The US Congress enacted legislation which allows the future periodic payments of certain types of injury and sickness claims (or settlements) to be income tax-free. Structured Settlements are often the preferred solution used to preserve the tax-free status of the future periodic payments. By configuring the settlement of a claim with a Structured Settlement, the stakeholders (the Injured Person and the Defendant) receive significant benefits from the win-win opportunities created by the Structured Settlement. Notwithstanding the occurrence of an otherwise unfortunate injury event, Structured Settlements can at least provide those who have suffered with a feeling of safety and security.
Claims that do not qualify under Section 104(a)(2), 104(a)1, and 130(c) of the Internal Revenue Code can be Structured so as to provide accumulated interest as income tax-deferred.