After the settlement negotiation takes place, a plaintiff attorney must be aware of several documents required to execute the settlement and the pitfalls associated with each. The Settlement Agreement and Release identifies the parties and the settlement amounts and officially releases the defendant of liability. The Qualified Assignment sets for the the schedule of payments and assigns the obligation of payments. Finally the Court Order approves the settlement design and spells out any pertinent conditions such as a special needs trust trustee as Payee.

Several common mistakes in drafting the settlement agreement are easy to avoid. The settlement agreement should never that the plaintiff or special needs trust trustee will purchase the annuity. The plaintiff attorney and settlement planner should be on the lookout for any language that may signal constructive receipt of funds. The defendant or its casualty insurer should send the check directly to the annuity company.

The agreement should avoid any terms such as "receipt and sufficiency is hereby acknowledged." The term "receipt" and anything indicating such should be stricken from such a clause. Also, the settlement agreement should never put the plaintiff's injury in question. Instead of a phrase such as "plaintiff claims that he sustained personal physical injuries, all as a result of the incidents . . .," the document should say, "plaintiff sustained personal physical injuries that he claims are as a result of . . ."

The Qualified Assignment assigns the obligation to pay future payments from defense or its liability insurer to an assignment company. This document states that the assignment company purchases and owns the annuity.

The court must approve any settlement for a minor or an incompetent adult. The court orders the payment made directly to the assignment company. If the case requires a SNT, then the court will order the payee of the annuity to be the SNT trustee. To protect Medicaid's interest, no other beneficiary is allowed other than the SNT trustee. The Deficit Reduction Act of 2005 requires disclosure of any injure requires disclosure of any interest an applicant has in an annuity even if the annuity is irrevocable or not treated as an asset. Insufficient disclosure may result in denial or termination of Medicaid eligibility.

Beneficiaries of an SNT do not have an interest in the annuity. The settlement agreement requires that future payments will be paid by the defense. The defense assigns that obligation to an assignment company through the Qualified Assignment. The court orders the payments are sent by the assignment company directly to the SNT trustee. Therefore the trustee is the only party who could sell, accelerate, or encumber the future payments.

Structured settlement annuities are among the safest investments around. The major companies frequently enjoy A+ or better ratings. Even when an insurance company declares bankruptcy, annuitants almost always get reimbursed for the annuity. Of the 700,000 people insured by a structured settlement, only about 300 failed to realize 100% of the benefit promised. Even those claimants managed to obtain most of the benefit after some delays. The industry as a whole is heavily regulated by insurance commissioners requiring reserves, capital and surplus. This ensures that even if a company becomes insolvent, there will still be funds available to pack back annuitants.