by John Darer® CLU ChFC MSSC CeFT® RSP CLTC
Plaintiffs in litigation are in transition, having first suffered a loss, then gone through a long process of stops and starts as their case winds its way through the courts. A day will come as the case resolves at mediation, in a courthouse conference, in their lawyers office or in their living room, where the plaintiff has to make a decision that will have a major impact on their life. For some plaintiffs its an overwhelming decision. That is why it is important to begin considering this option in advance of settlement as part of a pre-settlement planning process.
For those plaintiffs who want a stable income as the bedrock of their financial security, a structured settlement is a good option. a structured settlement is like a 'job they can never be fired from" in many case from a life insurance company that has been in business since the 19th century or the early 20th century.
A Structured Settlement must be established as part of the settlement and details of the future periodic payments to you must be incorporated into the settlement documents as part of the consideration for the settlement. If you receive your settlement as a lump sum you cannot structure later because, according to IRS rules, this is considered either “constructive receipt” (if a release has been signed but you're waiting for the money and there are no other restrictions), or actual receipt (if the money has been paid).
The only exception to doing a structured settlement after a release has been signed is where there is a Qualified Settlement Fund, such as often found in the huge class action lawsuits against drug and product manufacturers where there are large numbers of plaintiffs. Rev. Proc. 93-94 permits a qualified assignment from a qualified settlement fund, thus enabling a structured settlement in a similar manner as if it were established at settlement.
A single claimant qualified settlement fund however, is of no help if you want a structured settlement because structured settlement annuity issuers and their qualified assignment companies generally do not participate in such cases at present.