Structured Settlement Attorney

Attorney Fee Structures

We are hearing from more and more attorneys asking about the tax-deferred advantages of structuring attorney fees. This will answer some basic questions about structuring attorney fees.

In the short video below, Jack Meligan discusses different options attorneys have for structuring their fees. Click the video to play.

Now, to answer some frequently asked questions that attorneys have about attorney fee structures:

1. Does the Claimant have to structure a portion of their settlement before the attorney fee can be structured? No. The Claimant can take cash and the attorney fee can still be structured on a stand alone basis.

2. How does fee structuring work? Structuring an attorney fee is just like structuring a Claimant’s settlement. The same rules and tax principles must be followed in order to protect the tax benefits of any fee structure. One of the most important rules is NOT to take receipt of the settlement proceeds intended to be structured.

If you take receipt, whether actual (in your trust account) or constructive (bad or poorly drafted documents), of the portion of the settlement intended for structuring, your ability to structure your attorney fee on a tax-deferred basis is undermined.

A key concept to remember is that regardless of the nature (taxable or tax-exempt) of the underlying settlement, attorney fees are structured on a tax-deferred basis; not tax-exempt.

Let us take a hypothetical example. You are about to settle a case for $300,000. Your fee would be $100,000. You could take the fee, pay taxes on it and then do what you want with the remainder, which may be about $60,000.

Conversely, you could structure the full $100,000 to generate income in the future. By structuring your attorney fee you are using money that would have normally been paid away for taxes to generate further appreciation for you.

3. Why structure my attorney fee in a low interest rate environment? Fee structures are not suitable for every attorney.

Whether a fee structure is appropriate for you will depend on variety of factors, including your age, health, risk tolerance, retirement goals, tax bracket as well as your current and long-term needs. However, structuring you attorney fees could provide beneficial tax relief as well as secure and stable tax deferred income up to, and including, your lifetime.

Consider the following circumstances: It is November and you are about to settle a large case, but the attorney fee from that case will either push you into the next tax bracket or be taxed at the highest possible rate.

Why not structure that fee to payout over the next couple of years or even to start paying out at your retirement age? Even if the rate of return is nominal, after factoring in the tax-deferred savings of structuring a fee, it may be hard to beat.

**You can now leverage your Attorney Fee Structure. We have located a bank who will lend on fee structures and allow you to structure now AND invest now as well.

Learn More >> Leverage Your Attorney Fee Structures

4. Can I only structure contingent fees from a personal physical injury or wrongful death settlement? No. You can structure contingent fees from nearly any type of settlement. Companies have developed innovative products to expand the availability of attorney fee structures.

5. What do I need to do to prepare for structuring my attorney fees? Get prepared in advance by contacting your plaintiff loyal structured settlement planner. There are some basic foundational requirements you should be aware of before you structure your attorney fees.

An attorney fee for a structured settlement can be high or low depending on the amount of time and the amount of distribution awarded to the client. Structured settlements have been successfully used to settle claims resulting from personal injury suits; vehicle accidents, liability of a product, medical malpractice, and workers compensation coverage.

Some of these cases are completed in structured settlement litigation. Whenever litigation is required, the rates of an attorney are raised to another level. Future payments made periodically can be income tax free, which makes it an attractive way to receive money. It is also preferred over taxable investments, since the earnings made on an investment are taxable.

A claimant can avoid the risks associated with other types of investments. Payments are typically tailored to meet the claimant individual current situation, and can be adjusted as the years progress to fulfill other unique circumstances.

Sometimes a plaintiff will settle a case for a large sum of money. In structured settlement litigation, the defendant, the plaintiff's attorney or a financial planner will advice the claimant to be paid in installments over time rather than in a single lump sum.

The attorney fee for a structured settlement usually paid up front by the defendant, but if the fee is very large, it may also be included in the installment payment settlement. A specific advantage of an installment settlement plan is tax avoidance. When set up correctly, installment payments can significantly reduce the claimants tax obligations, and in some cases may even be tax free.

These types of payment plans are used for those who are not good at managing money, those that require the money for future needs most importantly, for those who cannot refuse the requests of family and friends, and for minors who are not responsible enough to be able to handle a large sum of money.

There are also disadvantages resulting from structured settlement litigation cases. People that choose this route may feel trapped by the periodic payments.

They may wish to purchase a large ticket item, and can't because they can't borrow against future payments from their settlement. Some people will do better with receiving a lump sum, and investing it themselves instead of the additional costs associated with paying and attorney fee for a structured settlement.

Many other standard mutual fund and stock investments will provide a greater rate of return than the annuities used in common distribution payments. There are companies that exist who approach people with the hopes of purchasing their distribution settlement in exchange for a lump sum payment.

