What are the primary documents in a structured settlement?
The Settlement Agreement and Release, which extinguishes the tort liability (or workers’ compensation claim) in exchange usually for cash at the time of settlement and a promise of future payments, and the Qualified Assignment, which transfers the future payment liability to a third party under authority of IRC § 130. The qualified assignment document may or may not release the original obligor, depending on the form. It may also contain a pledge of a security interest in the qualified funding asset. If a lawsuit has been filed, the releasee likely will require a Dismissal with Prejudice. If one of the claimants is a minor or protected adult (incompetent), court approval of the settlement is usually required by the laws of the jurisdiction.
