This difference reflects the time value of money, which is the concept that a dollar today is worth more than a dollar tomorrow because today’s dollar earns interest until tomorrow’s dollar is received.

Structured settlements are used in the distribution of marital property when one division of property, so it is not taxable. The recipient does pay taxes on the interest, not the principal. The note is normally collateralized. In this arrangement, Rufus gets the house; Rhonda gets an income stream.

The same basic regime applies Rufus’s buying out Rhonda’s interest in their home as would be if the he bought out her share of his business so he could keep it.

The calculation of present value. Otherwise, the distribution may be based on an erroneously high award value.

Jurisdictions view interest in different ways. Some consider it mandatory; other generally award it; some say that a failure to award it must be explained; still others contend that awarding interest, either denying it or postponing it, is a factor to consider.

Unlike lump-sum settlement, which make for a clean financial break, structured settlements are a continuing financial tie between former spouses. Sometimes couples, for financial reasons, negotiate a deferred luimp-sum payment, which also includes the payment of interest.

Both lump-sum settlements and structured settlement demonstrate the variety of ways a marital estate can be divided so that former spouses both get something of what each wants because the terms and conditions of marital settlements are all open to negotiation.

See also Lump-Sum Settlement.