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Structured Settlements: Plaintiffs
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Structured settlements and trusts with spendthrift provisions (sometimes referred to as "Settlement Preservation Trusts") individually or in combination can be helpful to protect plaintiffs in personal injury law suits. Even plaintiffs in labor and other types of disputes can benefit from a non-qualified form of structure called a non-qualified assignment.
Insurance Companies and Self-Insureds take varying approaches to structured settlements. Many allow the plaintiff's attorney to choose the structured settlement broker. Others enlist their own broker who works with the plaintiff's broker or on behalf of both parties if the plaintiff does not enlist a broker. Still others attempt to completely control the structured settlement process and profit from the annuity placement. Plaintiff attorneys use various approaches to deal with companies that wish to dictate the process by which their client's financial future is determined.
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A structured settlement can protect a plaintiff from having settlement funds dissipated, when they are necessary to pay for future care or needs. Sometimes a structured settlement can help protect a plaintiff from himself - some people simply aren't good with money, or can't say no to relatives who want to "share the wealth", and even a large settlement can be rapidly exhausted. Minors may benefit from a structured settlement as well, such as a settlement which provides for certain costs during their youth, an additional disbursement to pay for college or other educational expenses, and then one or more disbursements in adulthood. An injured person who has long-term special needs may benefit from having periodic lump sums with which to purchase medical equipment or modified vehicles.
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Each year about 15,000 new structured settlement transactions are originated in the United States. This ever-growing number points to an estimated cash flow of $25 billion. Plaintiffs receiving a structured settlement can benefit from the sale of their stream of payments by receiving a lump-sum of cash.
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Financial planners, financial advisers, other Investment representatives, plaintiff attorneys or even plaintiffs themselves occasionally raise questions about the rate of return on structured settlement annuities compared to other investment alternatives. It is important to keep in mind that these structured settlement payments, pursuant to IRC Sec 104(a)(1) or 104(a)(2), are totally free of any Federal, State or City income taxation. On the other hand the investment return on the settlement proceeds received in cash and outside of a structured settlement will generally be taxable as to income, capital gains, or both.
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G&L works with workers compensation carriers, self-insured corporations, third-party administrators, plaintiff attorneys, and structured settlement brokers. The company was founded in 1999 and counts life carriers such as AIG, CNA, The Hartford, and Travelers among its early clients. Bradenton, Fla.-based G&L is currently expanding, and is recruiting account managers for several of its regional offices.
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