Structured Settlement Agreement

STRUCTURED SETTLEMENT AGREEMENT

This Structured Settlement Agreement ("Agreement") is entered into as of [DATE] ("Effective Date") by and among:

CLAIMANT/PAYEE:
Name: _______________________________________________
Date of Birth: ________________________________________
Social Security Number: XXX-XX-__________ (last 4 digits only)
Address: ____________________________________________
City/State/ZIP: _______________________________________
("Claimant" or "Payee")

DEFENDANT/OBLIGOR:
Name: _______________________________________________
Address: ____________________________________________
City/State/ZIP: _______________________________________
("Defendant")

INSURER (Casualty Insurance Company):
Name: _______________________________________________
Address: ____________________________________________
Policy Number: _______________________________________
Claim Number: _______________________________________
("Insurer")

ASSIGNMENT COMPANY (Qualified Assignee):
Name: _______________________________________________
Address: ____________________________________________
("Assignee")

ANNUITY ISSUER (Life Insurance Company):
Name: _______________________________________________
Address: ____________________________________________
("Annuity Issuer")

RECITALS

A. A claim has been made by Claimant against Defendant arising from personal physical injuries or physical sickness sustained on or about [DATE OF INCIDENT];

B. The claim is:
☐ Not in litigation
☐ The subject of litigation: Case No. ____________ in [COURT]

C. The Parties wish to settle all claims through a combination of immediate cash payments and periodic payments over time;

D. The periodic payments are intended to qualify as damages on account of personal physical injuries or physical sickness under Internal Revenue Code Section 104(a)(2), excludable from Claimant's gross income;

E. The Defendant and/or Insurer intends to make a "qualified assignment" of the periodic payment obligation to the Assignee pursuant to Internal Revenue Code Section 130;

F. The Assignee will fund its obligation by purchasing an annuity from the Annuity Issuer;

NOW, THEREFORE, in consideration of the mutual covenants set forth herein, the Parties agree as follows:

ARTICLE 1: SETTLEMENT CONSIDERATION

1.1 Total Settlement Value

The total settlement value consists of:

1.2 Immediate Cash Payment

Defendant/Insurer shall pay Claimant an immediate cash payment of:

$_______________ ("Immediate Payment")

Allocation:

1.3 Payment of Immediate Amount

The Immediate Payment shall be made within [NUMBER] days of the Effective Date by:
☐ Check
☐ Wire transfer
☐ Multiple checks as specified above

ARTICLE 2: PERIODIC PAYMENTS

2.1 Description of Periodic Payments

Claimant shall receive periodic payments as follows:

Payment Schedule:

2.2 Detailed Payment Terms

Monthly Payments:
- Amount: $_____________ per month
- First Payment Date: _________________________________
- Payment Mode: ☐ 1st of month ☐ 15th of month ☐ Other: _____
- Duration: ☐ _____ years certain ☐ Life with _____ years certain ☐ Life only
- COLA (Cost of Living Adjustment): ☐ None ☐ ____% annual increase

Annual Lump Sums:

Life Contingent Payments:
☐ Not applicable
☐ $_____________ per [month/year], payable for life, beginning [DATE]
- Minimum guaranteed period: _____ years
- If Claimant dies before end of guaranteed period, remaining payments go to: _______________

2.3 Total Guaranteed Value

The total guaranteed value of all periodic payments is: $_______________

(This is the minimum amount Claimant or Claimant's beneficiary will receive regardless of when Claimant dies)

2.4 Rated Age (if applicable)

☐ Not applicable (Claimant has standard life expectancy)
☐ Applicable: Based on Claimant's medical condition, the annuity has been underwritten using a rated age of [___] years, which is [___] years [older/younger] than Claimant's actual age.

ARTICLE 3: QUALIFIED ASSIGNMENT

3.1 Assignment of Periodic Payment Obligation

Defendant and Insurer hereby assign to the Assignee all rights, obligations, and liabilities to make the periodic payments described in Article 2.

3.2 Claimant's Consent

Claimant hereby consents to the assignment of the periodic payment obligation to the Assignee and agrees that:
(a) The Assignee shall be solely responsible for making the periodic payments;
(b) Defendant and Insurer shall have no further liability for the periodic payments;
(c) Claimant shall look solely to the Assignee for payment of the periodic payments.

3.3 IRC Section 130 Requirements

This assignment is intended to qualify as a "qualified assignment" under Internal Revenue Code Section 130, which requires:
(a) The liability to make periodic payments arises from physical injury or physical sickness;
(b) The periodic payments are fixed and determinable as to amount and time;
(c) The periodic payments cannot be accelerated, deferred, increased, or decreased;
(d) The Assignee assumes liability from a person who was a party to the suit or agreement;
(e) The periodic payments are excludable from Claimant's gross income under IRC Section 104(a)(2).