There are only 35% of states within the country that do not restrict the sale of a settlement. Most have enacted laws of restriction for third party purchasers.

People who are paying an attorney fee for a structured settlement should be careful to watch out for potential exploitation in relation to the distribution plan. The first thing to watch out for before going through structured settlement litigation is excessive commissions.

Annuities can be very profitable for insurance companies, and often carry with them high commissions. Experts recommend doing the math to be sure that the commissions charged in setting up an annuity don't consume an inappropriate percentage of the principal. Second, claimants should watch out for an overstated value of the annuity by the defendant, or payer.

Claimants should compare the commission fees and values of the annuities offered by the payer, with other annuities to check for continuity in price and structure. There have also been cases when the lawyers involved are also in the insurance business and receive kickbacks or cuts of the annuities used. The claimant should be sure that none of the attorneys are causing a conflict of interests.

Claimants should also check around to be sure that their attorney fee for a structured settlement is not too high or over charged for the services rendered during the structured settlement litigation. Unfortunately, but most common is the life expectancy of the claimant.

Many people who receive large settlements have a shortened life expectancy as a result of the injuries that warranted the structured settlement. It is important to set up the annuity to pay the estate the remaining money if the claimant should pass away. This way the insurance company does not get to retain the money that they lost in a court ordered settlement. It is also advised for the claimant's protection to purchase annuities from multiple insurance companies.

This provides the protection needed in case an insurance company goes bankrupt. Not putting all the eggs in one basket is always a wise way to accumulate a safe return on investment or on money owed. Wisdom comes from seeking the knowledge required to make appropriate choices that can safeguard the financial wealth of an individual, family, or other organization. "When thou vowest a vow unto God, defer not to pay it; for he hath no pleasure in fools: pay that which thou has vowed." (Ecclesiastes 5:4-5)

Attorney Fees

Did you know that when you structure all or part of your fees through a Structured Settlement, you reap some of the same benefits as your clients?

As a Personal Injury Attorney, you already know that a Structured Settlement gives your clients the money they need, when they need it, thanks to the guaranteed, periodic payments provided under a qualified Structured Settlement.

But using a Structured Settlement for your attorney fees is also a smart financial planning decision since the proceeds may be tax-deferred and provide you with more money over time than a lump sum fee.

Select any of the links on the left to learn more about Structured Settlements, to find out why FSS is known for best-in-class service, or to determine if a Structured Settlement is the right solution for you.
Benefits of Structuring Attorney Fees

Structuring all or part of your fees may reduce your current taxable income and offers a secure way to set aside income for your own future needs.

By Structuring Attorney fees, you can:

* Defer all or part of your fee derived from a settlement - even if the claimant doesn't choose a structure.
* Choose when your payments will start. (There's no need to wait until age 59 1/2 for payments to begin.)
* Set up future lump-sum payments to cover known expenses, such as college education for children.
* Enjoy entirely predictable income, unaffected by future market performance, to help cover fixed costs such as overhead.
* Potentially reduce your taxes by spreading income out over time.

Guidelines for Structuring Attorney Fees

Structuring Attorney fees is similar to the structure solution available to their clients. In most cases, Attorney fees can be structured on a stand-alone basis, but need to be established before or concurrent with their client settlement. Structuring Attorney fees requires specific documentation and you should always consult a tax advisor before structuring your fees to ensure compliance with IRS tax requirements.
Why FSS?

We believe in matching each client's needs with the best solution possible.

At Financial Settlement Services (FSS), we take a holistic, life management approach, working with each client to ensure we have created a plan that addresses their future needs.

Our first priority is to understand the Attorney's future financial needs and concerns and then create customized and unique solutions that give them peace of mind knowing that their fees will be there to meet those needs.
Our Team

Our team averages 10 years experience in the Structured Settlement industry. In addition to their Structured Settlement experience, our dedicated professionals have diverse backgrounds in casualty claims, Workers' Compensation, commercial liability, law and finance.

Our team has a wealth of knowledge and experience that enables us to better serve our clients. At FSS, we deliver superior service to achieve maximum satisfaction and client benefit.
Customized Offering

FSS creates a customized package based on an individual needs assessment that takes financial and future goals into account. Our primary goal is to maximize our clients' settlement dollars using annuities from our highly rated Life Company partners.
Best-In-Class Service

Our reputation for service is second to none. We get involved early in the process and work hard to ensure that the process is easy to understand, timely and worry-free for our clients. Our large support staff allows us to quickly and accurately prepare and submit the required documents- allowing us to deliver exceptional service even through the post-settlement process.