Structured Settlements are an innovative method of compensating injury victims. Allowed by the US Congress since 1982, a structured settlement is a completely voluntary agreement between the injured victim and the defendant.
Under a structured settlement, an injured victim doesn't receive compensation for his or her injuries in one lump sum. They will receive a stream of tax-free payments tailored to meet future medical expenses and basic living needs.
A structured settlement may be agreed to privately (for example, in a pre-trial settlement) or it may be required by a court order, which often happens in judgments involving minors and incapacitated adults.
(Source: National Structured Settlement Trade Association Website, 4/23/2008).