ALL NEEDS FROM INTERNET

A structured settlement

At the age of 19, Paul was seriously injured when a public walkway collapsed under him. Paul's lawyer made a claim for compensation against the public authority responsible for the walkway. After negotiations between the parties, the public authority admitted liability (fault).

The following settlement agreement was reached between the parties:

• The public authority will pay an immediate cash sum of $500,000 to Paul to pay existing debts and costs.
  
  
• The public authority will purchase a personal injury annuity for Paul from a life insurance company. This annuity will start at $30,000 per year, with payments paid to Paul monthly, indexed to the consumer price index (CPI), payable for as long as Paul lives and guaranteed for the first 10 years.

The annuity payments will be exempt from tax when received by Paul. The immediate cash sum will also be tax-exempt.

A structured settlement involving a minor and a trust

At the age of 10, Chris was in a car accident when the car driven by his father collided with another car. He sustained a serious head injury, resulting in permanent brain damage. Chris is permanently unable to work and his financial affairs need to be managed by a trustee on his behalf.

A claim for compensation was made against the driver of the other car (the defendant). The other driver was insured, so their insurance company defended the claim.

Chris's lawyer negotiated a structured settlement agreement in which the defendant's insurance company agreed to pay the following compensation:

• An immediate lump sum of $420,000 will be paid to Chris's trustee to settle Chris's existing debts and meet some of his future expenses.
  
  
• The insurance company will purchase two personal injury annuities for Chris from two different life insurance companies:
  
  
• The first annuity will provide periodic payments for Chris, starting at $12,500 per year*, payable in monthly payments, continuing for the term of Chris's life, increasing in line with the CPI and guaranteed for the first 10 years.
  
  
• The second annuity will provide periodic payments for Chris, starting at $30,000 per year, payable annually, continuing for the shorter of 30 years or Chris's life, increasing at 5% per year compound with no guarantee period.

This settlement agreement was approved by the court (as required under state law because Chris, being under 18 years old, has a legal incapacity). The annuity payments are tax-exempt when received by Chris's trustee on his behalf.

* The minimum level of monthly support requires that the pension be equal to or greater than the maximum basic rate of the age pension. The payments under the first annuity to Chris were greater than the minimum monthly level of support at the date of the settlement order.

A structured settlement involving a single personal injury lump sum

A structured settlement agreement included the following payments:

• a personal injury annuity of $1,400 per month that satisfies the requirements for providing the minimum monthly level of support - the payments are indexed to increase in line with the CPI and are guaranteed for 10 years from the date of settlement
  
  
• another personal injury annuity paying $15,000 per year for 10 years
  
  
• a personal injury lump sum of $100,000 payable in 15 years if the injured person is alive at that time, and
  
  
• an immediate cash lump sum of $250,000.

The personal injury annuity payments and the personal injury lump sum payment will be tax-exempt.