To prevent premature exhaustion of funds through poor investments and / or mismanagement of assets.
	To guarantee funds for long-term medical needs.
	Injured persons attempting to retain some portion of their settlement for future use.
	Injured parties who are temporarily or permanently disabled.
	Total or partial wage loss for any period of time.
	Severely injured or mentally incompetent injured persons.
	Guardianship cases, including minors or incompetents.
	When the settlement is a large portion of all of an injured party’s future support.
	As an alternative to investing part of settlement proceeds.
	As part of an overall investment portfolio, providing for the fixed income portion.
	Severe injury, especially shortened life expectancy, and the mentally disabled.
	Death cases with surviving spouse and/or children needing monthly/annual income.
	Deferred payments for college funds, retirement, mortgages or attorney fees.
	Workers’ compensation cases.
	Any case where a secure, tax-free, high yield income makes sense.

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What happens to the monthly periodic payments if the injured party dies prematurely?

In the event of the person’s death, a guaranteed portion of the settlement may be made to the estate or a named beneficiary such as a spouse or child.

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Who benefits from a structured settlement?

Although a structured settlement is a valuable settlement solution for all parties involved in the settlement process, it is the injured party who benefits most.

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How does the injured party benefit?
 

Non-Taxable Income
	100% tax-free guaranteed income, (for life, if requested)
	Flexibility and convenience of regular payments
	Structured can provide funds to pay estate taxes
	Deferred payments for college, retirement, scholarships
	Combine workers’ comp and public benefits
	Make mortgage payments with interest deduction
	Deferred lump-sum payments
Guaranteed Income
	Security of multiple layers of protection by Federal and State requirements
	Protection for minors
	Guaranteed benefits for spouse, children and beneficiaries (may be scholarships, charities, even businesses)
	Guarantee future long-term care with no interruptions
Eliminates Investment Risk
	Protection from misuse and loss
	Competitive ate-of-return on capital
	No expense or worry with regard to investment performance

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How does the defendant insurer benefit?

Expenses associated with paying claims are eliminated. In addition, savings are realized by lowering overall administrative costs.

When determination has been made that liability for pollution exists, and the terms for clean-up are established and quantified, future costs can be funded with an annuity or similar agreement offered by a life insurance company. In this way, the potentially responsible party can pay for its future obligations on a more economically efficient basis. It can also give the life insurance company the administrative responsibilities of making the payments.

NOTE: The tax treatment of these alternative uses of structures is not the same as for the physical injury cases. A qualified tax expert should be consulted before any decisions or annuity purchases are made.

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How does the defendant attorney benefit?

It provides the defense attorney with another alternative in negotiating a settlement.

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How does the injured party’s attorney benefit?

Attorneys can be sure that they have maximized their client’s settlement, ensuring sound fiscal management with a very competitive fixed rate-of-return. It also is possible to structure attorney fees.

Click here to view Structuring Attorney Fees brochure.

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Is the Court involved in structuring a case?

When a case involves a minor, judges have the responsibility of approving settlements. Judges universally support the structured settlement concept. It is especially appealing n guardianship cases, including minors or incompetents.

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Do any other parties benefit from structured settlements?

Self-insured and casualty companies use the structure concept to secure early resolution of claims. Claims are often closed for less than a lump sum with the injured party’s needs being met. Their risk and obligation are transferred to another entity.

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Why can't I take cash and buy an annuity without doing a structure?

For a number of reasons, it would not be wise for injured parties to buy their own annuities. Not only would they be exposing themselves to a great deal of risk due to security issues, but their annuities would have to earn a much higher return rate in order to compensate for taxes they would have to pay on the interest earned. Any investment fees would also have to be deducted from their interest income.

The yield of a structured settlement annuity would be greater than that of an annuity an injured party could buy because all of the proceeds from settlement annuities are tax free. All of the earnings on an annuity purchased outside a structure would be subject to Federal, State and local taxes.

