Sage Settlement Consulting
Experts predict that the Federal Reserve will raise interest rates at least four times this year. As interest rates increase, so do rates of return on structured settlements. During good times and bad, structured settlements provide a reliable income source for your clients. Clients have peace of mind knowing they will receive guaranteed1 funds on a set date and for a specific amount. As their attorney, you can feel assured that your clients have financial protection.
As our economy rebounds, the settlement industry has developed advanced solutions to capitalize upon the tax savings and reliability of structured settlements while also leveraging market growth. Here are three reasons why you and your clients need structured settlements:
#1 Growth Potential: The Modern Structured Settlement
Of late, settlement planners are incorporating more innovative structured settlement options with the historically reliable annuity. These newer structured settlements offer market-based returns and tax-free or tax-deferred interest. Some choices include:
- A hybrid product that invests in both a fixed-rate structured settlement annuity and Vanguard Growth Funds;
- A fully market-based structured settlement that can be managed by an investment advisor of your choice;
- An uncapped, index-linked structured settlement annuity; and
- A structured settlement annuity for which payments increase and never decrease, based on the performance of the S&P 500.
#2 Tax Benefits
Any interest earned in a structured settlement used in a personal injury, wrongful death, or workers’ compensation case is always income tax-free. In non-physical injury cases and when deferring attorneys’ fees, the payments (including interest) are tax-deferred until payments are received.
Utilizing market-based structured settlements while deferring income taxes is becoming an indispensable financial planning tool that lowers tax liability and increases investment returns. Attorneys should familiarize themselves with the available market-based options to maximize their net fees.
#3 Funding Tool
Structured settlements are often used as funding tools for Medicare Set-Asides and Special Needs Trusts. The use of a structured settlement annuity in these instances can increase the net recovery to your client. While each case is different, this is something to discuss with your trusted settlement consultant on a case-by-case basis.
For more information about incorporating structured settlements into a settlement plan or an attorney fee deferral, contact your Monarch consultant today.
1 Guarantees are subject to the claims-paying abilities of the issuing insurance company.