Where have structured settlements become a part of statutory law?
Structured settlements are a part of statutory law in common law countries such as Australia, Britain, Canada, and the United States. Considered as asset-backed securities, structured settlements include spendthrift and income tax requirements as well as benefits. Purchase of annuities fosters guaranteed periodic future payments.
Structured settlement in Australia
Australia only seriously considered structured settlement laws in the mid and late 1990s. By 1995, the Department of Health organized a review of the Professional Indemnity Arrangements for Health Care Professionals. The department exhorted the compelling desideratum to amend the Australian Taxation laws to abet the use of structured settlements. Between 1996 and 1997, the Victorian Law Reform Committee and the NSW law and Justice Committee advocated structured settlements in the light of revised taxation laws.
The NSW Motor Accident Authority also presented a report in 1998, which included a comprehensive financial impact and modeling report on the basis of several suppositions that would lead to savings on Federal and State Funds. The Structured Settlement Group assembled a major lobbying and by September 2001 the Assistant Treasurer announced that settlements would be tax free.
Structured settlement in Britain
The British legal landscape has seen dissatisfactions of lump sum remittances and its inadequacies. With several statements issued in the Commonwealth, the judiciary and the legislature could not implement periodic payment systems at any level. Lawyers, brokers, insurers and taxation officials devised structured settlements due to favorable tax treatments.
Some of the primary attempts to discuss taxation matters with the Revenue Department were made in 1983. Finally a public agreement was reached with the intervention of the Association of British Insurers. A press release in 1987 declared a favorable tax position for structured settlements.
Structured settlement in Canada
Structured settlements advanced rather slowly in Canada, in contrast to the United States. Damage awards were not gauged as excessive, at the same time the idea would metastasize fast and far towards the northern border. By the year 1981 Canada saw a negotiation of structured settlements to the tune of 100 or even more. An astronomical income of $17 million was from structured settlements. A decision disseminated in 1979 had revised the approach of calculating damages and structuring was made an alternative to lump sum compensations.
The concept of favorable tax treatments towards structured settlements was accepted in Canada with the marketing endeavors of the Canadian casualty insurers and the life insurance industry. Inherent difficulty in calculating lump sum awards was recognized. The Supreme Court finally ruled towards permuting the way damage awards are determined.
Structured settlement in United States
In the United States structured settlements have been in recognition since the 1970s. Tax codes evolved stating that payment for such personal injuries was eliminated from taxation but disbursal was still a barrier.
Even as the issue was battling ambiguity, the Periodic Payment Act in 1982 allowed defendants to choose the 'qualified assignment' that would allow the defendants' and the insurers to enter into a qualified assignment providing clarification to all parties involved. The NSSTA estimated structured settlement payouts to about $400 billion in 2014.