A structured settlement broker negotiates and facilitates payment schedules for monetary settlements awarded to individuals or families as a result of a lawsuit. Structured settlements offer tax benefits and a steady stream of income, with brokers responsible for setting payment schedules and determining ongoing medical costs. Only a few hundred qualified brokers are registered with the Department of Justice.
A structured settlement broker, also known as an annuity broker, is a professional who is specifically trained to negotiate and facilitate a payment schedule for a monetary settlement awarded to an individual or family as a result of a lawsuit. Typically, the lawsuit stems from a negligent injury on the part of the accused and an amount of compensation is agreed upon by both parties to settle the case without resorting to a jury trial. There are several benefits to the injured party in exercising this option, most notably the reduction in attorney fees associated with representing an attorney if the case went to trial. Furthermore, a structured settlement guarantees a steady stream of supplemental income over a period of years, often lasting a lifetime.
Structured settlement payments are treated differently than regular income under legislation passed by the US Congress in 1982 that declared these payments free of federal and state taxes. This is in direct contrast to a lump sum settlement, in which any income earned from investing these funds is subject to taxation. Technically defined as structured annuity payments, settlement funds are received and distributed by a third party, usually an insurance company.
There are also a number of benefits to be gained from leveraging the expertise of a structured settlement broker. First, this individual is responsible for setting the settlement payment schedule. Generally, payments are made monthly, but they can be made more frequently if the broker deems it necessary. In addition, a structured settlement broker can also arrange periodic increases or advances against settlement if unexpected expenses occur, such as the need for a new wheelchair.
One of the most important functions of the structured settlement broker is to determine the medical costs that the injured party will be burdened with on an ongoing basis, such as expenses associated with physical therapy, a home nurse, medications, etc. Additional costs are calculated along with the regular cost of living for the injured person and his family. These projections are particularly important for building a successful structured settlement, as they are necessary to establish the amount of annuity payments to be made and must also incorporate the increases in cost of living that are expected to occur over the life of the recipient.
Structured settlement brokers belong to an elite class of professionals. In fact, there are only a few hundred qualified structured settlement brokers in the US registered with the Department of Justice. The broker must be licensed or authorized to perform his duties on behalf of at least one insurance company and must be insured under an Errors and Omissions policy or equivalent. It should also be noted that an individual who has been convicted of a felony or licensed as an insurance dealer or agent is not eligible for consideration.
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