Structured settlements in divorce are a tricky business. They require a high level of planning and significant forethought in order to be successful. At their best, structured settlements can provide a continuous source of income, address liquidity issues of the moneyed spouse, and provide financial security over time. At their worst, they can extend conflicts into the future with disastrous consequences for the spouse who is relying on the settlement in order to meet basic needs.

A structured settlement replaces one lump payment with smaller payouts over time — it’s a concept frequently used in workers’ compensation or tort cases, but more often, these types of settlements are also being used in divorces. It sounds like a positive solution, but I cannot tell you how many times I have observed the many ways that structured settlements have failed because of a lack of penalties and controls built into the final agreement.

Take the case of Jenna, a woman who is self-employed in the high-powered financial services industry and divorced from her ex-spouse Andy, a stay-at-home dad*. While the couple were married, he supported her through business school, helped her start their business, and when they decided to have children, he promised her that he would stop working and stay at home.

Shortly after their second child was born, Jenna began an affair with the pool boy and later, the CFO of her (their) company. When Andy discovered her infidelity, she promised to bury him if he divorced her and threatened him with the loss of his lifestyle.

Their structured settlement included a property payout over eight years, alimony with a cost of living increase each year, and a share of the profits from her business. For this stay-at-home dad, however, nothing went according to plan.

Download the complete article, reprinted with permission from the Connecticut Law Tribune.