Structured settlement payments are the amounts received by the individual as a result of the court ordered liability to be compensated. These amounts are considered as tax free and received on specific dates over a period of time. There are other matters that need to be understood regarding structured settlement payments, some of which are as follows:
a) Structured settlement payments are personal assets and cannot be transferred, assigned or declined unilaterally by the recipient. This means, the person so named in the structured settlement is the only person allowed to receive it, without running afoul of the law.
b) Structured settlement payments are obligations that cannot be avoided or refused by the one with liability. Failure in its compliance would result in both criminal and civil liability over and above the original obligation.
c) Structured settlement payments are paid out in installments over a period of time. This schedule is to be strictly applied and observed. Failing to comply with these requirements would mean violation of both state and federal laws.
d) Structured settlement payments are considered as assets in determining credit but cannot be used as securities for a loan. This means, the payouts are considered as an income asset and not a material asset that can eventually be sold off or exchanged for value through a loan.
e) Structured settlement payments need to be properly accounted in terms of payouts and receipts. These must be submitted to the courts in order for the proper accounting of these obligations.
The Intricacies of Structured Settlement Payments
There are certain requirements that need to be observed in the receipt of structured settlement payments. These are as follows:
- The structured settlement payments must observe the schedule that has been stamped as approved by the court with jurisdiction over the original case.
- The structured settlement payments must be paid out in the amounts as set forth by the compromise agreement duly approved by the court.
- The structured settlement payments must be received either personally or sent to the indicated address in the agreement.
- The structured settlement payments must be confirmed as received by the named party in order to be properly compliant with the court orders.
This obligation though is not perpetual in nature. This means, upon the completion of the payment of the settlement amount, there are steps that need to be undertaken by the parties to the transaction. These are the steps are as follows:
a) Upon completion of the payments, a full accounting must be done by all parties. These include the recipient, the annuity company and the payor of the obligation. This accounting is then submitted to the court for confirmation.
b) The court then issues an order that confirms the completion of the structured settlement payments and the closure of the matter.
c) The completion would also mean a stoppage of the payments receivable and this specified date must be observed without fail. Extension, for no valid reason, would be deemed as unjust enrichment on the part of the recipient and damage and/or loss to the payor.
Structured settlement payments is an organic process of completion of the obligation as mandated by the court. Compliance with the precepts is but one step to fulfill the obligations mandated for the structured settlement agreement in the long run.