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Structured Settlements involve the payment of damages over time to an injured party. They are a proven, effective solution for the needs of personal injury claimants. Claims professionals, plaintiff attorneys, judges and defense attorneys advocate the use of structured settlements because they can effectively meet a claimant’s needs for security as well as provide more benefits over time than a single, lump-sum settlement.

Christopher Seeley is a nationally recognized expert in representing claimants in structured settlement negotiations. Seeley Capital Management has been brought in by top law firms to represent their clients in large settlements from high profile cases. We ensure the claimants needs are addressed in structured settlements by providing:

Strong representation from a proven expert.
Independent advice and assessment of the true value of the defendant’s offer.
Payment structure designed to meet the claimant’s needs.
Full-services consultation and in-person mediation.

Seeley Capital Management is committed to ensuring your structured settlement funds are safe and secure. We only work with companies rated A or better when securing your settlement annuity. At Seeley Investments, we see it as our responsibility to ensure that our clients’ monies are well invested and well protected. That includes making sure that each of our structured settlements is placed with a creditworthy institution.

FAQ

What is a structured settlement?
Why are structured settlements necessary?
What is the process of creating a structured settlement?
Who should consider a structured settlement?
What are the benefits of a structured settlement for the plaintiff?
What are the benefits of a structured settlement for the defendant/insurer?
What is a qualified assignment?
What other situations utilize periodic payments?
How do federal tax laws make structured settlements beneficial?
What are special needs funds?
What is a 468(B) Qualified Settlement?

What is a Structured Settlement?

A structured settlement is a voluntary agreement reached between parties under which the claimant receives damages in the form of a stream of periodic payments.

Payment amounts and frequency can be tailored to meet each claimant’s unique needs. This might include steady payments in equal amounts or future lump sums. Each plan is based on individual expectations about future expenses such as medical costs, higher education, and housing.

Why are structured settlements necessary?

Previously, plaintiffs were awarded large sums of money to cover a lifetime of medical and living expenses. This type of payment placed many families in the position of handling large sums of money which was intended to last for a large period of time. As a result, many injured parties were exposed to the dangers of mishandled and poorly invested money, leaving little to nothing to cover future medical expenses. Structured settlements are intended to provide a safety net by placing large settlements into a secure investment fund that provides a steady stream of income over a defined period of time.

What is the process of creating a structured settlement?

The defendant agrees with the victim on a stream of periodic damage payments. This agreement will represent the victim’s particular medical care and basic living and family expenses. The defendant then assigns the periodic payment obligation to a life insurance company, which funds the victim’s damage payments with an annuity. Sometimes, the defendant retains the periodic payment liability and purchases an annuity to fund payments to the victim.

An alternative is a trust fund which invests only in United States Treasury obligations. These trusts add the safety of investment in obligations issued by the U.S. Government.

Who should consider a structured settlement?

Temporarily or permanently disabled plaintiffs or claimants.
Guardianship cases, including minors or incompetents.
Wrongful death cases where the surviving spouse and/or children need monthly or annual income.
Severe injury, especially with long-term needs for medical care, living expenses and support of family.
Any injured party who desires a secure long-term plan.

What are the benefits of a structured settlement for the plaintiff?

The claimant receives compensation when it is needed rather than receiving a lump sum. This payment agreement will provide a plan for future medical and other needs.
Payment is received from two of the safest types of funding assets available: life insurance annuities or U.S. Treasuries.
Structured settlements provide an efficient means of resolving claims and avoiding the expense and delay of a trial.
A structured settlement can:
1. Relieve the financial pressures of ongoing medical expenses and basic living needs,
2. Meet long-term rehabilitation or permanent care facility expenses,
3. Provide for the future costs of college funds, retirement, down payment on a home, or mortgage payment, and
4. Provide long-term financial security.

What are the benefits of a structured settlement for the defendant/insurer?

Structured settlements can:

Create quicker and more creative settlements, including assistance by structured settlement brokers with negotiations, life care planning, and settlement documents.
Reduce litigation costs.
Avoidance of the risk and expense of a jury trial.
The ability to assign future liability through a qualified assignment.

What is a qualified assignment?

The defendant (or his/her liability insurance company) may transfer the cost of future damage payments to a third party by means of a qualified assignment to a financially secure and experienced institution. The assignment provides the claimant with strong financial security, and the defendant can close its books on the case.

This process relieves the defendant of further responsibility for the payments and transfers the administration and record-keeping responsibilities. After the initial payment is paid to the assignee, it then takes care of making specified damage payments to the injured party.

