Closing a Case with a Structured Settlement

Upon conclusion of a case with a structured settlement, the release of the underlying tort claim will include a promise by the defendant to make one or more future payments to the claimant. Without question, the promisor/defendant desires a full and final release of liability and the promisee/claimant desires future payments that are, in fact, received free from any income tax liability.

The attorneys at LMA respect these essential interests of the parties. Accordingly, when a case closes, we prepare a Closing Blueprint to best ensure that the documents forming the basis for the release in tort and the taxation of the damages being paid facilitate optimal results. To accomplish this objective, the Blueprint contains language that is imperative to include in each of the following required legal documents:

  • A Sample Settlement Agreement/Release;
  • The Qualified Assignment Agreement; and
  • Sample Language for Court Documents.

This Blueprint and the accompanying Sample Forms walk the plaintiff attorney step-by-step through the creation of each of the documents (including the provisions required in the settlement documents and designed to be compliant with Internal Revenue Code). The process is designed to be simple. However, should the attorney, paralegal, or secretary require assistance, LMA provides Help Desk Support that is familiar with each of these essential documents.

Preliminary Housekeeping

Once the parties have successfully negotiated a settlement, the premium (consideration) must be sent to LMA directly from the defendant. (Failure to do so, unless a 468B Trust is utilized, will defeat the tax-free nature of the settlement annuity)

Prompt receipt of the premium by the life insurance company (or assignee) guarantees the price and payment schedule. The purchase price must be "locked in" as soon as possible because the underlying annuity rate scale is subject to change by the life insurance company. Missing the agreed upon Funding Date found on the attached Case Summary can cause the price of the annuity to increase or the amount and/or timing of the payments to be altered.

The key steps to ensuring the purchase price of the settlement annuity are:

  1. Confirmation with LMA of the desired payment schedule for the settlement annuity.
  2. Confirmation with LMA of the life insurance company(s) from which the settlement annuity is to be purchased.
  3. Confirmation with LMA that the data contained on the Closing Information Checklist (see below) is accurate, and/or the submission to LMA of any missing data.
  4. Receipt by LMA of the premium on or before the stipulated funding date. 

Closing Information Checklist

In order to supply the sample documentation, the LMA Closing Specialist must obtain the following information.  With your approval, we are happy to contact any involved attorneys to assist in gathering this information.

  1. The precise terms of the settlement, including the amounts, timing, and conditions of all structured settlements and the up-front cash;
  2. Birth Certificates of Annuitant(s) receiving life-time annuity benefits and of Minors;
  3. Guardianship papers (if any);
  4. Trust documents (if any);
  5. Address(es) of claimant(s);
  6. Phone number(s) of claimant(s);
  7. Social Security Numbers of claimant(s);
  8. Copies of Social Security Card(s);
  9. Primary and contingent beneficiaries (names, dates of birth, Social Security Numbers, relationship to claimant);
  10. Copy of lawsuit caption (if suit filed);
  11. Additional parties to be released;
  12. Parties not to be released;
  13. Exact legal names of all involved insurance companies and which of them are purchasing the structured settlement annuity(s);
  14. Who pays costs; and
  15. Probate Court or Court that will approve the settlement, if any.


After obtaining the above information, the LMA Closing Specialist will send to the claim representative and/or the appropriate attorneys the following items:

  1. A sample release/settlement agreement;
  2. Qualified assignment agreement or other appropriate financing documents;
  3. Sample language required for any associated court documents;
  4. A schedule of deadlines that must be observed to secure the quoted cost and to assure that the first payment is made on time;
  5. Request for any information described in the above checklist that was not previously provided to the closing specialist.

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Phone: 513-871-8900  Fax: 513-871-9099