Entire Amount Of Structured Settlement

At times the obligation of periodic payment is transferred to another company and this is called as a qualified assignment or a third party. The third party also called as assignment will receive the entire amount of structured settlement in the form of annuity and will in turn fund the first party, that is claimant who is seeking payment in installment basis. There is no other liability for third party other than payment of qualified assignment.

This is also another safest methods of structured settlement wherein two parties are agree with each other settlement of periodic payment and the second party pays the entire annuity amount to the third party to make periodic payments to the first party. This means without the interference of second party, the third party will be obligated to make periodic payments to the first party. This arrangement is made with a view to avoid any future complications that may arise due to lapse in payment. In this regard, the claimant will also agree to receive payments from third party and this also indicates structured settlement. The claimant does not have to rely or depend on the second party, but can receive regular payments from the third party.

But for the sake of qualified assignment, it is important that a criteria must be met with according to the Internal Revenue Code Section 130. If the criteria is not met with, periodic payments will invite levy of income tax and federal income tax. In case, the qualified assignment has met with Internal Revenue Code, under Section 130, the amount received is excluded from income taxes. These provisions have to be referred carefully, in order to draw maximum benefit from qualified assignment. A thorough and clear knowledge of legal provisions is required for gaining income tax benefits. If there is a compliance under the provisions of IRC 130, periodic payments cannot be increased or decreased.