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Rather than getting a one-time lump-sum payment, a structured settlement distributes the settlement over time through scheduled, guaranteed payments. You choose the timing and frequency of these payments, as well as the insurance provider. Once the settlement is finalized, the responsible party transfers funds to an assignment company, which then secures an annuity from your chosen carrier and ensures you receive the agreed payments. Payment guarantees are backed by the financial strength of the issuing company
Structured settlements often offer significant tax benefits—namely, payments are either tax-exempt or tax-deferred, depending on the case type. In contrast, any investment gains from a lump-sum payout may be subject to taxes.
Structured settlements provide a flexible way to resolve many different types of cases. Payments from personal injury, wrongful death, or workers’ compensation claims can be arranged as income-tax-free structures. In addition, a wide range of non-injury cases—such as divorce, sexual harassment, discrimination, or environmental claims—can qualify for structured settlements with the benefit of tax-deferred treatment.
One of the biggest advantages of a structured settlement is the favorable tax treatment. Depending on the case, payments may be completely tax-free or tax-deferred, including any growth. By contrast, if you receive a lump-sum cash settlement—even if the principal is tax-free—any earnings generated through traditional investments could be subject to taxation.
Attorney fees are first directed to an assignment company by the defendant, insurer, or Qualified Settlement Fund (QSF). The assignment company then purchases either a structured settlement annuity or a market-based structured settlement that pays the attorney according to a set schedule. Taxes are owed only on the payments received in each tax year, not on the full fee upfront.
Deferred attorney fee payments are taxable in the year they are received, no matter who the payee is. The key advantage is the ability to grow funds on a pre-tax basis. When payments go to a law firm, they are treated as firm income; when paid directly to an attorney, they are reported as that individual’s income. This tax-advantaged structure can help reduce taxable income in any given year and may even keep you in a lower tax bracket.
Yes. Attorney fee deferrals can be structured to pay either your law firm—helping smooth payroll and overhead—or directly to you as an individual. In some cases, insurance carriers even allow the payments to be divided between the firm and the attorney.
Structured settlement payments are backed by some of the strongest and most highly rated life insurance companies in the industry. These carriers are carefully evaluated for long-term financial strength and stability, providing claimants with confidence that their future payments will be secure.
Claimants and their attorneys do not pay the consultant directly. Instead, the consultant’s compensation comes in the form of a commission from the insurance company that provides the structured settlement. Because consultants are not tied to any single carrier, we are free to focus on the claimant’s best interests when recommending settlement options and products.