Structured Settlements in the United States
The United States has enacted structured settlement laws and regulations at both the federal and state levels. Federal structured settlement laws include sections of the Federal Internal Revenue Code. State structured settlement laws include structured settlement protection statutes and periodic payment of judgment statutes. Medicaid and Medicare laws and regulations impact structured settlements. To preserve a claimant’s Medicare and Medicaid benefits, structured settlement payments may be incorporated into “Medicare Set Aside Arrangements” and “Special Needs Trusts”.
The United States defines “structured settlement” for Federal income taxation purposes in Internal Revenue Code Section 5891 (c) (1) as an "arrangement" that meets the following requirements:
- A structured settlement must be established by:
- A suit or agreement for periodic payment of damages excludable from gross income under Internal Revenue Code Section 104(a)(2); or
- An agreement for the periodic payment of compensation under any workers’ compensation law excludable under Internal Revenue Code Section 104(a)(1); and
- The periodic payments must be of the character described in subparagraphs (A) and (B) of Internal Revenue Code Section 130(c)(2) and must be payable by a person who:
- Is a party to the suit or agreement or to a workers compensation claims; or
- By a person who has assumed the liability for such periodic payments under a Qualified Assignment in accordance with Internal Revenue Code Section 130.
J.G. Wentworth Forecast:
Consumers Expected to Increase Sales of Annuities They Hold in 2006, Continuing 3-Year Trend in Personal Finance
Bryn Mawr, PA, December 5, 2005-American consumers are expected to more than double the sales of existing tax-deferred annuities they hold in 2006, as the economy moves into what appears to be a transition phase in which liquidity will be valued over illiquid holdings, according to J.G. Wentworth. As a result, the company said, sales by consumers of existing annuities are likely to hit a three-year high next year even as the annuities market itself continues to grow.