Peachtree People Blog

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What Is a Structured Settlement?

A structured settlement is a stream of payments awarded in a civil case where a claimant is suing a person or company as compensation for wrongdoing or negligence. A claimant may receive a portion or all of a settlement agreement in the form of periodic payments on a set schedule instead of receiving a lump sum payment. Common types of cases where structured settlements can be awarded include auto accidents, workers compensation, medical malpractice, wrongful deaths, or product liability.

Settlement money enables recipients to pay for medical expenses or other costs, or replace income. As part of the negotiations or legal proceedings, a structured settlement may be offered by the defendant in a case, or it could be requested by the injured party. At the end of the day, both parties must agree on the specific terms of the settlement. A settlement may allow both parties in a lawsuit to reduce legal and other costs by avoiding a trial.

Often, the periodic payments will be funded through the purchase of one or more annuities. These annuities, which are financial assets in and of themselves, are used to generate the structured settlement payment stream. These payments may also be referred to as periodic payments or annuity payments.

While some legal settlements offer a lump-sum payment option, which provides a single cash payout, a structured settlement provides a steady income stream for a set period. Receiving a structured settlement can offer long-term financial security, whereas a lump sum settlement may be spent too quickly. Furthermore, if the plaintiff chooses to invest their cash payout, any interest and dividends earned would be subject to taxes, whereas annuities benefit from tax-deferred growth.

Structured settlement payments are a unique asset, so it is important to know what your options are. It is also possible to sell all or only a portion of your future payments, but the sale must be approved by a judge.

How Do Structured Settlements Work?

Through the settlement process, the defendant and the claimant work with a qualified assignee and an insurer to define the terms of the structured agreement such as the payment frequency and pay period. The defendant then directs payments to the qualified assignee to purchase an annuity from an insurance company for the injured party. The insurance company pays the plaintiff a series of payments according to the structured settlement contract and, over time, the annuity earns interest. The plaintiff can then use these regular payments as compensation.

Once a contract has been issued, the terms can’t be renegotiated. However, structured settlement annuity owners can get a lump sum of cash by selling some or all payments to structured settlement buyers. This transaction must be approved by a judge who determines if the sale ultimately in the best interest of the annuity recipient.

Structured Settlement Pros and Cons

Structured settlements are ideal for a wide variety of cases. However, like with any financial agreement, it is important to understand the benefits and risks of agreeing to annuity payment streams.


  • Annuity payment streams can ensure future income, which is particularly beneficial if the recipient has long-term medical needs or other significant costs.
  • Payments are tax-free and do not fluctuate with market changes. In other words, payments are guaranteed to annuity These terms also apply to a beneficiary in the event of the recipient’s death.


  • Terms of your contract cannot be renegotiated once they are finalized, even if your financial situation changes.
  • Recipients cannot immediately access funds in an emergency. On the other hand, recipients can sell all or portions of their payments at a discount to a structured settlement buyer for a single lump-sum cash payout. Note that selling them results in recipients gaining less than the full amount they would have received from future payments, and a judge must approve the sale beforehand.

FAQs About Structured Settlements

What are the Benefits of Selling Structured Settlement Payments?

Selling some, or all of your payments can allow you to control your finances or take advantage of another financial opportunity. Some common goals include purchasing a home, paying for tuition, paying off debt or medical bills, or buying a new car.

How Long Does It Take to Sell My Structured Settlement Payments?

Every case is different. Your individual situation, as well as the state you live in, can affect your timeline. Peachtree Financial Solutions representatives will work as quickly and efficiently as possible to process your sale. However, it is important to know that fulfilling state guidelines and requirements takes time, usually between 60 and 90 days. If you have a pressing need that cannot wait, please let your representative know right away! We have a number of options to help you while you wait, including cash advances of a portion of your purchase price.*

Do I Need a Lawyer?

Peachtree covers the full cost of the transaction, and our attorney will submit the transaction documents to the court. You only need to hire a lawyer if you want independent advice on your sale or if you live in a state that requires you to consult with a professional advisor or attorney.

What Documents Do I Need to Complete a Transaction?

Every situation is different, but generally you will always need: a copy of your annuity contract and settlement agreement, any additional documents that are relevant to your settlement and annuity, a government issued ID, and proof of residency.

If you need help gathering any of these documents, your representative will be able to assist you.

Are Structured Settlements Considered Income Tax?

No, the owner of a structured settlement is not required to pay income taxes on payment streams from a personal injury case in accordance with The Periodic Payment Settlement Act of 1982.

What are My Options for Selling Structured Payments?

Did you know that you have multiple options when it comes to selling payments? When you discuss your financial needs with your representative, they will outline all your options to help you choose the best course of action.

Typically, you have three options when you are selling structured settlement or annuity payments:

  • Selling All Future Payments
  • Selling a Portion of All Future Payments
  • Selling a Group of Payments for a Period of Time

How Much Can I Get for My Structured Settlement or Annuity Payments?

Many factors go into determining what we can offer you for your future payments, including the amount of each payment, the frequency of the payments, and when you are scheduled to receive them. Let us know how much you need, and we can provide an estimate for what you could receive for your payments.

Is this an additional sale of structured settlement payments? What insurance company issues your checks? Knowing the answers to these questions will expedite the process as you work with your representative.

Why Might a Quote Change Over Time?

If you called Peachtree in the past but decided not to accept any of our offers, your quote this time will likely be different. Why is that? One of the main reasons that your quote will change has to do with the time value of money.

Why Choose Peachtree?

Our experienced, dedicated representatives listen to your goals and then clearly explain all payment sale options available to you. It is all part of something we call the Peachtree Promise. We know your needs are unique, and we work with you step-by-step to determine the best course of action to meet your financial goals.

For more information, give our team a call at 1-800-821-7773. You can also fill out our online form to get in touch with a knowledgeable representative.

*Advances are subject to approval at Peachtree’s sole discretion. Cash advances are not a loan. They are an advance of part of the purchase price for the sale of your payments. Call (800) 317-1962 for additional terms and conditions.

All transactions are at Peachtree’s sole discretion and are subject to court approval and other underwriting requirements. Peachtree does not provide legal, tax, or financial advice; please consult with appropriate independent professionals for such advice.


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