3.4 Funding Asset

The Assignee shall fund its obligation to make the periodic payments by purchasing an annuity from the Annuity Issuer. The annuity shall be the Assignee's sole funding asset for this obligation.

3.5 Release of Defendant and Insurer

Upon consummation of the qualified assignment and the Assignee's assumption of liability:
(a) Defendant and Insurer shall be fully and finally released from the periodic payment obligation;
(b) Claimant shall have no further recourse against Defendant or Insurer for the periodic payments;
(c) Claimant's sole remedy for non-payment of periodic payments shall be against the Assignee.

ARTICLE 4: ANNUITY PROVISIONS

4.1 Annuity Details

Annuity Issuer: ____________________________________
A.M. Best Rating: __________________________________
S&P Rating: ______________________________________
Annuity Contract Number: ___________________________
Cost of Annuity: $__________________________________

4.2 Owner and Annuitant

Contract Owner: The Assignee
Annuitant: The Claimant
Payee: The Claimant (or successor payee as designated)

4.3 Beneficiary Designation

In the event of Claimant's death before all guaranteed payments have been made:

Primary Beneficiary:
Name: _____________________________________________
Relationship: _______________________________________
Date of Birth: _______________________________________
Social Security Number: _______________________________

Contingent Beneficiary:
Name: _____________________________________________
Relationship: _______________________________________
Date of Birth: _______________________________________
Social Security Number: _______________________________

4.4 Change of Beneficiary

Claimant may change the beneficiary designation at any time by providing written notice to the Assignee and Annuity Issuer in accordance with their procedures.

4.5 Death of Claimant

Upon Claimant's death:
(a) All remaining guaranteed payments shall be paid to the designated beneficiary;
(b) Any life-contingent-only payments shall cease;
(c) The beneficiary must provide a certified death certificate and complete claim forms.

ARTICLE 5: TAX TREATMENT

5.1 IRC Section 104(a)(2) Exclusion

The periodic payments are intended to qualify as "damages received on account of personal physical injuries or physical sickness" under IRC Section 104(a)(2) and shall be excludable from Claimant's gross income.

5.2 No Tax Advice

Claimant acknowledges that:
(a) None of the other Parties has provided tax advice to Claimant;
(b) Claimant has been advised to consult with independent tax counsel;
(c) Claimant is solely responsible for any taxes owed on any payment.

5.3 Tax Indemnification

Claimant agrees to indemnify and hold harmless Defendant, Insurer, Assignee, and Annuity Issuer from any tax liability, penalties, or interest arising from the tax treatment of the settlement payments, except to the extent caused by the actions of such parties.

ARTICLE 6: NON-ASSIGNMENT AND ANTI-ALIENATION

6.1 Non-Assignability

IMPORTANT: READ CAREFULLY

Claimant acknowledges and agrees that:

(a) The periodic payments are NOT assignable, transferable, or alienable, and Claimant cannot sell, assign, pledge, hypothecate, or otherwise transfer or encumber any right to receive periodic payments;

(b) Under IRC Section 130(c), the periodic payments must be "fixed and determinable as to amount and time" and cannot be accelerated, deferred, increased, or decreased by the recipient;

(c) Any attempt to assign, sell, or transfer the periodic payments would jeopardize the tax-free status of the payments under IRC Section 104(a)(2);

(d) Claimant has been advised of these restrictions and voluntarily accepts them in exchange for the tax benefits.

6.2 Structured Settlement Protection Act

Claimant is advised that most states have enacted Structured Settlement Protection Acts that:
(a) Require court approval before any transfer of periodic payment rights;
(b) Require independent professional advice before any transfer;
(c) Are designed to protect Claimant from improvident transfers.

6.3 Factoring Transactions

Claimant acknowledges that "factoring" or selling future periodic payments typically results in:
(a) Receiving substantially less than the present value of the payments;
(b) Potential tax consequences;
(c) Loss of the security and guaranteed income stream.

ARTICLE 7: RELEASE OF CLAIMS

7.1 Release

In consideration of the settlement payments, Claimant, on behalf of Claimant and Claimant's heirs, executors, administrators, successors, and assigns, hereby fully and forever releases and discharges:

• Defendant and Defendant's officers, directors, employees, agents, insurers, successors, and assigns;
• Insurer and Insurer's officers, directors, employees, agents, successors, and assigns;

from any and all claims, demands, damages, actions, causes of action, and liabilities of any kind whatsoever, whether known or unknown, arising out of or relating to the incident described in the Recitals.

7.2 Waiver of Unknown Claims

Claimant expressly waives all rights under California Civil Code Section 1542 and similar provisions of any jurisdiction:

"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY."

Claimant's Initials: _______

7.3 No Admission

This Agreement is a compromise of disputed claims and shall not be construed as an admission of liability.

