Catherine Byerly, Annuity.org Writer
  • Written By
    Catherine J. Byerly

    Catherine J. Byerly

    Staff Writer

    Catherine J. Byerly has worked in digital communications for the past four years, handling everything from award-winning, on-air public radio casts to writing in-depth investigative stories for business news sites.

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    Emily Miller
    Emily Miller, Managing Editor for Annuity.org

    Emily Miller

    Managing Editor

    Managing editor Emily Miller is an award-winning journalist with more than 10 years of experience as a researcher, writer and editor. Throughout her professional career, Emily has covered education, government, health care, crime and breaking news for media organizations in Florida, Washington, D.C. and Texas. She joined the Annuity.org team in 2016.

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  • Financially Reviewed By
    Somer G. Anderson, Ph.D., CPA, CGMA®, CFE
    Somer G. Anderson, Ph.D., CPA, CGMA, CFE,

    Somer G. Anderson, Ph.D., CPA, CGMA®, CFE

    Assistant Accounting Professor at Maryville University's Simon School of Business

    Somer G. Anderson is a licensed certified public accountant and holds a doctorate in personal financial planning. Her other designations include chartered global management accountant and certified fraud examiner. Somer has worked in the accounting and finance industries for over 20 years as a financial statement auditor, a finance manager in a large health care organization, and a finance and accounting professor.

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  • Updated: September 14, 2022
  • This page features 3 Cited Research Articles
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How to Cite Annuity.org's Article

APA Byerly, C. J. (2022, September 14). Structured Settlement FAQs. Annuity.org. Retrieved September 26, 2022, from https://www.annuity.org/structured-settlements/faqs/

MLA Byerly, Catherine J. "Structured Settlement FAQs." Annuity.org, 14 Sep 2022, https://www.annuity.org/structured-settlements/faqs/.

Chicago Byerly, Catherine J. "Structured Settlement FAQs." Annuity.org. Last modified September 14, 2022. https://www.annuity.org/structured-settlements/faqs/.

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Structured Settlements

Can a Structured Settlement Be Inherited?
Structured settlements are often paid through annuities that are held and administered by insurance companies.

Whether a structured settlement can be inherited depends on whether the annuity contract specifies 'life contingent payments' or 'guaranteed payments.'

• Life contingent payments last only as long as the person who was awarded the settlement is alive. If the person who was awarded the settlement dies, the insurance company does not send future payments to their beneficiaries.

• Guaranteed payments are disbursed according to the schedule in the annuity contract no matter what. The person who was awarded the settlement can designate a beneficiary to receive the payments if they die before the payout is finished.

If you are the named beneficiary of a loved one’s structured settlement, and they have passed away, you will have to submit a claim to the annuity issuer so the rest of the agreed payments can be disbursed to you. The money from a qualified structured settlement will continue to be exempt from income taxes even after it has been inherited. In addition, a structured settlement can have a 'commutation rider' included in its contract. This means when the settlement is inherited, all or some of the future payments are converted into a lump sum of cash for the beneficiary. A commutation rider can make inheritance much simpler. Without a commutation rider, a beneficiary has to go through the process of selling future payments in order to get cash sooner than scheduled.
What Happens to a Structured Settlement During Divorce?
How a structured settlement is handled during a divorce depends on the approach your state takes to asset division.

States divide assets according to either 'equitable distribution' or 'community property.'

• If you live in a state with equitable distribution, and you received the settlement before you were married, it is likely you will keep the settlement.

• According to community property, on the other hand, anything either spouse owned before and during the marriage is considered property of the union and can be subject to division.

In any state, the division of assets doesn’t mean the settlement check itself gets divided. Typically, the spouse who doesn’t keep the settlement will get a different asset to balance out the overall division of assets. If you have a settlement and are facing divorce, you may want to hire a lawyer or mediator with experience handling complex assets.
Do I Have to Sell All of My Payments?
No. There are several options when it comes to selling your structured settlement payments, including selling some of your payments or all of them. Each person’s situation is unique, and regardless of how much of your settlement you want to sell, a judge has to approve the sale. You should discuss your options with your accountant or attorney before choosing how much to sell.
Why Is Court Approval Necessary?
Before the industry was regulated, some factoring companies took advantage of people who were not informed of the nuances of selling their structured settlements. To prevent this from happening, the United States government passed several laws — such as the Federal Periodic Payment Settlement Act of 1982 —that mandate court approval for the sale process. Mandating court approval ensures the sale is in the consumer’s best interest and a factoring company is not taking advantage of the person’s ignorance. Court approval laws are still being updated in 2022 to provide further protection.
Please seek the advice of a qualified professional before making financial decisions.
Last Modified: September 14, 2022

3 Cited Research Articles

Annuity.org writers adhere to strict sourcing guidelines and use only credible sources of information, including authoritative financial publications, academic organizations, peer-reviewed journals, highly regarded nonprofit organizations, government reports, court records and interviews with qualified experts. You can read more about our commitment to accuracy, fairness and transparency in our editorial guidelines.

  1. Stephenson, Chávarri & Dawson, L.L.C. (2022, May 18). Will a Personal Injury Settlement Get Divided During a Divorce? Retrieved from https://www.smclattorneys.com/blog/will-a-personal-injury-settlement-get-divided-during-a-divorce/
  2. The Florida Legislature. (2022). The 2022 Florida Statutes. Retrieved from http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0600-0699/0626/Sections/0626.99296.html
  3. The JG Wentworth Company. (n.d.). What Happens to Your Structured Settlement When You Die? Retrieved from https://www.jgwentworth.com/what-happens-your-structured-settlement-when-you-die