32 CFR 536.55 - Structured settlements.
(a) The use of future periodic payments, including reversionary medical trusts, is encouraged to ensure that the injured party is adequately compensated and able to meet future needs.
(1) It is necessary to ensure adequate care and compensation for a minor or other incompetent claimant or unemployed survivor over a period of years.
(2) A medical trust is necessary to ensure the long-term availability of funds for anticipated future medical care, the cost of which is difficult to predict.
(3) The injured party's life expectancy cannot be reasonably determined or is likely to be shortened.
(b) Under subpart D of this part, structured settlements cannot be required but are encouraged in situations listed above or where state law permits them. In the case of a minor, every effort should be made to insure that the minor, and not the parents, receives the benefit of the settlement. Annuity payments at the age of majority should be considered. If rejected, a blocked bank account may be used.
(c) It is the policy of the Department of Justice never to discuss the tax-free nature of a structured settlement.
For further discussion, see DA Pam 27-162, paragraph 2-63.