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Structured Settlement Divorce

What about a Structured Settlement Divorce arrangement. This is something that is used quite often in negotiating a divorce settlement case. You can go for a lump-sum, or a structured settlement. Let’s take a look at what exactly a structured settlement entails.

Basically, the structured settlement is just a promise to pay a fixed amount of money over a fixed amount of time. It is a very flexible type of settlement, and can be created to fit the needs of the parties involved. The claimant, or person that will receive the payments, can elect to receive a lump sum up front, to be followed up by periodic payments of a set amount of money for a few years all the way to a lifetime. Another lump sum payment can even be schedule for the future.

As Applies To A Divorce Proceeding

A structured settlement can be used for the distribution of marital-property. As an example: Let us suppose that George and Carol are getting Divorced. George is insistent on retaining the house, but he can’t really afford to make the payments in the settlement-sum that they agreed on.

George can execute a “property-settlement-note”. With this fiduciary instrument, George is promising to pay Carol the amount they agreed on, for a certain length of time, at current interest-rates. The funds will be considered a “division-of-property”, and therefore, will not be taxed on the principal, but will be taxed on the interest.

The note is usually backed by some form of collateral. With this deal, George gets the house, and Carol gets the promise of a future income stream. The welfare of any minor children will have to be taken into consideration. Child support can be figured into the settlement agreement. In that case, the court will make sure that there will be a sufficient amount of funds to take care of any of the child’s requirements until he/she is 18 years old.

The needs of the child will become the major issue, and issues such as: medical, education, clothing, food, shelter, and even recreational activities, will be taken into consideration.

Advantages For Spouse Receiving Payments:

The main advantage would be security against broken promises by the “ex-spouse”.

* The settlement agreement will be guaranteed by a major life insurance company, no risk.

* These plans are flexible, and can allow for multiple income streams, and long term payout.

* Depending on the state, the annuity may be creditor-proof.

* The settlement is not subject to an attack by creditors of the ex-spouse.

Advantages For The Spouse Making The Payments:

* The discounted cost-of-payments offer a potential for savings.

* A non-qualified-assignment will keep this obligation off-the-books.

* Can end the contacts and obligations with the ex spouse.

* Promissory-notes will not cause any liens on assets.

As you can see, this type of settlement is very flexible, and can work to the advantage for both parties. A lump-sum settlement can be gone very quickly, and the income stream will evaporate. This is why a Structured Settlement Divorce arrangement may be the best option.