1. Qualified Structured Settlement Payments
- Generally qualified structured settlement payments can be equal or unequal
- There are many different types of structured settlement payments to choose from. See Types of Structured Settlement Payments | Your Structured Settlement Payment Options (4structures.com)
- You can combine different types of cash flows to suit your needs, in a single contract if you wish.
2. Non Qualified Structured Settlement Payments
- IRC Section 72(u)(1) "The Non Natural Person Rule"
- The so called "Non Natural Person Rule" provides that "if an annuity contract is held by a person who is not a natural person, then such contract shall not be treated as an annuity contract for purposes of subtitle A (other than subchapter L) and the income on the contract for any taxable year of the policyholder shall be treated as ordinary income received or accrued by the owner during such taxable year
- As an exception to the " non-natural person rule, payments must be substantially equal within the meaning of IRC 72(u)(4).
IRC 72(u)(4) Definition of Immediate Annuity
For purposes of this subsection, the term “immediate annuity” means an annuity—
Which is purchased with a single premium or annuity consideration,
The annuity starting date (as defined in subsection (c)(4)) of which commences no later than 1 year from the date of the purchase of the annuity, and
Which provides for a series of substantially equal periodic payments (to be made not less frequently than annually) during the annuity period.
In the structured settlement space, this applies where a domestic (US) non qualified assignment is funded with an annuity, where the annuity is owned by a non-natural person.
AGL Assignments, LLC is the non qualified assignment company for Corebridge subsidiaries American General Life Insurance Company and United States Life Insurance Company in the City of New York (NY cases) and is registered in Delaware.
MetLife Assignment Company, Inc. is an assignment company, registered in Delaware, that handles both qualified and non qualified assignments where Metropolitan Tower Life annuity is the issuer of an annuity owned by MetLife Assignment Company, Inc.
Are There Any Workarounds to IRC 72(u)?
Non Qualified Assignments Where Funding Asset is Not an Annuity
AGL Assignments, LLC is the non qualified assignment company for Corebridge subsidiaries American General Life Insurance Company and United States Life Insurance Company in the City of New York (NY cases). A non qualified structured settlement solution is available in all states except Pennsylvania, using a Funding Agreement instead of an annuity. The Funding Agreement is not an annuity.
Reinsurance Structured Settlements
Use of Non-Domestic Assignment Companies
- Structured Assignments, SCC Barbados
- Havelet Assignment Company -Barbados
- Dominion Assignment (Switzerland) for Independent Life's iStructure Dominion Assignment Company - Independent Life
- Kenmare Assignments (Ireland)
Last updated November 13, 2023