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Frequently Asked Questions

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Fee Structures Plus®

Is there a minimum or maximum amount that can be placed into Fee Structure Plus® (FSP)?

The minimum amount for FSP is $100,000.00. There is no maximum.

Can the payee be the law firm?

Yes, the payee can be either the attorney or the law firm. The payee will be reflected in the settlement documents.

Can FSP be used for a claimant in a non-physical injury case (non-qualified settlement)?

Market-based structured settlements for claimants are available through the Settlements Plus program.

Where are the assets funding the Fee Structure Plus payments held?

Upon receipt of the funding amount in Barbados, the assignment company immediately sends funds via wire transfer to a trust company in the United States for custodianship and management. At the completion of the FSP transaction, the assets are held by the US domiciled trust company as the funds’ custodian. Additionally, if requested by the attorney, the trust company may transfer the funds to an external financial advisor’s platform.

What are the fees for FSP?

The fees for FSP are:

  • One-time assignment fee of $1,000
  • One-time administrative fee of $400
  • Annual FSP Program Fee of 1% of the value of the Fee Structure Plus account each year, taken at the time of account establishment and on or about each anniversary thereafter.

This program fee covers the ongoing program administration costs, operating expenses of the assignment company and custodial and administrative services provided by the trust company. It also provides the attorney or law firm with access to the trust company’s investment asset allocation models at no additional cost. If investment advisory services by an external financial advisor or active management by the trust company are desired, the fees of the external advisor or the trust company would be added to the fees outlined above.

Can an attorney structure fees with FSP even if his or her client does not select a structured settlement?

Yes, a claimant structure is not necessary. FSP is available for stand-alone attorney fee structures.

Is FSP limited to physical injury cases?

No, FSP is available to attorneys for any type of contingency fee case.

Are the assets within FSP accounts protected from creditors of the attorney or law firm?

While the attorney or law firm would be the payee of the future payments, the assets used to fund the FSP payments are owned by the assignee, Structured Assignments, Inc., pursuant to a non-qualified assignment.

Since the attorney and/ or law firm have the right to receive periodic payments but do not have ownership rights in the underlying assets, the assets are not subject to claims of the attorney’s or law firm’s creditors.

Why is the assignment company located in Barbados?

The Assignment Company is domiciled in Barbados to make use of the benefits of the US-Barbados Tax Treaty to prevent double taxation.

What is the role of a trust company?

A trust company serves as the master custodian and administrator of the FSP program. It is responsible for accounting, tracking, reporting (including tax reporting), and calculations on behalf of the assignment company.

Can the attorney designate beneficiaries?

Yes, the attorney can designate both primary and contingent beneficiaries.

What type of tax reporting is required for FSP?

The trust company, on behalf of the assignment company, will issue a 1099-MISC to the attorney or law firm payee during the year(s) that payments are made. The payments are reported as ordinary income.

Can the attorney view the balances in the FSP account online?

Yes, online view-only access to the account is available.

Do the laws governing ERISA plans as well as other deferred comp plans apply to the FSP program?

No, pursuant to the Childs case, a structured attorney fee payment is viewed as non-employee deferred compensation, not employee compensation (e.g., 401(k)). Further, it falls under Section 83 under the Childs decision and was exempted from the 409A deferred compensation regulations in Notice 2005-1. Copies of the Childs decision and Notice 2005-1 are available upon request.

Settlements Plus™

Is there a minimum or maximum amount that can be placed into Settlements Plus (SP)?

The minimum amount for SP is $250,000.00. There is no maximum.

Must the claimant structure the entire settlement?

No, a claimant can structure all or a portion of the settlement. The portion of the settlement that will be structured is paid directly to the assignment company.

Is the claimant limited to one type of settlement product for the case?

No, a claimant can split fund the settlement between multiple structured settlement products or other programs.

What are the advantages of SP over a traditional Annuity?

