A structured settlement is a way of paying the proceeds of a settled claim over time rather than in a single lump sum. In a Georgia wrongful death case, the parties may agree that some or all of the recovery will be paid out as a series of future payments. This guide explains how structured settlements operate, why they are used, and how Georgia law treats them, particularly when minor children are involved.
What a Structured Settlement Is
In a traditional settlement, the defendant or its insurer pays an agreed amount in one payment, and the recipient takes possession of the entire sum at once. In a structured settlement, the parties instead agree on a schedule of future payments. These payments may be monthly, quarterly, or annual, and they may also include deferred lump sums payable on specified future dates, such as when a child reaches a certain age.
The future payments are typically funded through an annuity. The defendant or its insurer pays a sum to a life insurance company, which issues an annuity contract obligated to make the agreed payments on schedule. The annuity converts a present sum into a guaranteed stream of payments stretching over years or decades.
How a Structured Settlement Fits Into a Wrongful Death Case
A Georgia wrongful death claim seeks the “full value of the life” of the person who died, and it is brought by statutory beneficiaries such as a surviving spouse, children, or parents. A related claim, the survival action, is brought by the estate. When either claim settles, the parties decide how the money will be paid.
A structured settlement is one option. The recovering parties and the defendant may agree that part of the settlement will be paid immediately, often to cover existing expenses, and that the remainder will be structured into future payments. The structure is built into the settlement agreement itself and is generally arranged at the time the case resolves, because the tax and contractual treatment depends on the structure being established as part of the original settlement.
Why Structured Settlements Are Used
Several considerations lead parties to choose a structured settlement.
A stream of guaranteed payments provides long-term financial stability and reduces the risk that a large lump sum will be spent quickly or mismanaged. This is a frequent consideration when the beneficiaries include young children who will have needs extending many years into the future.
Structured payments can be tailored to anticipated needs. Payments can be scheduled to begin when a child reaches college age, to provide periodic income during adulthood, or to deliver larger amounts at particular life stages.
Under federal tax law, payments received from a properly structured personal injury or wrongful death settlement are generally treated the same way as a lump sum recovery would be, which can make the periodic payment arrangement attractive without an added tax burden. Tax treatment depends on the specific facts, and the general rule has limits.
Court Approval and Minor Beneficiaries in Georgia
When a wrongful death recovery includes funds belonging to a minor, Georgia law imposes oversight to protect the child’s interest. Georgia revised its rules governing the settlement of minors’ claims, and the current framework ties the level of oversight to the size of the settlement.
In general terms, when the gross settlement allocated to a minor is below a statutory threshold, court approval and the appointment of a conservator are not required. When the gross amount exceeds that threshold but the net amount, after fees and expenses, falls below it, court approval is required but a conservator is not. When both the gross and net amounts exceed the threshold, both court approval and a conservator are generally required. The threshold figure and the precise procedure are set by Georgia statute, and the rules in this area have changed over time.
A structured settlement is one method a court may consider appropriate for handling a minor’s funds, because it defers the child’s access to the money and can hold it until the child is older. A court reviewing a minor’s settlement examines whether the proposed arrangement, including any structure, serves the child’s interest.
In a wrongful death case, the proceeds are also subject to the statutory rules on who is entitled to the recovery and how it is divided among beneficiaries. Where beneficiaries cannot agree on the division, Georgia courts can resolve the apportionment.
The Annuity and Payment Security
Because structured payments depend on an annuity issued by a life insurance company, the financial strength of that company is a relevant factor. The obligation to make the payments rests with the issuing company under the annuity contract.
A separate body of law, often called structured settlement protection law, governs later transactions in which a payee seeks to sell or transfer the right to receive future structured payments to a third party in exchange for a discounted lump sum. Georgia has adopted such a law, and it generally requires court review before a transfer of structured settlement payment rights can take effect. This review is designed to consider whether the proposed transfer is in the interest of the payee.
Conclusion
A structured settlement in a Georgia wrongful death case replaces a single lump sum with a schedule of future payments, usually funded by an annuity. It is established as part of the settlement agreement and is often considered where long-term financial stability is a goal, particularly when minor children are beneficiaries. Georgia law adds court oversight when a minor’s funds are involved, with the level of oversight depending on the size of the settlement, and a separate statute governs any later transfer of structured payment rights.
Disclaimer
This article is provided strictly for general educational and informational purposes. It is intended to explain how Georgia law works as a matter of public legal education, and it does not constitute legal advice, a legal opinion, or a recommendation about any particular course of action. Reading this article, or contacting the website on which it appears, does not create an attorney-client relationship between the reader and any law firm, attorney, or author.
The law changes over time. Statutes, regulations, court rules, and judicial decisions discussed here may have been amended, repealed, superseded, or reinterpreted after the date of publication, and citations to specific code sections or cases reflect the law only as it was understood when this article was written. The application of any legal principle also depends heavily on the specific facts and circumstances of an individual matter, and outcomes vary from case to case.
For these reasons, no one should rely on this article as a substitute for advice from a licensed Georgia attorney who can review the particular facts involved. The author and publisher make no warranty, express or implied, regarding the accuracy, completeness, timeliness, or applicability of the information provided, and disclaim any liability for any action taken or not taken based on this content.