 “Despite the best intentions of plaintiffs, lump sum settlement awards are often quickly dissipated because of excessive spending, poor financial management, or a combination of both.Statistics showed that twenty-five to thirty percent of all cash awards are exhausted within two months, and ninety percent are exhausted within five years.”

An explanation of Internal Revenue Code section 130 was given during discussions of possible taxation of companies that bought future payments under those structured settlements.“By enacting the PPSA, Congress expressed its support of structured settlements, and sought to shield victims and their families from pressures to prematurely dissipate their recoveries.”

Congress was willing to afford such tax advantages based on the belief that the loss in income taxes would be more than made up by lower expenditures on public assistance programs for those who suffered significant injuries.