While structured settlements are primarily considered for personal injury and wrongful death matters, there is an often-overlooked benefit to using the structured settlement concept in matters where such an injury or fatality is absent. Of course, non-injury settlements are fully taxable in the year in which the matter is settled, triggering frustration on behalf of the claimant over the net recovery they ultimately receive.
Structuring all or a portion of such a settlement allows the claimant the opportunity to avoid immediate tax-liabilities in the year of settlement. Instead, the claimant can design an annuity payment schedule to meet their unique needs, allowing the proceeds to grow in a tax-deferred manner, paying a tax obligation in the future year(s) when payment is received.
Just as is the case in a qualified (injury) settlement, the defendant must purchase the non-qualified structure at the time of settlement on behalf of the claimant.
Examples of Non-qualified opportunities include:
- False Arrest/ Wrongful Incarceration
- Breach of Contract
- Civil Rights
- Sexual Harassment
- Punitive Damages
- Property Damages
- Environmental Claims
- Psychological/ Emotional Distress
- Coverage Buyouts
- Property Disputes
- E&O/D&O claims, and
- Estate Distributions (some, not all)