STRUCTURING TAXABLE SETTLEMENTS

Failing to use periodic payments in a taxable settlement may produce an even worse outcome than in a tax-free case.

Breach of contract* Employment
Sexual Harassment
Punitive Damages
Environmental* Disability
Business Buy-Out* Construction
Transactional Litigation

Most settlements push the plaintiff in a higher tax bracket in the year of the settlement. By deferring a portion of the settlement, the plaintiff pays taxes on the income when it is received. The combination of tax savings and earnings on pre-tax dollars can be significant. The money saved in taxes is invested at little or no risk with no money management fees with strongest insurance companies in the industry. This can only be accomplished through periodic payments incorporated in the settlement.

In addition to avoiding a higher tax bracket, the moneys in the annuity are exempt from creditors. Some examples:

  • Fund retirement or college funds for children/grandchildren
  • Fund lifetime income or joint survivor benefits for a spouse
  • Annual cost of living increases available up to 6%
  • Death benefit allows your beneficiary to receive remaining guaranteed payments

Call to learn more about availability, underwriting guidelines, procedures, and required documents.

PERIODIC PAYMENTS FOR 104 (a)(3) DISABILITY INCOME POLICY CLAIMS
(Tax-exempt when premiums are paid by the claimant)

A Disability Structured Settlement benefits both the insurer and the claimant. It is appropriate to consider a Structured Settlement when:

  • The claimant has no interest in vocational rehab or return to work programs.
  • The claimant is permanently disabled and has no hope of returning to work.
  • There is unclear or multiple medical prognosis for the long term.
  • There is disputed medical treatment or disputed claim.

  • Policy limits will definitely be reached.

Advantages to the Claimant

Freedom to negotiate and restructure the benefits to suite their lifestyle. The benefits can be tailored to meet a variety of financial needs, such as supplementing retirement income, providing a college funds for children, starting a business, or paying off debts. There is no need to adhere to the level and frequency of payments available under the disability policy. Claimants are free to go back to work without jeopardizing their payments.

Guaranteed benefits for claimants and their family. The benefits can be extended for the claimant's lifetime instead of ending at age 65. A guarantee period can protect beneficiaries and provide greater peace of mind.

Assured payments. Issued by highly rated insurance companies with medical underwriting available to leverage benefit payouts.

Advantages to the Disability Insurer

Disability claims present a unique problem to any insurer: how to manage the complicated issues that arise form a long term disability claim, and still maintain profitability when the cost of providing these benefits increases over time.

Reduce claims reserves. Shifts the risk and reserves to another entity with strong financial strength.

Reduce administrative costs. By settling the disability claim, the expense and time required to administer payments is eliminated, as well as the case load for adjusters.

Pass on the investment and reinvestment risk. Structured settlements can eliminate the risk of changes in investments or interest rates.

THE BENEFITS OF USING STRUCTURED SETTLEMENTS FOR ENVIRONMENTAL CLEANUP*

A structured settlement meets the needs of many companies facing an environmental cleanup challenge. A structured settlement can remove accounting and financial reporting requirements, improve investor relations and image, and allow for a current tax deduction of future cleanup costs.

Structured settlements helps the company avoid having to disclose environmental cleanup liabilities which are required under accounting and Securities and Exchange Commission (SEC) regulations. When future contingent liabilities are removed, no further disclosure is necessary. The avoidance of any negative impressions of environmental claims improves investor relations and corporate image.

The company can obtain a current tax deduction for future environmental cleanup costs when making a payment into a Qualified Settlement Fund which funds the cost of future cleanup.