What is a structured settlement in a Georgia injury case?

· 3 min read

A structured settlement pays an injury recovery as a stream of future payments over time rather than as one immediate lump sum. In a Georgia injury case, this arrangement is set up at settlement, typically funded through an annuity, so the injured person receives scheduled payments that can span years or a lifetime.

How a structured settlement is built

Instead of handing over the full settlement amount at once, the defendant or its insurer funds a financial product, usually an annuity purchased from a life insurance company, that is designed to make the agreed future payments. The payment schedule is negotiated as part of the settlement and can be tailored in many ways:

  • Equal periodic payments over a set number of years.
  • Payments for the claimant’s lifetime.
  • Larger payments timed to anticipated needs, such as future medical care or education.
  • A partial up-front amount combined with a future stream.

Once the structure is established, its terms are generally fixed, so the schedule is decided carefully at the outset.

Why parties use them

Structured settlements appeal to claimants who want long-term financial stability and protection against spending a large sum too quickly. Spreading payments over time can provide a dependable income, which is especially valuable in cases involving serious, long-term injuries or when the recovery must support a person for many years. Tax treatment is another draw: under federal law, damages received for a physical personal injury are excluded from income under Internal Revenue Code § 104(a)(2), and when those damages are paid as a properly structured stream, the periodic payments and the growth inside the funding annuity generally remain tax-free, whereas interest earned on a lump sum that is invested afterward is typically taxable. The mechanism that makes this work is a qualified assignment under Code § 130, in which the obligation to make the future payments is transferred to an assignment company that buys the annuity. Because the consequences are long-lasting, claimants typically weigh these benefits against the loss of immediate access to the full amount.

Special situations

Structures are common where extra protection is appropriate, such as settlements involving minors or individuals who need lifetime support. Georgia gives minors’ recoveries particular attention: under O.C.G.A. § 29-3-3, a natural guardian may compromise a child’s claim with a gross settlement of $25,000 or less without court approval or a conservatorship, but larger recoveries generally require a conservator to be appointed and the funds to be safeguarded, and a structured payout that delivers money as the child matures fits well with those protections. Structures are also used to coordinate with future medical needs, sometimes alongside arrangements that set aside funds for care. Because these decisions affect a person’s finances for years and may involve tax and benefits questions, they are generally made with professional guidance suited to the individual’s circumstances.

The bottom line

A structured settlement in a Georgia injury case converts part or all of a recovery into a schedule of future payments, usually funded by an annuity, instead of a single lump sum. It offers long-term income and stability, particularly in serious-injury cases, at the cost of immediate access to the full amount, so the payment design is set thoughtfully when the case resolves.

This article is for general educational and informational purposes only and is not legal advice. It does not create an attorney-client relationship, and Georgia law may change. For advice about a specific situation, consult a licensed Georgia personal injury attorney.

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