A structured settlement for workers’ compensation or physical injury tort claims is a special provision under the United States Internal Revenue Code [Sec. 104(a)(1) and (2), respectively] that exempts all payments from current year income taxation, whether received as a lump sum or over a period of time. If the entire settlement is taken as a cash lump sum, that amount is excluded from current year taxable income, but the first dollar earned on the award becomes a taxable event. The structured payments must be determined at the time of settlement and incorporated into the settlement agreement and release, not afterwards when it is too late. Once the cash is either actually or constructively received by the claimant, the benefit of tax free growth is lost forever.
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Contents of this Practice Direction Title
Scope
Definitions
Starting proceedings
Claimants with severely limited life expectancy
Fixing the case management conference for other claims
The show cause procedure
Setting the trial date
Taking evidence by deposition
Compliance with pre-action protocols
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