Structured Settlements

Area of Specialization

A structured settlement is a financial arrangement in which a portion of a settlement is received by the claimant in the form of periodic payments. By accepting payments over time, the claimant can design a guaranteed, tax-free, predictable stream of income at a competitive rate of return, specifically tailored to meet their personal needs. These payments are often used to provide for future wage replacement, ongoing medical care, education or rehabilitation, and basic living expenses, and to give the claimant piece of mind that they will not outlive their savings.

The plan design, and the frequency and size of each periodic payment, are determined exclusively by the claimant, providing the flexibility to match these payments to future needs and goals as closely as possible.

Kipnes Crowley Group LLC


Studies have shown that claimants who receive large sums of money typically squander the vast majority of that money in the first five years. Recognizing the need to protect these claimants, in 1982, Congress passed the Periodic Payment Settlement Act, which encourages the use of structured settlement annuities by making them tax-free. Since that time, federal and state governments have enacted a variety of measures to further promote the use of structured settlements. In fact, a number of states, including New York, require that certain verdicts involving future damages be paid in the form of a structured settlement annuity.

Put another way, an investor paying taxes and fees would have to generate a considerably higher rate of return just to match the real return on an annuity. To achieve this higher return, the investor would almost certainly have to take on significant market risk, whereas a structured settlement annuity involves no market risk.

A structured settlement is available in any personal injury case and can be beneficial to the claimant in any case where all of the settlement monies are not needed to satisfy immediate expenses. The following types of claimants often find a structured settlement to be especially advantageous:

In order to remain tax-free, the structured settlement must be implemented at the time of settlement. If the claimant were to receive the settlement monies and then purchase the exact same annuity after settlement, the annuity would be taxable. For this reason, structured settlement annuities are purchased by the defendant (or their insurance carrier) for the benefit of the plaintiff. In conjunction with this transaction, the defendant will almost always execute a qualified assignment pursuant to Internal Revenue Code §130, which allows the defendant to settle the matter with finality, despite the ongoing periodic payments to the claimant.