What other situations utilize periodic payments?

Property Loss Claims: Periodic payments may be an excellent means of satisfying the claims of homeowner groups or others seeking reimbursement for construction defects.

Environmental Claims and Pollution Liability: From the Superfund-designated sites to the thousands of potential municipal and local sites, there is a need for clean-up funding. When determination has been made that liability for pollution exists, and the terms for clean-up are established and quantified, future costs can be funded with an annuity or similar agreement offered by a life insurance company.
NOTE: The tax treatment of these alternative uses of structures is not the same as for the physical injury cases. A qualified tax expert should be consulted before any decisions or annuity purchases are made.

How do federal tax laws make structured settlements beneficial?

In The Periodic Payment Settlement Act of 1982 (P.L. No. 97-473), Congress adopted specific tax rules to encourage the use of structured settlements to resolve physical injury tort actions.

Section 104(a)(2) of the Internal Revenue Code was amended to clarify that the full amount of the periodic payments constitutes damages, which are tax-free to the victim, unlike the investment earnings on a lump sum, which are fully taxable.

Congress adopted Code section 130 to provide a mechanism under which badly injured tort victims suffering harm well into the future could receive the stream of damage payments from a financially secure and experienced institution through the qualified assignment process described above.

In order to protect the public, Congress specified in Section 130 the requirements to establish a qualified assignment:

The assignee assumes the liability from a party to the suit or agreement
The payments are fixed and determinable
The payments cannot be accelerated, deferred, increased or decreased, or otherwise changed after the agreement is reached
The assignee’s obligation is no greater than the obligation of the assignor
The periodic payments are excludable from the recipient’s gross income under Section 104(a)(2)
The injury must be a physical sickness or injury
A qualified funding asset (an annuity or U.S. Government obligation) must be used to fund the periodic damage payments

What are special needs trusts?

The government established rules allowing assets to be held in trust for a recipient of SSI and Medicaid, as long as certain parameters are met. These trusts, called Supplemental Needs or Special Needs Trusts (SNTs), preserve government benefit eligibility and leave assets that will meet the supplemental needs of the person with a disability(those that go beyond food, shelter, and clothing) and the medical and long term supports and services of Medicaid. The SNT can fund those additional needs. In fact, the SNT must be designed specifically to supplement, not supplant, government benefits. Monies are sent directly to third parties involving medical care and not to directly to the claimant.

The SNT can be used for various expenditures such as:

Out-of-pocket medical and dental expenses
Eyeglasses
Annual independent check-ups
Transportation (including vehicle purchase)
Maintenance of vehicles
Insurance (including payment of premiums)
Rehabilitation
Essential dietary needs
Purchase materials for a hobby or recreation activity
Purchase a computer or electronic equipment
Pay for trips or vacations, pay for entertainment like going to a movie, a ballgame, concert, etc.
Purchase of goods and services that add pleasure and quality to life: videos, furniture, or a television
Athletic training or competitions
Personal care attendant or escort

What is a 468(B) Qualified Settlement?

The Designated Settlement Fund concept was created in 1986 under Section 468B of the IRC to enable defendants to deduct amounts paid to settle multi-plaintiff lawsuits before it was agreed how these amounts would be allocated. In these cases, the defendants and plaintiffs had agreed how much the defendant or their insurers would pay to settle the cases collectively, but not individually. The defendant benefits by being able to accelerate its deduction to the date that the settlement amount paid is to the Designated Settlement Fund (DSF), rather than when each plaintiff is paid.

In 1993, the Treasury issued regulations for the “Qualified Settlement Fund” or QSF, 26 CFR 1.468B-1. When a QSF is established, it assumes the tort liability from the original party before the settlement is made, at which time the original party is dismissed with prejudice. The QSF then stands in the shoes of the original party with the Plaintiff. The QSF may enter into a Settlement Agreement with the plaintiff(s) and can enter into a Qualified Assignment, pursuant to Rev. Proc. 93-34″.

Plaintiff attorneys now favor these funding agreements because they can then have greater control of the settlement funds while determining appropriate distribution amounts to their clients. Obtaining the money early eliminates risk of insolvency of the defendant or its insurer and allows time for an agreement on allocation and negotiation of lien claims. Moreover, Plaintiffs have more flexibility in making appropriate choices for distribution of the settlement in cash, in structured settlements that can provide a secure income stream, or in Supplemental Needs Trusts to preserve Medicaid and Supplemental Security Income (SSI), and can benefit from interest accumulation of funds, in the QSF, if the distributions are not timely.