Structured Settlement

The United States Congress has enacted a federal statute to protect parties involved in structured settlement sales.

Where is this law?

This law is 26 U.S.C. § 5891, which is the citation for Title 26, Subtitle E, Chapter 55, Section 5891 of the United States Code (2008). Title 26 is the Internal Revenue Code (tax code). Subtitle E covers alcohol, tobacco, and certain other excise taxes. Chapter 55 covers structured settlement factoring transactions.

What does the law do?

This law imposes a 40% tax on purchasers of structured settlements if they don’t adhere to certain conditions such as getting court approval of the transaction, obtaining a court declaration that the transaction is in the seller’s best interest, and following state law.

What specifically does the law say?

Here is the exact language of the law: Read the rest of this entry »

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 Read the rest of this entry »