Structured Settlements Structured Settlement Basics 2

Question 1

Who typically serves as the 'qualified assignee' in a structured settlement qualified assignment?

Accepted Answer

A special-purpose assignment company affiliated with a life insurer

Answer

The plaintiff

Answer

The defendant's employer

Answer

The state court

Question 2

Under IRC §130, what happens when a defendant assigns its structured settlement obligation to a qualified assignee?

Accepted Answer

The defendant excludes from income any amount received for assuming the periodic payment liability

Answer

The defendant owes capital gains tax on the assignment proceeds

Answer

The assignee must pay estate taxes on future payments

Answer

The assignment invalidates the original settlement agreement

Question 3

What does 'present value' mean in the context of structured settlements?

Accepted Answer

The current worth of future payments discounted at an assumed interest rate

Answer

The total of all future payments without discounting

Answer

The original settlement demand amount

Answer

The inflation-adjusted value of the annuity

Question 4

Which of the following is NOT a typical type of structured settlement payment schedule?

Accepted Answer

Declining government bond yields

Answer

Level periodic payments

Answer

Increasing periodic payments

Answer

Lump-sum payments at set future dates

Question 5

What is a 'life-contingent' structured settlement payment?

Accepted Answer

A payment that is made only if the claimant is still alive

Answer

A payment guaranteed regardless of the claimant's survival

Answer

A payment that adjusts for inflation annually

Answer

A payment funded by life insurance death benefits

Question 6

What is a 'guaranteed' structured settlement payment?

Accepted Answer

A payment that will be made for a fixed number of years regardless of the claimant's survival

Answer

A payment backed by the US government

Answer

A payment that increases with the CPI each year

Answer

A payment contingent on the defendant's solvency