Ability to defer unlimited amounts of settlement income, maximize the advantage of tax free/deferred investment growth, potential market-based returns, and the ability to adjust the risk tolerance according to changes in financial landscape, flexible structure.

Can the claimant view the balances in the Settlements Plus account online?

Yes, online view-only access to the account is available whether the claimant chooses the trust company or a personal financial advisor.

Where are the assets funding the Settlements Plus payments held?

Upon receipt of the funding amount, the Assignment Company immediately sends funds via wire transfer to a trust company in the United States for custodianship and management. At the completion of the Settlements Plus transaction, the assets are held by the U.S.-domiciled trust company as the funds’ custodian. Additionally, if requested, the trust company may transfer the funds to an external financial advisor’s platform.

What are the fees for SP?

The fees for SP are as follows:

  • One-time assignment fee of $1,000
  • One-time administrative fee of $400
  • Annual SP Program Fee of 1% of the value of the SP Account each year, taken at the time of account establishment and on or about each anniversary thereafter. This Program Fee covers the ongoing program administration costs, operating expenses of the Assignment Company, and custodial and administrative services provided by the trust company.
  • The fees for investment advisory services by an external financial advisor or active management by the trust company are in addition to the fees outlined above.

Why is the Assignment Company located in Barbados?

The Assignment Company is domiciled in Barbados to make use of the benefits of the US-Barbados Tax Treaty to prevent double taxation.

What type of tax reporting is required for SP?

For taxable settlements, the trust company, on behalf of the Assignment Company, will issue a 1099-MISC to the plaintiff/claimant during the year(s) that payments are made. The payments are reported as ordinary income.

Are the assets within the Settlements Plus accounts protected from creditors of the claimant?

While the claimant would be the payee of the future periodic payments, the assets used to fund the SP payments are owned by the Assignee, Structured Assignments, Inc., pursuant to a Non-Qualified Assignment Agreement and Release (NQAR). Since the claimant has the right to receive periodic payments but does not have ownership rights in the underlying assets, the assets are not subject to claims of the claimant’s creditors.

What happens to the settlement payments in the event of the claimant’s death?

Payments would continue to be made to the claimant’s beneficiary according to the original payment schedule.

What is the role of the trust company?

The trust company serves as administrator and master custodian of the SP program. It is responsible for accounting, tracking, reporting (including tax reporting), and calculations on behalf of the assignment company.

Treasury Funded Structured Settlement™

Is a TFSS tax-free?

Yes. Physical injury settlements placed into a TFSS™ are free from federal and state income taxes under Section 104 of the Internal Revenue Code. Non-physical injury settlements placed into TFSS provide tax-deferred payments.

Are my payments secure?

Yes. Once funded, the payments are backed through the purchase of U.S. Treasury Obligations. Regardless of market performance, your payments will not change, providing you with a secure source of income.

What type of tax reporting is required for TFSS?

For taxable settlements, the trust company, on behalf of the Assignment Company, will issue a 1099-MISC to the payee during the year(s) that payments are made. The payments are reported as ordinary income.

What kind of payments can I receive?

A TFSS™ can be structured to pay monthly, semi-annually, annually or periodic lump sums, up to 30 years. The payments are customized to your current and future needs during the time of settlement.

Alternative Insurance Solutions

Can a Fixed Annuity (FA) /Fixed-Indexed Annuity (FIA) be used to structure both a claimant’s settlement and Attorney’s Fees?

Yes, both types of structures will be accepted. Qualified cases will grow tax free and non-qualified cases will grow tax deferred.

What are the minimums for a Structured FIA?

That varies by carrier, remember that a one-time set-up fee is deducted from the premium, so the minimum must be the premium after the fee is applied.

What is the setup fee?

– One-time assignment fee of $1,000

– One-time administrative fee of $400

Can I use an FA/FIA in a qualified and non-qualified structure?

