by John Darer® CLU ChFC MSSC RSP CLTC
A structured settlement is not an annuity. A structured settlement however, can be funded with an annuity.
What is a structured settlement?
A structured settlement is a way to settle a lawsuit where part of the damages are paid in the future in accordance with an agreed upon schedule that is negotiated by the settling parties.
How Are Structured Settlements Funded?
Structured settlements in personal injury or wrongful death claims or lawsuits are funded by way of a qualified funded asset [ see IRC 130(d)] that can either be an annuity, or an obligation of the United States government (treasury funded structured settlement).
The same options hold true for cases where there future payment represent taxable damages however, IRC 130(d) and the term " qualified funding asset" do not apply.
One frequently sees the misnomer that "a structured settlement is an annuity" on the Internet. Much of the misinformation about structured settlements is disseminated by paid content writers hired by companies seeking to buy people's valuable structured settlement assets at a discount, who do not hold licenses or have any meaningful experience in the field of structured settlements, or by the settlement purchasers themselves. If you want to confirm information about structured settlements only seek advice from someone with legitimate professional credentials that you have verified.