A structured settlement company, structured settlement broker or a personal injury lawyer in your local jurisdiction will be able to give you more information on how to get cash from structured settlement compensation.
Whether you get your personal injury compensation settlement structured or awarded as a lump sum will depend to a large extent upon where you live. The relevant laws are local and change from one jurisdiction to another.
Structured Settlement Legislation Country By Country
USA
In the USA both federal and state law govern the awarding of structured settlements, the federal law covering taxation and medical insurance aspects. The enabling legislation, the Periodic Payment Settlement Act (Public Law 97-473), was introduced in 1982, since when the use of structured settlement annuity payments has for the most part been encouraged. Periodic payments are tax-free under Sections 104(a)(1) and (2) of the Internal Revenue Code.
The Periodic Payment Settlement Act authorizes "Qualified Assignment" of a defendant's obligations to make future periodic payments.
Congress and 48 state governments agreed in 2002 that settlement recipients should be able to receive their settlements in whatever manner they choose. Personal injury victims in most of the US have the right to sell a structured settlement, but under US federal law, court oversight and approval is required. In addition, over 40 states have enacted consumer protection legislation to restrict and regulate such sales. Whether or not you can get authority to sell your structured settlement will depend partly upon the guidelines set by the city or state in which you live. The key here is to get help from someone with specialist knowledge of these local guidelines; for example a personal injury claim lawyer. There is little point in putting time and effort into getting structured settlement quotes before you've been granted authority to sell.
Canada
Canada was the first country to introduce laws allowing structured settlement compensation in 1979. Some provinces now impose mandatory structured settlements for certain types of claim. These include British Columbia, Manitoba and Ontario. This does not necessarily mean that the claimant has to accept a structured settlement, but the presumption of the law has been changed in favor of such settlements. Is has been suggested, on the basis of case law, that Manitoba is more likely to impose a structured settlement than is Ontario. The situation is as yet unclear as regards British Columbia, since the legal changes favouring mandatory structured settlements are too recent for there to be enough case law to make a comparison. As ever, all depends on the personal circumstances of the claimant and if they wish to have a lump sum award they will have to show the court why a structured settlement would not be in their best interests. Specialist help from a personal injury lawyer could be the answer.
Under Section 116 of the Courts of Justice Act, R.S.O. 1990 c. C. 43, the courts now have the power to impose a structured settlement unless it is of the opinion of the court that a structured award will not serve the best interests of the claimant having regard to all the circumstances of the case.
United Kingdom (England and Wales, Scotland, Northern Ireland)
The Acts covering the award of structured settlements in the United Kingdom are the Damages Act 1996 and the Income and Corporation Taxes Act 1988. Immunity from Income Tax is granted on that part of the settlement which is to be paid in instalments, as defined in the Finance Act 1995 Part III, Section 142, which amends the Taxes Act 1988. This Act also amends the relevent legislation in Scotland and Northern Ireland to give immunity from Income Tax on periodic payments awarded as personal injury damages.
Annuitants are protected against liquidation of the insurer by the provisions of the Policyholders Protection Act 1975 (Sections 10 and 11) to the full amount of the liability, benefit or value of the annuity - Damages Act 1996, Section 4 - (1).
A court may only make an order for a structured settlement to form all or part of the damages awarded "with the consent of the parties" - Section 2 - (1). This has, on occasion, led to courts being unable to award such a settlement because the defendant (in these circumstances, usually an insurance company) has not agreed to it. Because of this, it has been suggested that the power of the courts should be extended to enable structured settlements to be imposed.
Section 3 does not extend to Scotland; otherwise the Damages Act 1996 applies to the whole of the United Kingdom. This section deals with what happens if someone who has been awarded provisional damages and then dies as a result of their injuries. In this case actions may be brought under the Fatal Accidents Act 1976, or in Northern Ireland under the Fatal Accidents (Northern Ireland) Order 1977. Any compensation so awarded must take account of loss of support to dependents.
The periodical payments awarded as damages may be for the life of the claimant, for a specified period or of a specified number or minimum number or include payments of more than one of those descriptions. - Section 5 - (2)
The amounts of the periodical payments (which need not be at a uniform rate or payable at uniform intervals) may be -
- (a) specified in the agreement, with or without provision for increases of specified amounts or percentages; or
- (b) subject to adjustment in a specified manner so as to preserve their real value; or
- (c) partly specified as mentioned in paragraph (a) above and partly subject to adjustment as mentioned in (b) above. - Section 5 - (3)
Section 6 of the Damages Act deals with those who receive their structured settlements not as an annuitant but by the guarantee of a Minister of the Crown. In other words, those who get their settlements from public funds (taxation) via a body over which a Minister of the Crown has power; i.e. a government department. The bodies that fall into this category are designated under guidelines agreed between the relevant department and the Treasury. There are various subsections dealing with how the compensation money is to be churned around within the Government.
The relevent legislation may be viewed at the HMSO web site, where there is a search facility: http://www.england-legislation.hmso.gov.uk
The Damages Act 1966 (Chapter 48 in particular, which deals with structured settlements) is accessible on line at:
http://www.opsi.gov.uk/acts/acts1996/ukpga_19960048_en_1
The Finance Act 1995 Part III (and Section 142 in particular, which grants immunity from Income Tax on structured settlements) is accessible on line at:
http://www.opsi.gov.uk/acts/acts1995/ukpga_19950004_en_16#pt3-pb23-l1g142
Australia
Australian tax legislation introduced on 7th June 2002 permitted structured settlements to enjoy the same tax advantages as lump sum settlements for personal injury claimants. Neither should now incur Income Tax provided that certain criteria are met. Briefly, these are that the structured settlement must have been designed for a seriously injured person, and the interests of that person must have been protected by the settlement. The new law, the Taxation Laws Amendment (Structured Settlements and Structured Orders) Bill 2002, applies to all structured settlements entered into after 26 September 2001.
New Zealand
New Zealand is highly unusual in its treatment of personal injury damages claims. Civil lawsuits for personal injury simply cannot be brought, so those who cause personal injury to others in New Zealand cannot be sued (not under New Zealand law, anyway). Instead, the state pays compensation through a no-fault national accident compensation system known as the ACC (Accident Compensation Commission), which came into existence in 1974. The New Zealand Accident Compensation Act of 1972 effectively abolished tort claims for personal injury and substituted the ACC, which operates outside the courts. Compensation rates are determined by a schedule of benefits under the Accident Compensation Act 1982. Structured settlements as such are no part of this picture, although in some cases part of the compensation under the ACC scheme can be paid in instalments if the claimant wishes. Effectively, for cases which fall outside criminal law, levels of compensation are decided by bureaucrats, not through the courts. Although it has been claimed that the scheme is "a world leader in providing cost-effective rehabilitation and compensation" ***, others have criticized it because under it "nobody feels they need take responsibility for the safety of others".****
***Garry Wilson, Chief Executive Officer of the Accident Compensation Corporation, Victoria University of Wellington Law Review 45, 2004, presentation to symposium
**** Joe Tooma, Queensland Law Society President, March 2002
"Subject to this section, where any person suffers personal injury by accident in New Zealand or dies as a result of personal injury so suffered, or where any person suffers outside New Zealand personal injury by accident in respect of which he has cover under this Act or dies as a result of personal injury so suffered, no proceedings for damages arising directly or indirectly out of the injury or death shall be brought in any court in New Zealand independently of this Act, whether by that person or any other person, and whether under any rule of law or any enactment". - Accident Compensation Act 1982, Section 27 (1)