What is Structured Settlement

Many people have been compensated for injuries sustained in an accident Until 1982, such compensation was usually accomplished by payment in a lump sum. A change in Federal law that year created what are now known as structured settlements, an alternative to lump-sum payments where the injured party receives monthly or annual payments over a period of time.

A structured settlement is a financial or insurance arrangement, including periodic payments, that a claimant accepts to resolve a personal injury tort claim or to compromise a statutory periodic payment obligation. Structured settlements were first utilized in Canada and the United States during the 1970s as an alternative to lump sum settlements. Structured settlements are now part of the statutory tort law of several common law countries including Australia, Canada, England and the United States. Although some uniformity exists, each of these countries has its own definitions, rules and standards for structured settlements. Structured settlements may include income tax and spendthrift requirements as well as benefits. Structured settlement payments are sometimes called “periodic payments.” A structured settlement incorporated into a trial judgment is called a “periodic payment judgment."