Yes, both situations work and the growth of the product receives the tax advantages appropriate to the type of settlement being agreed upon?

Must the claimant structure the entire settlement?

No, a claimant can structure all or a portion of the settlement. The portion of the settlement that will be structured is paid directly to the assignment company.

Is the claimant limited to one type of settlement product for the case?

No, a claimant can split fund the settlement between multiple structured settlement products or other programs.

Why is the Assignment Company located in Barbados?

The Assignment Company is domiciled in Barbados to make use of the benefits of the US-Barbados Tax Treaty to prevent double taxation.

What type of tax reporting is required for FIA and FA?

For taxable settlements, the trust company, on behalf of the Assignment Company, will issue a 1099-MISC to the plaintiff/claimant during the year(s) that payments are made. The payments are reported as ordinary income.

Are the assets within the FIA/FA accounts protected from creditors of the claimant?

While the claimant would be the payee of the future periodic payments, the assets used to fund the payments are owned by the Assignee, Structured Assignments, Inc., pursuant to a Non-Qualified Assignment Agreement and Release (NQAR). Since the claimant has the right to receive periodic payments but does not have ownership rights in the underlying assets, the assets are not subject to claims of the claimant’s creditors.

What happens to the settlement payments in the event of the claimant’s death?

This depends on the type of product. For some products, payments would continue to be made. For some products, the beneficiary would be able to take a lump sum of whatever remains in the account.

Fixed-Indexed Annuity

How do the annuity funds grow?

There are 3 triggers insurance carriers may use to control the growth of the annuity. They are: Caps, Participation Rates, and Spreads/margins. Depending on the product an annual fee may be applied too.

What is the reset period?

This is the amount of time the specific product uses to lock in gains and reset to the new starting point in the index. This time varies from product to product.

What is the surrender period?

This is how long the product will have early withdrawal charges. IF this period does not match your structure, do not use the product. Surrender charges do not apply when turning on an income rider.

What is the advantage to an FIA?

The FIA provides guarantees of principle and market Indexed gains based on a strategy unique to each specific Indexed annuity.

Where are the assets funding the FIA held?

Upon receipt of the funding amount, the Assignment Company immediately sends funds via wire transfer to the insurance company in the United States to purchase the annuity contract.

Trust Solutions

Why do I need to consider a trust in addition to the structured settlement annuity?

As we all know, Structured Settlement Annuities or “SSA’s” are powerful financial vehicles that deliver many benefits to the parties to the settlement. However, in certain circumstances the overall value of the settlement can be enhanced for all parties by employing the many benefits of a trust. These unique financial and legal devices can offer protection and flexibility to the parties of the settlement by placing those assets into trusts and having funds professionally managed over time. This is done in order to address certain future contingencies.

What is the Structures Trust Platform?

The Structures Trust Platform is a bundle of various trust related services offered by Structures to settlement consultants. The Structures team offers guidance to consultants on whether a trust is appropriate for a case and if so, connects the consultant to a qualified trust services provider partner that meets the unique needs for the specific case opportunity.

How do I know if a trust is needed?

By contacting the Structures Team, you will be able to discuss the unique aspects of your case with us. If it is decided that a trust may be of benefit then a call with a trust provider partner is scheduled. In many instances this call occurs in conjunction with your initial call so that you quickly have the answers you need

What information do I need to have about my case before contacting the Structures Team?

The good news is that in most cases you already have the majority of the basic information needed to get things started. The obvious information are the names of the settling parties, what state of residence that they are in and whether the Court is ordering a trust or if the Guardian Ad Litem, Plaintiff Attorney or perhaps a family is requesting a trust. In addition, if you know whether there is an identified need for a Special Needs Trust, Reversionary Medical Trust or Medicare Set-Aside Account has been identified, that would be helpful. If any of the parties have expressed to you an interest in having some of their settlement proceeds tied to market performance that would also be helpful information for us. Lastly having a general idea about funds potentially available to be placed in a trust will also assist our team in selecting the right trust company referral.

