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FAQs
Frequently Asked Questions:
A structured settlement is an alternative to a lump-sum cash payment as a means of compensating physically injured victims. Congress enacted the Periodic Payment Settlement Act of 1982, which promoted the use of structured settlements through Internal Revenue Code Sections 104(a)(2) and 130. These sections provide that all structured payments—including any interest generated—are income-tax-free to the recipient.
Age rating is a technique through which we are able to maximize lifetime annuity payments to the injury victim. It involves submitting medical records to the insurance carriers that issue structured settlements; they review these files in order to determine a rated age for the prospective annuitant. For instance, while the injury victim's biological age may be 12, actuaries at the insurance company may determine that, due to the severity of the injuries sustained, the life expectancy is not that of a 12-year-old but rather that of someone age 30—and they will therefore offer to issue the annuity based on that rated age. This translates into increased lifetime monthly payments to the annuitant, since the insurer has based the payments on a shorter life expectancy.
- Once the plan design is finalized, we engage the seven carriers that offer structured settlement annuities and hold a financial rating of A+ or A++ in a bidding contest. A daily rate is an offer for a specific payment schedule that an insurance carrier holds open for only a single day. Daily rates are often better than a carrier's published rates because the carriers are competing for business they know will be placed with either themselves or a competitor. The bidding contest works as follows: we solicit daily rates from each carrier, analyze every offer, and select the best available rate among all the top-rated insurers—maximizing the value of the annuity payments made to the injured party and their beneficiaries.
We have a myriad of ways in which we can complement plaintiff attorneys' efforts to settle claims on behalf of their clients. Two are particularly useful: age rating and pre-mediation consulting. Age rating, discussed above, can offer valuable insight into whether the defense has engaged a structure broker of its own. Specifically, when we request age ratings on an injured party, we receive not only that person's rated age but often the names of any defense structured settlement consultants who have also requested ratings on that individual. Second, we are glad to assist in preparing for mediations. This puts an expert on your side of the table—one who can give your client financial clarity about what they'll need to meet their long-term goals.
- Yes. Attorney contingency fees can be structured. It's important to clarify that the annuity payments will be taxable—but that taxation occurs on a deferred basis, which can be particularly valuable when structuring large contingency fees. Rather than taking the fees immediately, which would be treated as a single taxable event on the entire amount, structuring them lets the annuity payments—and the associated tax liability—spread across many years.
Certainly. Having your own consultant ensures the structure is designed around your client's interests, with full transparency into how the numbers are built. The key factor is a planning process that produces a custom solution. This process includes preserving health insurance and government benefits, reducing debt, establishing emergency funds, and planning for college while protecting financial aid eligibility—all while complementing the client's overall financial picture and easing the burden on their monthly budget.
No. Our services will not reduce the amount that your client receives. We are compensated by the insurance carriers with which we place the structured settlement. Furthermore, we do not charge any consultation fees whatsoever. Thus, we feel that our services can only add value to your representation of your client.