In order to equal the return rate of a structured settlement annuity, the annuity purchased by an injured party would need to exceed the return of a settlement annuity by 4.91% if the injured person were in the 38.6% tax bracket. Especially in a larger settlement, these differences can add up to a lot of money.

Another advantage of settlement annuities is that most life carriers offer higher return rates on settlement annuities than can be found in the financial marketplace. This is another reason why the settlement annuity has a higher payout. Other drawbacks to injured parties buying their own annuities include possible penalties and limitations on deferral periods. Taxes must also be paid eventually on tax-deferred annuities, which are highly publicized today as a way of reducing individual income taxes.

The advantages of reduced risk and financial security must also be added to the benefits of a settlement annuity over any annuity an individual might purchase. Since settlement annuities are backed by strong life companies and assignees and state guarantee funds, they are more secure.

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Can the injured person take cash now and decide to structure later?

No. The structured settlement must be fully executed at settlement. When injured people require lifetime care and support, they should think about how much money they can afford to lose.

Statistics show that one way or another most recipients of cash awards wind up dissipating their funds in a short period. They should be confronted with the prospect that they will be vulnerable and susceptible to losing all or part of their money. Losing settlement funds happens in a variety of ways, including bad investments, loans to friends and relatives, and unwise or frivolous purchases. The flip side of looking at the cash option is choosing a settlement annuity, which provides secure, guaranteed, tax-free settlement funds (for life, if requested).

Click here to see the Dissipation Stats.

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Is it possible to have both – cash and a structured settlement?

Yes. Most injured parties believe that they have to choose one or the other -- cash or a structure. However, that is not the case. Most structured settlements involve upfront immediate cash payments that cover items such as attorney fees and medical liens with additional cash for injured parties to spend at their discretion. The settlement annuity portion provides periodic payments (often for life) for medical costs, lost wages, attendant care, mortgage payments, etc.

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Can workers’ comp cases be structured?

Yes. On August 5, 1997, Section130 of the Internal Revenue Code was amended to permit seriously-injured workers’ compensation applicants the same financial security and stability and tax-free settlements that were previously available only to tort victims

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What are Qualified Assignments?

Qualified assignments shift responsibility for an injured party’s payment stream for medical and living expenses, which could be for life, to a well-capitalized institution. In some instances, this can also create favorable tax benefits for self insured's. The assignee funds its obligation to the injured worker using very high-grade assets mandated by IRC Section 130 – U.S. Treasury obligations or annuities of state-licensed and –regulated life insurance companies.

Model Qualified Assignment and Release Agreement
MODEL Qualified Assignment Agreement

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What is Secured Creditor Status?

The injured worker would be provided with Secured Creditor Status, providing maximum financial protection and ensuring that medical and other future needs will be met. When a workers’ comp obligation has Secured Creditor Status, it means that if the assignment company failed to pay, as a secured creditor the injured party can become the owner of the assets funding the payments. This ensures that the assignee’s other creditors cannot use the assets to satisfy their claims against the company.

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How many types of structured settlements are there?

The beauty of the structured settlement is that each one is designed specifically for each injured person. These individuals can participate in the creation of their settlement annuities by providing as much information as possible about their unique situations, their needs and their hopes and dreams. With this input, the settlement annuity specialist can design a proposal that truly meets their specific needs.

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Who develops the structured settlement plans?

A structured settlement broker develops one or more plans unique to each person. Often, injured parties insist on cash because they really don’t understand the structured settlement concept and its benefits. That’s why it is important to have a structured settlement broker involved during all phases of the negotiation process, and they should be encouraged to speak to injured parties.

When settlement annuity specialists from Ringler Associates are directly involved in the negotiations, 70% of the cases are settled with a structure, regardless of the rates. (Add link to Role of the Broker here)

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What is a Uniform Qualified Assignment (UQA)?

