Structured Settlement Analysis
UFS will work with the attorney to maximize the benefit to the client of any structured settlement. We will evaluate any proposal from the liable carrier and compare it to alternative proposals from a wide range of leading carriers. The goal: to identify the insurer prepared to provide the highest return to the client.
Advantages of Structured Settlements
A structured settlement is designed to ensure the long-term financial security of an injured party by providing a guaranteed stream of tax-free income. Periodic payments may be received for any length of time, including over the individual's lifespan. In addition, there may be a death benefit paid to the individual's estate or a named beneficiary.
Of course, a plaintiff may also have the option of taking a settlement as a lump sum. A lump sum payment made to a plaintiff in settlement of a personal injury tort claim is not subject to federal income taxes. However, the plaintiff's future earnings on those assets will normally be subject to taxation in the year they are received.
By contrast, under a structured settlement, the plaintiff does not receive the agreed upon funds directly; instead the defendant's insurer (in most cases) uses the amount to purchase a fixed annuity on behalf of the plaintiff. The annuity payments received under such a structured settlement are not subject to federal income taxation. Over time, the ability to compound earnings tax free can provide a tremendous advantage.
Planning is the Key
Structured settlements for workers' compensation or physical injury tort claims are enabled by a provision under the United States Internal Revenue Code. In order to preserve the advantageous treatment of future earnings, the structured payments must be determined when the case is settled and the payment terms included in the settlement agreement and release.
UFS will customize a plan for each individual case, based on damages to the client as well as coverage and liability considerations related to potentially liable parties. Our understanding of structured settlements, overall market knowledge and in-depth familiarity with the major carriers can be especially valuable in cases where there is limited liability or coverage.