A Primer on Structured Settlements in Divorce Cases

Divorce cases involve various decisions and obligations. Some situations require a spouse to provide monetary support through structured settlements for the other party. Here’s what people should know about this arrangement.

Applicable Cases

Structured settlements are a suitable option for the following:

Distribution of Marital Assets

Assets that are considered marital properties should be distributed between spouses. Some possessions, such as real estate, are difficult to divide. This problem can be solved by liquidating these resources to fund a structured settlement. The payee will receive a financial arrangement determined by a court to ensure that both parties will have fair shares.

Financial Support

The court may order a person to provide their spouse or children with monetary support through a structured settlement. This arrangement ensures that the receiver will have sufficient funds for major expenses, such as mortgage payments and daily living costs.

Pros and Cons

Financial arrangements have pros and cons. Here are some of them.


Structured settlements are generally beneficial for individuals who want a stable source of money for several years. They aren’t taxed as income and are given high interest rates. Financial arrangements for divorce cases, in particular, are ideal for the receiver since they don’t need to rely on their spouse’s promises, with a third party providing the payments.


These financial arrangements can’t be used to fund huge expenses immediately. Plus, their value can be affected by unfavorable economic conditions and subjected to state tax when withdrawn. Because these factors are ever-changing, some individuals choose to cash out their payments.


Selling structured settlements is recommended for those who want to get a large sum of money instantly for funding huge expenses. Individuals need to secure court approval before cashing out payments. Here are the requirements they should meet:

  • An appropriate reason for cashing out payments;
  • Fair rate and conditions; and
  • Necessary documents

If the arrangement is given to children, the court imposes stricter rules before guardians can cash out payments. Consulting a lawyer is ideal because they’re knowledgeable about these laws and can prove that the transaction will be beneficial to the rightful receiver.

Individuals can ask for their shares in marital assets or monetary support in the form of a structured settlement Brokers can give professional advice when it comes to this financial arrangement, including cashing out payments if it’s in the receiver’s best interest.

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