By Guest Author Catherine J. Byerly
Structured settlements aren’t something you hear about all too often in divorce – but they can come up, and when they do you want to have all the facts.
But first, what is a structured settlement? A structured settlement is a particular way of resolving an amount of money owed after a legal case. In a structured settlement the party that owes money purchases an annuity on behalf of the other party (the one receiving the money).
One of the best parts of a structured settlement is that it removes the need for the two parties to interact continually about the relevant financial matter. Because of this separation there’s no chance for one party to stop making the payments agreed on in the divorce proceedings. The annuity issuing firm is the one writing the checks from day one. In other words, there’s no risk that an ex-spouse who owes child support will decide not to send a check that is due.
Even in the event of an amicable divorce, not having to contact an ex-spouse each month can make it easier to move on with your new life. This can make a structured settlement a great way to handle the division of assets.
Typically only complicated asset division in a divorce would require a structured settlement. Often a couple can work with a mediator and/or attorneys to divide assets without adding a structured settlement to the mix.
More frequent is having a settlement itself be the asset that needs to be divided. Sometimes a spouse has a structured settlement that is being paid to them because of a separate case, such as a personal injury or medical malpractice case. If the case was settled before the marriage started, then the settlement remains the separate property of the original case holder. If, however, the case was settled during the marriage, the settlement may count as marital property. Because of that it can be subject to equitable distribution. That doesn’t mean that it must be split 50-50, but it can mean that each spouse has a right to a portion of the funds. Working with a mediator can ensure that a settlement is divided in a way that both spouses feel comfortable with.
