis such as foreclosure or not having transportation to get to a job, many structured settlement owners decide to sell part or all of their payments. The defendant or insurer then pays the settlement funds to a third-party assignment company, which assumes responsibility and purchases an annuity from a structured settlement insurance company.
Federal law, as well as additional regulations in 48 states, require court approval to transfer structured settlement payments. When it comes to settlement plans, lawyers and clients are most likely familiar with a structured agreement. Even if you already have a structure, you may not know how they work and why they are configured the way they are. Establishing a structured settlement annuity for your client is a little more complicated than settling for cash.
Congress passed the Periodic Payment Settlement Act in 1982, which simplified the use of structured settlements in personal injury lawsuits.
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