Justifying The Structured Settlement Tax Subsidy: The Use of Lump Sum Settlement Monies
The structured settlement tax exclusion incentivizes personal injury claimants to agree to periodic payments as opposed to a lump sum amount, in the hope of preventing premature dissipation. The anecdotal evidence suggests that such dissipation is frequent. Statistical evidence is also commonly cited. This note examines the available empirical data, finding the evidence to be inconclusive, and that those citing dissipation data are often mistaken.
This article fist appeared in the NYU Journal of Law & Business.