How to Get Filthy Rich From a Structured Settlement

Legalese:

A structured settlement is a financial or insurance arrangement, including periodic payments, that a claimant accepts to resolve a personal injury tort claim or to compromise a statutory periodic payment obligation. Structured settlements were first utilized in Canada and the United States during the 1970s as an alternative to lump sum settlements. Structured settlements are now part of the statutory tort law of several common law countries including: Australia, Canada, England and the United States. Although some uniformity exists, each of these countries has its own definitions, rules and standards for structured settlement. Structured settlements may include income tax and spendthrift requirements as well as benefits. Structured settlement payments are sometimes called “periodic payments”. A structured settlement incorporated into a trial judgment is called a “periodic payment judgment”.

Translation:

If you live in a first world country, a structured settlement is your birthright.( )

So How Do I Get in on one of these Things?

You have several options:

Since you're not a sucker, we'll focus on the last two.

How to Get Hit by a Car

First thing's first. Getting hit by a car is serious business. Make sure you think things through. Point number one, and I cannot emphasisize this enough, pick your mark well. You don't want to get hit by some shmuck in a VW Bug from 1978. Make sure you target a rich guy that has a decent chance of paying out. As a general rule, if the car doesn't cost more than $300,000, you should pass and wait for something better.

Other considerations: You don't want to cripple yourself for life here, but this is definitely a case of no pain, no gain. If you don't crack at least a couple of ribs, you're going to be looking at a sub-10-million dollar settlement.Remember to keep your eye on the prize.

How to Get a Chronic Health Condition in a Public Building

This might be the best way to go. Chronic conditions are hot on the judicial circuit - asbestos and mesothelioma are buzzwords in the legal world of today. Juries understand what these things are and are inclined to grant you huge billion dollar settlements against faceless entities such as cities and corporations.

Basically you find to find a public building with exposed pipes, like the one in the picture above. These pipes are very commonly insulated with abestos and other nasty industrial compounds. Serreptitiously chew on these pipes for a couple of hours, then check with your doctor. If you're not on a short train to moneysville by the end of the day, you're doing something wrong and you should consider trying the car route, as outlined above.

Now Get a Lawyer

You want an angry-looking son of a bitch that looks something like this:

Make sure you get your lawyer to work entirely on contingency, so that he really wants to win. Remember that even if you only see 10% of the settlement you're seeking, 10% of a billion dollars is still a huge pile of money. And nothing is stopping you from getting a second settlement later. You're trying to build up a working relationship here.

 

Here are some reference notes for your lawyer:

Structured Settlements in the United States


The United States has enacted structured settlement laws and regulations at both the federal and state levels. Federal structured settlement laws include sections of the Federal Internal Revenue Code. State structured settlement laws include structured settlement protection statutes and periodic payment of judgment statutes. Medicaid and Medicare laws and regulations impact structured settlements. To preserve a claimant’s Medicare and Medicaid benefits, structured settlement payments may be incorporated into “Medicare Set Aside Arrangements” the “Special Needs Trusts”.

Definitions

The United States definition of “structured settlement” for Federal income taxation purposes, found in Internal Revenue Code Section 5891(c)(1), is an "arrangement" that meets the following requirements:

A structured settlement must be established by:
A suit or agreement for periodic payment of damages excludable from gross income under Internal Revenue Code Section 104(a)(2); or
An agreement for the periodic payment of compensation under any workers’ compensation law excludable under Internal Revenue Code Section 104(a)(1); and
The periodic payments must be of the character described in subparagraphs (A) and (B) of Internal Revenue Code Section 130(c)(2) and must be payable by a person who:
Is a party to the suit or agreement or to a workers' compensation claim; or
By a person who has assumed the liability for such periodic payments under a Qualified Assignment in accordance with Internal Revenue Code Section 130.

Legal Structure


The typical structured settlement arises and is structured as follows: An injured party (the claimant) settles a tort suit with the defendant (or its insurance carrier) pursuant to a settlement agreement that provides that, in exchange for the claimant's securing the dismissal of the lawsuit, the defendant (or, more commonly, its insurer) agrees to make a series of periodic payments over time. The insurer, a property/casualty insurance company, thus finds itself with a long-term payment obligation to the claimant. To fund this obligation, the property/casualty insurer generally takes one of two typical approaches: It either purchases an annuity from a life insurance company (an arrangement called a "buy and hold" case) or it assigns (or, more properly, delegates) its periodic payment obligation to a third party which in turn purchases an annuity (which arrangement is called an "assigned case").

In an unassigned case, the property/casualty insurer retains the periodic payment obligation and funds it by purchasing an annuity from a life insurance company, thereby offsetting its obligation with a matching asset. The payment stream purchased under the annuity matches exactly, in timing and amounts, the periodic payments agreed to in the settlement agreement. The property/casualty company owns the annuity and names the claimant as the payee under the annuity, thereby directing the annuity issuer to send payments directly to the claimant. If any of the periodic payments are life-contingent (i.e., the obligation to make a payment is contingent on someone continuing to be alive), then the claimant (or whoever is determined to be the measuring life) is named as the annuitant or measuring life under the annuity.

