How Do Companies Purchase Structured Settlement Payments?
How Structured Settlement Payments Work When the plaintiff in a civil lawsuit (pending or otherwise) agrees to settle in exchange for a large sum of money, the defendant may require that the settlement be “structured” into an annual payment schedule (a.k.a. an “annuity”). Rather than require the entire amount be paid up front, a structured settlement puts less strain on the defendant’s credit. Because a settlement counts as taxable income, spreading the payments over several tax years helps keep the plaintiff in a lower tax bracket, which lowers the total amount of taxes he will have to pay on it.
Related Questions
- Can I sell my structured settlement payments if my state does not have a law specifying how the sale of structured settlements should be handled?
- Can the plaintiff purchase an annuity for a structured settlement and still get the payments tax free?
- how are payments for construction services structured?
