Structured settlements

• Author: Nicholas L. Bourdeau
• Pages: 453-480

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Chapter 23

Structured Settlements

TABLE OF CONTENTS

§23:10 GENERAL

§23:20 STRUCTURE DETAILS

§23:21 INCOME

§23:22 EXPENSES

§23:30 CASE STUDY

§23:10 GENERAL

Structured settlements are plans for transfer-

ring assets from one spouse to another during the

course of a divorce and over subsequent periods.

[For the purpose of this discussion, it will be

assumed that the husband or the marital estate has

access to assets, and it is the wife who is in need.]

ECONOMIC DISADVANTAGE

There are numerous reasons why wives may

be at an economic disadvantage in a divorce. The

first is biological. Statistically, over their lives,

women do not participate in the workforce as long

as men, a fact that can be substantially attributed

to child bearing. For example, a woman who mar-

ried directly out of school and immediately began

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§23:10 The Determination of Income for Child Support 23-2

having children may never have entered the work-

force. In other cases, a spouse’s age may make it

highly impractical or impossible for her to enter

the workforce in any meaningful way. In still other

cases, a spouse may be precluded from working

because of mental or physical defect. In some

cases, a wife may have little, if any, idea how

finances work. Having never been responsible for

the costs associated with her household, she may

be clueless as to what is involved or what it costs.

Defining what has caused the economic disadvan-

tage will lay the foundation for the introduction of

the structured settlement. It may also provide valu-

able clues as to how the economic disadvantage

can be rectified.

PURPOSE OF STRUCTURED

SETTLEMENT

The necessity for these plans can range from

providing basic sustenance to maintaining a partic-

ular standard of living. They can also be very valu-

able in demonstrating that a particular settlement

proposal will, or will not, meet the needs of the

wife. However, the ultimate goal of a structured

settlement may not be entirely clear at the onset

of the study. A study which begins as an alimony

calculation may result in a plan which provides

for the wife’s education instead of extended pay-

ments on the part of the husband. Consequently,

the express goal of the exercise is not important,

the financial picture which it paints is.

EDUCATION OF SPOUSES

The structured settlement process is a high-

ly effective tool for educating divorcing parties.

The structure describes the financial condition

of the party in need after the divorce. It also

provides an introductory course for clients who

have never been responsible for household

finances and, consequently, have no idea how

much it costs to live or maintain a particular

lifestyle.

When the process is completed by both

parties, it shows the parties’ relative financial

positions. This, for example, may throw cold

reality on an unreasonable alimony demand. If

a husband can show through the structure that

he simply cannot meet the demands of the wife,

the wife’s arguments will falter in negotiations

and, ultimately, court.

In addition, one of the greatest challenges

in managing divorces is overcoming the fear of

the spouse who is at a financial disadvantage.

Structured settlements paint a clear picture of fis-

cal resources available, and expected expenses.

Even if a party’s financial position is bleak, it is

always better to know. This knowledge reduces

stress and allows the party to deal in a world of

reality.

ASSESSMENT OF SPOUSE

The structured settlement normally begins

with an assessment of the status of the wife. This

will probably be an ongoing process, and encom-

passes everything from her emotional state to her

ability to earn money. However, this assessment

begins by answering one question, “What can this

individual do for herself?”

Divorce Managers (DMs) are not typically

experts in employment, mental illness, physical

disability, or occupational therapy. Nor do they

have to be. The DMs may only have to answer one

question, “Would I hire this individual to work for

me?” If the DM can’t answer the question, then

an occupational therapist should be consulted. If

the answer is yes, then the DM can move on to

quantify the productivity of the individual. If the

answer is no, then the DM checks the resistance

of the client to being classified as unemployable.

If the client assents, then, barring objection from

the spouse, the determination stands. If the client

or the spouse resists the classification, then an

occupational therapist or other expert should be

brought into play.

[This, of course, is easy enough to say. A

spouse who is mentally deficient, delusional,

or has certain other personality disorders may

not be employable at all, but believe that she

is. This situation can present a serious internal

conflict within a case when a wife is arguing

that she is employable when she is not. It puts

the DM squarely at odds with the client and

the best interests of the client. Telling clients

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