A structure provides guaranteed* tax-free income. Payments may be guaranteed for a specific period of time or as long as you live. Alternatively, the return on most other investments from a lump-sum settlement is never guaranteed, and risk can quickly become an undesired reality.
It Is Tax-free and Does Not Have Any Administrative or Management Fees
Pursuant to IRC Section 104(a)(2), all structured settlement payments are tax-free. Furthermore, they do not involve administrative or management fees. Lump-sum cash settlements are also initially tax-free, but the interest earned on investing that money is usually fully taxable. In addition, cash settlements are often subject to management and administrative fees, as well as the alternative minimum tax. It can be challenging for even the most sophisticated investor to match the after-tax return of a structured settlement.
It Eliminates the Burden of Dealing with a Large Cash Settlement
Successfully managing a lump sum involves great risk. As a result, many plaintiffs have lost all or a portion of their settlements. A common belief within our industry is up to 90 percent of single lump-sum cash settlements are fully depleted within five years, regardless of their amount.
It Offers Virtually Unlimited Flexibility
Structured settlements are designed to meet your specific needs. Tax-free payments can be scheduled for any length of time, even a lifetime. Plans can include monthly, quarterly or annual payments, as well as future lump sums, in amounts and on dates of your choice. They can begin immediately or be deferred to some future date. If income needs are expected to grow, you can also receive increasing payments with a cost of living adjustment.
It Protects You and Your Family
A properly designed structured settlement can provide you with confidence and security. You may design your structure to include a monthly check for everyday needs. You can also fund future obligations, such as your children’s education or your own retirement on a tax-free basis.
Capital Protection for Minors
Structured settlement payments can protect your child, by providing funds at the age of majority and spreading the rest over a period of time that you determine. Court approval of the settlement is more easily obtained by presenting a well designed structured settlement.
Estate Protection for Heirs
During the planning process, you determine the minimum number of guaranteed payments to be received. If you die before that number of payments has been made, your estate or heirs may receive all remaining payments tax-free.
0 comments:
Post a Comment