How Do Structured Settlements Work in Georgia, and What Are the Rules?

A structured settlement turns a personal injury recovery into a stream of periodic payments instead of a single lump sum. Georgia regulates these arrangements closely, both to protect minors whose recoveries are placed in them and to guard against bad deals when someone later tries to sell the payment rights. This guide explains what a structured settlement is, how the payments work, the special rules for minors, and the protections that govern transfers.

What a Structured Settlement Is

A structured settlement is an agreement in which a personal injury claim is resolved through future periodic payments rather than one immediate sum. The payments are typically funded by an annuity purchased from an insurance company. A defining feature is the tax treatment: payments received under a qualifying structured settlement for personal physical injury are generally received tax-free, which is part of the appeal compared to taking a lump sum and investing it.

How Periodic Payments Work

The payment schedule is set when the settlement is created and can take many forms: equal monthly or annual payments, payments that increase over time, scheduled future lump sums timed to anticipated needs, or a combination. The structure is chosen to match the injured person’s situation, for example, steady income to replace lost wages, or a larger payment timed to a future medical event. Once set, the schedule is fixed by the settlement terms.

Court Approval for Minors

When the injured person is a minor, Georgia adds layers of protection, because a child cannot manage a large recovery and the law guards it until adulthood. Under O.C.G.A. § 29-3-3, the level of court involvement depends on the amount. A gross settlement of $15,000 or less can generally be handled by the guardian without court approval. Above that, court approval is required, from the probate court if the matter is pre-litigation, or from the court where the action is pending if a suit has been filed.

The analysis then looks at the net settlement, the gross amount minus fees, expenses, medical costs, and the present value of amounts the child will receive after reaching adulthood. If the net amount to be received as a minor exceeds $15,000, the guardian generally must be appointed conservator, a process that includes a bond requirement. A common way to manage this is a structured settlement that holds all but a modest sum until the child becomes an adult, which is one reason structures are frequently used in minors’ cases.

Transfer Rules and Protections

Sometimes a person who is receiving structured settlement payments later wants to sell those future payment rights for a lump sum. Georgia’s Structured Settlement Protection Act, O.C.G.A. §§ 51-12-71 through 51-12-80, regulates these transfers tightly.

No transfer is effective unless a court approves it in advance, with express findings, including that the transfer is in the best interest of the payee, taking into account the welfare and support of the payee’s dependents. The payee must be advised of the right to seek independent professional advice about the legal, tax, and financial implications. The law also imposes disclosure and waiting-period requirements and gives the payee a right to cancel within set time frames.

On top of that, a company seeking to buy structured settlement payment rights must register with the Georgia Secretary of State as a structured settlement purchase company and post a surety bond before doing business in the state. The statute lists prohibited practices, such as failing to fund a transfer after court approval or paying commissions to unregistered brokers. These layers exist because selling future payments at a discount can be a costly decision, and the law builds in checkpoints.

Key Takeaways

• A structured settlement pays an injury recovery as periodic payments, often funded by an annuity and generally received tax-free for physical injury.
• The payment schedule is set when the settlement is created and is fixed by its terms.
• For minors, O.C.G.A. § 29-3-3 sets court-approval thresholds, with structures often used to manage amounts above $15,000.
• Selling future payments requires advance court approval finding the transfer is in the payee’s best interest, under the Structured Settlement Protection Act (§§ 51-12-71 through 51-12-80).

This article provides general information about Georgia law and is not legal advice. Statutes and court decisions change, and how the law applies depends on the specific facts of a situation. For advice about a particular matter, consult a licensed Georgia attorney.