Market Based Structured Settlements | How They Work
What is a Market Based Structured Settlement?
Market based structured settlements are established much like a traditional structured settlement, but differ in that there is a market-based investment portfolio serving as financial vehicle generating periodic payments, rather than (or in conjunction with) a structured settlement annuity. The essential promise to pay in the settlement agreement and qualified (or non qualified) assignment, is based on an objective formula rather than a fixed payment.
Market based structured settlements were initially introduced as an alternative for attorney fee deferrals during an extended period period of declining interest rates on traditional fixed rate structured settlements. Opportunities later arose for claimants and plaintiffs.
Today an expanding menu of market based structured settlement and next generation index linked structured settlements are part of a mix of options for claimants and attorneys than were available 15-20 years ago and offer opportunities to address inflation, diversification and wealth generation.
Here are some of the Market Based Structured Settlement Programs available today:
Settlements Plus™
- Tax-Free Income for Physical Injury Cases: Unlike when claimants receive cash and invest outside of the settlement, where used for payment of damages under IRC 104(a)(2), Settlement Plus payments are all tax-free including gains, thereby allowing the opportunity for greater rates of return on future payments.
- Tax-Deferred Income for Non-Physical Injury Cases: A plaintiff's or claimant’s deferred funds can be placed in a vehicle other than a traditional annuity or U.S. Treasuries, allowing the plaintiff or laimant to realize market-related returns on the value of the future periodic payments.
- Market-Driven Growth Potential: In addition to tax-free or tax-deferred income on structured settlements, the claimant’s funds may be allocated to market-related investment portfolios.
- Asset-Class Diversification and Inflation Protection: Settlements Plus™ can help achieve asset-class diversification to address income needs, retirement planning and other financial considerations. It can also be used in conjunction with a structured settlement annuity to provide guaranteed fixed income and market-based income.
- Periodic Payments to Meet Unique Needs: Periodic payments are designed to deliver the flexibility and customization needed to meet a claimant’s individual financial needs.
- Use of a Personal Financial Advisor: Claimants can select a passive or an active investment management approach using a financial institution or even their personal financial advisor. This allows for the investment to work in conjunction with their overall wealth management strategy.
Fee Structure Plus®
- Income Tax Deferral: Rather than paying taxes on a lump sum, the full amount of the contingency fee is placed in FSP pre-tax. This approach permits the attorney to spread out tax liability as the payments are received, allowing the FSP account to continue growing in the meantime.
- Diversification of Funds: Fee Structure Plus® can help attorneys achieve asset-class diversification to address income needs, retirement planning, operating expenses, and other financial considerations.
- Market-Related Returns: In addition to tax-deferral on contingency fees, deferred funds may be allocated to market-related investment portfolios.
- Periodic Payments to Meet Individual Needs: Periodic payments are designed to deliver the flexibility and customization needed to meet an attorney’s specific financial goals. Attorneys can manage their tax burden by distributing payments over several years or deferring payments to a time or place when their tax rate is lower.
- Open Architecture Solution: Contingency fee attorneyes and law firms can select a passive or active investment management approach using a respected financial institution or their own personal financial advisor. This allows for the investment to work in conjunction with their overall wealth management strategy.
*Fee Structure Plus is a Registered Mark of Structures, Inc. (USPTO Reg. 4772214)
Assura Trust
Assura Trust | Market Based Structured Settlement Option | (4structures.com)
Treasury Funded Structured Settlements
Treasury Funded Structured Settlements | 4structures.com
Last updated September 19, 2024