The intent of the Uniform Qualified Assignment is to transfer ownership of the annuity, and any future liability for the payments from the purchaser to a subsidiary of the life insurance company/annuity carrier. The structured settlement annuity cannot be purchased and still qualify as a structured Settlement annuity without the purchaser owning the annuity or transferring such ownership via the industry --standard UQA. Clearly, the casualty carrier does not wish to retain ownership the annuity. Please note that this is "standard procedure" in the structured settlement industry. Also, please note that the transfer of liability from the casualty company will be clearly stated in the settlement agreement and is seen as a vehicle to release the liability carrier.

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Can a financial planner or life insurance agent set up a structured settlement annuity for an injured party?

Only a state licensed structured settlement broker can structure a settlement. If the related paperwork/documents are not completed properly, the tax-free benefit the structured settlement provides will be jeopardized.

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Is it possible to structure cases not involving physical injuries?

Periodic payments are used today to resolve a wide range of claims. Defendants used to be constrained by IRS limitations in Section 130 as to what could be assigned, which limited them to personal physical injury torts and workers’ compensation claims filed after August 5, 1997. By entering in to an agreement for periodic payments and then transferring the payment obligation to NABCO or BARCO, a defendant can, transfer risk, reduce costs, and increase flexibility.

NABCO and BARCO will take the following cases. BARCO will take non physical injury claims including but not limited to:

Punitive damages
Legal malpractice
Construction defect
Contract dispute
Environmental
Lottery annuity obligations
Employment discrimination non-wage related
Attorney fees (including stand alone)
Workers’ compensation pre 8/5/97

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What is 468b?

Internal Revenue Code Section 468b is a qualified settlement fund that was created to facilitate settlement in class action and mass tort lawsuits. It is a mechanism for a current tax deduction for defendants.  Funding agreements can be used in a 468b fund.

Click here to view Treasury Letter regarding 486b.

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What is Section 409A?

Section 409A was enacted as part of the American Jobs Creation Act of 2004
and is generally effective the first of 2005. Many questions have arisen
since the enactment of Section 409A as to the impact it would have on
structuring attorney fees.

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What impact does Section 409A have on structuring attorney fees?

Under this Treasury/IRS guidance, the new section 409A deferred compensation
rules will not apply to arrangements between an attorney and his or her
client, where the attorney is actively engaged in the practice of law and
provides legal services during the year to two or more clients who are
unrelated to the attorney as well as to each other.

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What are "Pseudo" Structured Trusts?

Are structured settlements used in many brain injury cases?

Absolutely. Structured settlements should especially be considered in brain injury cases, where settlement proceeds are guaranteed and protected for the injured party’s future medical needs and care.. For more information and statistics, tune in to the RINGLER RADIO show “The Compelling Issues of Representing These Clients With Compassion and Understanding (A Brain Injury Lasts A Lifetime).” This is an important discussion about brain injury cases, which was recorded at the 2005 ATLA Convention in Toronto. Guests include nationally known Attorney Michael V. Kaplen from the New York firm of DE CARO & KAPLEN, LLP, representing victims of brain injury. As President of the Brain Injury Association of New York State, Attorney Kaplen explains the compelling issues of representing clients with compassion and understanding that a brain injury lasts a lifetime.

To listen CLICK HERE.

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What are "binding arbitration agreements"?

For an in-depth explanation of “Binding Arbitration Agreements” by an attorney at the forefront of consumer litigation nationwide. Listen to RINGLER RADIO as Attorney Thomas J. Methvin from the national firm of BEASLEY, ALLEN, CROW, METHVIN, PORTIS & MILES, P.C, the largest plaintiff's law firm in the Southeast, discusses important topics about the assault on consumer rights by some large corporations,.


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What does “capacity to earn” mean?

In “Lost Wages vs. Capacity to Earn,” Dr. Tony Gamboa, an expert in the field of brain injuries, discusses his in-depth method of determining a brain injured person’s capacity to earn as companed to the traditional “lost wages” concept of determining how much the injured party might have been able to earn.


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