What Other Federal Tax Rules Govern The Use Of Structured Settlements?
In order to protect the public, Congress specified in Section 130 the requirements to establish a qualified assignment: • The assignee assumes the liability from the defendant; • Both the victim (and his/her attorney) and the defendant agree that the payment schedule cannot be “accelerated, deferred, increased or decreased”; • The payment stream may be excluded from the recipient`s gross income for tax purposes; • The injury must be a physical sickness or injury; and • A highly secure funding asset (such as an annuity or U.S. Government obligation) must be used to fund the payments.