Why doesn’t Structures use just one trust company?

In many instances, we do just use one company for your specific case.  However, like with annuity companies, no one annuity is best for all cases and no one trust company is right for every opportunity either.  Structures has gone through a very exhausting process of evaluating many different trust companies from all over the country to ensure that we have the best in class for you and your client’s needs.  Different trust companies have different capabilities and it’s important to match the right company for your client’s needs.  Additionally, geographic consideration can be very important as well, so Structures has made the decision to have a number of trust companies on our platform, thus ensuring the right solution will be may matched to your client’s needs.

How does Structures select trust companies for the platform?

Structures completed an exhaustive multi-agency survey in which we asked settlement consultants about their use of and need for trusts in their practice.  This very important “voice of the customer” information from you the settlement consultant formed the basis of our analysis and selection of the trust companies that would be placed on the platform.  Additionally, all of our trust company partners understand the importance of structured settlement annuities and see trusts and the investments made in trusts as complementary to SSA’s, not replacements for them.  This mutual understanding and respect is imperative to work in our “Settlement Solutions Approach” concept at Structures for serving our clients.

I have a case coming up that I would like to discuss with the Structures Staff and a Trust officer. Who should I contact?

All of the staff at Structures is trained on the trust platform capabilities and we welcome a call to anyone at Structures.  Following that initial contact, we will get a selected trust specialist involved and set up a more in-depth follow-up call.  Please contact us wither by phone at (844) 689-3020 or e-mail at info@structures.com.  We stand ready to deliver professional and timely trust solutions that will help solve your clients’ needs and deliver a trust solution that will be integrated into the overall settlement plan.

Structured Settlement Annuity

What is a structured settlement?

Structured settlements are an innovative method of compensating injury victims with the use of annuities. Encouraged by the U.S. Congress since 1982, a structured settlement is a voluntary agreement between the injury victim and the defendant for future periodic payments.

With a structured settlement annuity, the injury victim doesn’t receive compensation for his or her injuries in one lump sum. Rather, he or she receives a stream of tax-free payments tailored to meet future medical expenses and basic living needs.

A structured settlement may be agreed to privately (for example, in a pre-trial settlement) or it may be required by a court order, which often happens in judgments involving minors.

What kind of flexibility do I have in setting up a structured settlement annuity?

Structured settlement annuities are exceptionally flexible and can be designed to meet virtually any set of needs. A relatively simple payment schedule can be set up that provides for equal payments at set intervals – for example, every month for 20 years.

Yet payments need not be in equal amounts. Someone who will need a new wheelchair every three years might elect to receive a larger payment every 36 months to help defray the cost. (This would presumably be in addition to the regular payments.)

The inherent flexibility of structured settlement annuities means that they are well-suited to compensate people for a wide variety of injuries. Your attorney or a structured settlement consultant will be able to explain additional details as they apply to your case.

Who determines the amount of payments and the payment schedule?

In any physical injury case, the plaintiff and defendant negotiate issues such as the injured party’s medical care and basic living and family needs. Oftentimes, one side (or both) will bring in an expert, such as a structured settlement consultant, who provides calculations on the long-term cost of these needs.

When there is agreement on the amount of damages due the injury victim (which can happen before, during or after a lawsuit), the injured party can select a periodic payment plan that meets his or her needs, and the defendant will agree to make the future payments via a structured settlement annuity. The defendant then assigns this obligation to a third party assignment company who funds the obligation to make periodic payments through a life insurance company annuity.

As these issues involve complex calculations, you should always consult your attorney and a structured settlement consultant.

Are structured settlements annuities more likely to be used in certain types of cases?

Structured settlement annuities can be ideally suited for many types of cases, including:

  • Persons with temporary or permanent disabilities;
  • Guardianship cases that may involve minors or persons found to be incompetent;
  • Workers’ compensation cases;
  • Wrongful death cases where the surviving spouse and/or children need monthly or annual income; and
  • Severe injury, especially with long-term needs for medical care, living expenses and support of family.

