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Case Studies

Traditional Annuity rejected opens door for Settlements Plus™

Case involved a tractor trailer collision with a car that resulted in the fatalities of the parents of three adult children.  Unlike a lot of fatality cases, the adult children were not dependent on the parents, were financially savvy, established in their careers and possessed other financial assets to meet their immediate and long-term needs.

The structured settlement consultant presented structured settlement annuities as a part of a settlement plan for the adult children.   Despite the guaranteed tax-free returns from the traditional annuity, the plaintiffs rejected the annuities and inquired about the availability of market-based structured settlement programs.

The consultant then presented Settlements Plus as a program to realize market-related returns with tax-free growth vs. taxed post-settlement gains from investing their all cash settlements.  As a result, two of the family members elected to utilize Settlement Plus (they were employees of a bank and wanted to have the bank manage their assets within the program) and the third family did not want to take market risk and elected to receive a structured settlement annuity for a portion of their settlement proceeds.

In the end, Settlements Plus helped provide some acceptable settlement solutions for all the family members that had differing needs/desires for their settlement proceeds.  Without Settlement Plus, the clients were planning to take cash.  With Settlements Plus, the clients chose their own financial advisor to manage their money, secured tax-free gains on those funds, and then realized the advantages of a structured settlement annuity for a portion of their settlement.

Non-Qualified Settlement Created Opportunity for a Fixed-Indexed Annuity

A financial advisor referred a prospective client of his to introduce the structured settlement options. Through the conversation it was discovered that this was an employment case to be settled for $7.2 million. After the attorney fee was paid, the claimant would receive $4.9million. The idea of providing a pre-taxed contribution and tax deferred performance for the claimant was also discussed because the non-qualified nature of the funds. This was very exciting for the claimant. The claimant wanted the best growth opportunity available with downside protection from losses. The claimant elected to defer $2.45 million of the settlement in a fixed indexed annuity (FIA) with an assignment to Structured Assignments, Inc. (SAI) and the remaining $2.45 million in cash. By deferring $2.45 million, the claimant reduced the immediate tax liability by $980,000. The FIA would grow for 10 years and then be distributed intaxable periodic payments over 20 years. The indexed annuity would provide the larger market driven growth opportunity and still provide protection from any losses. These tax advantages and the indexed annuity would not be an option for the claimant if a non-qualified assignment through SAI were not available.

Fee Structure Plus® with Open Architecture and Personal Advisor

One of the many exciting features of Fee Structure Plus is the open architecture flexibility of the program.  Recently one of our consultants worked with a successful personal injury attorney who settled a case where the attorney’s fee was $2.8 million.   The attorney would have incurred a significant $1.1 million income tax consequence if the fee were taken directly in cash.  The consultant offered the Fee Structure Plus program.  The attorney liked the program but wanted to use his independent financial advisor.  The consultant educated him about the open architecture of the FSP program which gave him the opportunity to use his own advisor.  He decided to Structure his fee with Fee Structure Plus and spread out his payments over 5 payments ending in 2024.  He liked the ability to realize tax-deferred, market-related returns.  The attorney also liked that the full $2.8 million fee was going to work for him versus $1.7 million; the amount he would have had remaining after taxes if he had received his fee in cash.

Without the ability to use his own financial professional to manage his fees on a pre-tax basis, this attorney would have elected to receive his fee in cash.

Fee Structure Plus® provides Creditor Protection

Recently a settlement consultant met with a plaintiff attorney who was about to settle a large personal injury case.  The 44-year-old attorney was going to receive a $1.2 million contingency fee from the settlement.  The consultant knew that the attorney would realize a significant tax consequence on the fee, so the consultant introduced Fee Structure Plus.  Once the attorney understood how the FSP program worked, he was eager for the fee to be placed in the program.

The attorney liked the thought of being able to defer and invest the entire $1.2 million rather than paying $475,200 immediately in taxes at the highest tax rate. The attorney was also pleased with the ability to use a non-qualified assignment with Structured Assignments, Inc.  The assignment protects the attorney from claims from potential creditors as the attorney only has the right to receive periodic payments without any ownership rights of the underlying assets.  A big attraction to FSP for the attorney was that he could select an investment strategy based on his own risk tolerance that would provide market-related returns.

Without Fee Structure Plus, the attorney said he would never have structured his fee.