Legalities of Structured Settlements

While there have always been people who arranged for over-time payments of debts, a structured settlement became a focus in congress in 1982. At the time, there were a few high-profile instances of people who had been given a lump sum payment and then had either seen a great deal of it gobbled up by taxes, or mis-managed and lost before they could even get the treatment they needed. Congress decided to step in and make things more safe for the lawsuit victims. They came up with:

The Periodic Payment Settlement Act of 1982

As much as we blame congress for our woes, they really do try to help us out occasionally. This act made the Structured Settlement tax-free, to try to encourage people to take advantage of it. It helps to shield companies from bankruptcy, by having them be able to pay out a large fine over a period of time, when appropriate. It also helps to shield individuals from wildly spending their entire benefit immediately (or having a dishonest guardian do that for them).

By giving out the settlement slowly, over a period of years, the company can now often afford to give far more in total than they could have in a lump sum. And by receiving their money slowly, the recipient is far more likely to use the money for what it was intended, and to have it available 10 or 20 years down teh road.

Structured Settlement Main Page

NOTE: I am not a lawyer or doctor, please always talk to professional advisors to get personal advice on your situation.

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