Independent surveys show that the more serious the injury, the greater the likelihood that a structured settlement will be used.

I’m involved in a lawsuit now. Why should I consider a structured settlement annuity?

The tax-free payments from a structured settlement annuity can:

  • Relieve the financial pressures of medical expenses and living needs;
  • Meet long-term rehabilitation or permanent care facility expenses;
  • Provide for the future costs of college funds, retirement, down payment on a home, or mortgage payment;
  • Provide enhanced protection of the recovery from creditors and predators; and
  • Provide long-term financial security.

What are the advantages of a structured settlement annuity over a lump-sum payment?

A long-term structured settlement annuity has several advantages. First, there is security. A structured settlement annuity provides guaranteed long-term income. That gives the victim or the injured party’s family the ability to recover without spending time and resources determining investment strategies. Structured settlement annuity recipients avoid the possibility of a financial loss due to poor investment choices. Structured settlements annuities provide a secure, low-risk source of compensation and the convenience of regular payments tailored to fit the victim’s specific needs.

A second advantage is financial: when Congress amended the federal tax code to encourage structured settlement annuities, it explicitly provided that 100% of every structured settlement payment received on account of physical injury or sickness within the meaning of IRC 104(a)(2) would be exempt from federal and state income taxes.

There are many other benefits as well. The victim avoids the risk of mismanaging his or her settlement proceeds. Insurance industry statistics show that about 25 to 30% of all injured parties completely dissipate their judgments or settlements within two months of recovery, and 90% of them spend it all within five years. (Source: The Rutter Group, Ltd. from Flahavan, Rea, Kelly & Tener, “California Practice Guide: Personal Injury” (TRG 1992) Ch. 4.) Finally, using a structured settlement annuity, an injured party can avoid the risk of outliving his or her recovery by transferring the risk to a secure financial institution with experience in this field.

What are the disadvantages of a structured annuity?

There are two main disadvantages:

1. The periodic payments cannot be borrowed against, deferred, accelerated or changed once set up; and

2. Default risk, meaning the life insurance company that is selected becomes unable to make the payments.  However, this risk is small due to the well-capitalized life insurance companies that are used for structured settlement annuities. Finally, settlement proceeds can be spread among several different life insurance companies to lessen default risk.

What are some of the federal tax rules that make structured settlement annuities beneficial?

In the Periodic Payment Settlement Act of 1982 (P.L. No. 97-473), Congress adopted specific tax rules to encourage the use of structured settlement annuities to resolve physical injury cases.

Section 104(a)(2) of the Internal Revenue Code clarifies that the full amount of the structured settlement annuity payments is tax-free to the injured party. (By contrast, the investment earnings on a lump sum payment are usually fully taxable.)

What is a “qualified assignment”?

The defendant or its insurer may transfer the obligation to make future payments through a “qualified assignment” to a financially secure and experienced institution – a life insurance company, for example. The assignment provides the injured party with strong financial security, and the defendant can close its books on the case.

This process relieves the defendant of further responsibility for the payments and transfers the administration and record-keeping responsibilities. The assignment company specializes in these activities and may offer additional financial security to the claimant.

What other federal tax rules govern the use of structured settlement annuities and qualified assignments?

In order to protect the public, Congress specified in Section 130 the requirements to establish a qualified assignment:

  • The assignee assumes the liability from the defendant;
  • Both the injured party (and his/her attorney) and the defendant agree that the payment schedule cannot be “accelerated, deferred, increased or decreased”;
  • The payment stream may be excluded from the recipient’s gross income for tax purposes;
  • The injury must be a physical sickness or injury; and
  • A highly secure funding asset (such as an annuity or U.S. Government obligation) must be used to fund the payments.
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