ARTICLE 8: LIENS AND SUBROGATION

8.1 Medicare/Medicaid

☐ Claimant is NOT a Medicare/Medicaid beneficiary
☐ Claimant IS a Medicare/Medicaid beneficiary

Medicare conditional payments/lien amount: $_______________
Medicaid lien amount: $_______________

Claimant agrees to satisfy all Medicare/Medicaid liens from the settlement proceeds and to indemnify Defendant, Insurer, Assignee, and Annuity Issuer from any such claims.

8.2 Medicare Set-Aside

☐ Not required
☐ A Medicare Set-Aside ("MSA") of $_____________ has been established

If an MSA is required:
(a) The MSA shall be funded as follows: __________________
(b) The MSA shall be administered by: ___________________
(c) Claimant shall comply with all CMS requirements for MSA administration.

8.3 Other Liens

All other liens and subrogation claims shall be satisfied from the immediate cash payment. Claimant agrees to indemnify all other parties from such claims.

ARTICLE 9: REPRESENTATIONS AND WARRANTIES

9.1 Claimant Representations

Claimant represents and warrants:

(a) Claimant has full legal capacity to enter into this Agreement;

(b) The injuries giving rise to this settlement are personal physical injuries or physical sickness;

(c) Claimant understands that the periodic payments cannot be accelerated, deferred, increased, decreased, sold, or assigned;

(d) Claimant has had the opportunity to consult with legal and financial advisors;

(e) Claimant voluntarily chooses to receive periodic payments rather than a lump sum;

(f) Claimant is not currently in bankruptcy and has no pending bankruptcy petition;

(g) Claimant has disclosed all liens and subrogation claims;

(h) Claimant is signing this Agreement voluntarily and without duress.

9.2 Annuity Issuer Representations

Annuity Issuer represents and warrants that:
(a) It is duly licensed to issue annuities in the state of Claimant's residence;
(b) It meets all financial solvency requirements;
(c) The annuity will be issued in accordance with the terms of this Agreement.

ARTICLE 10: DISMISSAL OF PENDING LITIGATION

☐ Not applicable (no pending litigation)

☐ Within [NUMBER] days of the Effective Date, Claimant shall file a dismissal with prejudice of the action captioned ______________, Case No. ______________, together with a Notice of Settlement.

ARTICLE 11: GENERAL PROVISIONS

11.1 Governing Law

This Agreement shall be governed by the laws of the State of [STATE] and applicable federal tax law.

11.2 Entire Agreement

This Agreement constitutes the entire agreement among the Parties.

11.3 Amendments

This Agreement may not be amended except by written instrument signed by all Parties.

11.4 Severability

If any provision is held invalid, the remaining provisions shall remain in full force.

11.5 Counterparts

This Agreement may be executed in counterparts.

11.6 Electronic Signatures

Electronic signatures are valid and binding.

11.7 Notices

All notices shall be in writing and sent to the addresses above.

ARTICLE 12: EXECUTION

CLAIMANT

I acknowledge that:
- I have read and understand this Agreement
- I have had the opportunity to consult with legal and financial advisors
- I understand the periodic payments cannot be sold, assigned, or accelerated
- I voluntarily choose periodic payments over a lump sum
- I am signing this Agreement freely and without duress

Signature: __________________________________________
Printed Name: _______________________________________
Date: ______________________________________________

CLAIMANT'S ATTORNEY

Signature: __________________________________________
Printed Name: _______________________________________
Firm: ______________________________________________
Date: ______________________________________________

DEFENDANT

Signature: __________________________________________
Printed Name: _______________________________________
Title: _____________________________________________
Date: ______________________________________________

INSURER

Signature: __________________________________________
Printed Name: _______________________________________
Title: _____________________________________________
Company: __________________________________________
Date: ______________________________________________

ASSIGNEE

Signature: __________________________________________
Printed Name: _______________________________________
Title: _____________________________________________
Company: __________________________________________
Date: ______________________________________________

ANNUITY ISSUER

Signature: __________________________________________
Printed Name: _______________________________________
Title: _____________________________________________
Company: __________________________________________
Date: ______________________________________________

EXHIBIT A: ANNUITY ILLUSTRATION

[Attach detailed annuity illustration from Annuity Issuer showing all payment amounts and dates]

EXHIBIT B: BENEFICIARY DESIGNATION FORM

[Attach Annuity Issuer's beneficiary designation form]

EXHIBIT C: QUALIFIED ASSIGNMENT AGREEMENT

[Attach formal Qualified Assignment Agreement between Defendant/Insurer and Assignee]

This template is provided for informational purposes only and does not constitute legal advice. Structured settlements involve complex tax and financial considerations. Consult with qualified legal and financial professionals before use.