In an assigned case, the property/casualty company does not wish to retain the long-term periodic payment obligation on its books. Accordingly, the property/casualty insurer transfers the obligation, through a legal device called a qualified assignment, to a third party. The third party, called an assignment company, will require the property/casualty company to pay it an amount sufficient to enable it to buy an annuity that will fund its newly accepted periodic payment obligation. If the claimant consents to the transfer of the periodic payment obligation (either in the settlement agreement or, failing that, in a special form of qualified assignment known as a qualified assignment and release), the defendant and/or its property/casualty company has no further liability to make the periodic payments. This method of substituting the obliger is desirable for property/casualty companies that do not want to retain the periodic payment obligation on their books. Typically, an assignment company is an affiliate of the life insurance company from which the annuity is purchased.

An assignment is said to be "qualified" if it satisfies the criteria set forth in Internal Revenue Code Section 130 [1]. Qualification of the assignment is important to assignment companies because without it the amount they receive to induce them to accept periodic payment obligations would be considered income for federal income tax purposes. If an assignment qualifies under Section 130, however, the amount received is excluded from the income of the assignment company. This provision of the tax code was enacted to encourage assigned cases; without it, assignment companies would owe federal income taxes but would typically have no source from which to make the payments.

Structured Settlements FAQ

Can I use structured settlements as collateral for a loan?
Generally, the answer is no. The laws regarding structural settlements are designed to protect you from abuse, and the ability to use structured settlements as collateral would void that intended purpose. The payments however, can be claimed as a form of income so that if you want to buy a house, the payments represent the same financial ability that a take home paycheck of the same amount would provide.

Once in place, can structured settlements be traded back for a lump sum settlement?
No. You are given special tax treatment with regard to structured settlements' proceeds, and you cannot then take that in a lump sum fashion and invest it again.

Do I get interest on structured settlements?
No. The interest is a part of your structured settlement agreement and is therefore, tax-free. You do not then get interest on top of that. This however, is not to say that if you get your regular structured settlement payment and don’t spend all of it, that you cannot invest that remainder into another account and draw interest from that. That interest however, would be taxable.

I see ads for turning my cash payments into a lump sum. Is that like renegotiating the structured settlement?
On the surface, they may sound the same, but they are not. Structured settlements may not be paid out in any different fashion than initially agreed upon. What these ads talk about is selling the payments to them. They would receive the payments just as you would have over time.

What they do for you is to buy them for a far lesser amount than the gross proceeds than you would get over time. Remember though that they are taking certain risks that are attached to inflation, and they also need to make money in the transaction. Consequently, the amount that they give you will be substantially less than the face value of the structured settlement. Structured settlement buyouts ads sound like they are giving something nice. But this is real business and you most certainly lose money long-term in exchange for getting it sooner.

Depending upon the term of structured settlements and the company making the offer, you may lose 50% of the total amount to be paid to you over the long run. If you need to go this route, don’t settle for the first deal that comes your way. Talk to as many companies as you can find and let them know that you are checking many deals. They are not all the same.

You should also seek the advice of your attorney before signing anything or taking any payment from anyone. Structured settlements can have many different requirements and are subject to different laws. Before you enter into any agreement regarding your structured settlement, you want to make sure that you don’t put yourself in legal trouble or find that there are things that you are agreeing to that are not in your best interests.

Structured Settlements Are Tax Free

Structured settlements provide a steady stream of cash that is completely free of tax liability, both Federally and at the State level. This is completely different than lump sum settlements where investment proceeds made with them such as interest are subject to both Federal and State taxes.

Structured Settlements Are More Secure


Another benefit to structured settlements, especially for seniors and their adult children, is that there is added security in receiving smaller amounts of cash over time. Many seniors are the target of greedy people and a large pot of available cash can make them an even more attractive target to conmen, and subject them to permanent loss of assets if they are grossly mismanaged by a trustee.

A structured settlement means that there is a smaller pot of cash, which is not nearly as attractive to the conman. Even in the event that there is a financial loss, a structured settlement means that the loss is not as large, and there will be additional income coming in the months and years ahead.

Structured Settlements Are Worry Free


A third benefit to structured settlements is that the recipient doesn’t have to worry about investment strategies or not adequately planning for the future. Those who do not receive structured settlements must concern themselves with making sure that they do not overspend from an account that looks like it should last forever, and subject the entire award to financial risk.

A million dollar lump sum payment looks huge, and a few thousand here and ten thousand there don’t seem to make much of a dent when you look at them individually.

However, investment proceeds from lump sum settlements are not tax-free and attorneys must be paid out of whatever payments have been received. So if this million-dollar settlement is supposed to last for 25 years and a few unwise purchases are also made, it is not impossible to see this million-dollar lump sum settlement effectively turn into 20 thousand dollars per year.

This of course, is hardly a living income much less will pay for any medical expenses. Consequently, many people who opt for the lump sum payment will find themselves on public assistance in relatively short time.

Structured Settlements Are Cheaper


A fourth benefit to structured settlements is that they are often arrived at without the risk and time loss of going to court. For many reasons, defendants who believe they could have liability will make an offer of a structured settlement to minimize their costs.
Few people relish the idea of going to court including defendants because while there is the potential for coming out ahead, there is also the potential for coming out much farther behind than a negotiated structured settlement would give them. In most cases, settling a case with structured settlements can minimize the risk to both sides.

In most cases where the structured settlement is made out of court, attorney fees will be much cheaper than if litigation is required. If your attorney does not need to go to court, you can see their fees be reduced by as much as 8% of the total settlement. On a one million dollar settlement, that means about $80,000 more for you.

This guide provided for entertainment purposes only.

If you do any of this stuff you're an idiot and deserve to be culled from the gene pool.