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Taking the (Tax) Sting out of Taxable Settlements

by Adam Pierce |

Structured Settlements have been available for injury victims since the late 70’s.  Countless billions have been placed in these annuities which have helped hundreds of thousands of injured parties guarantee their financial future.

Since 1999, the non-qualified structured settlement has emerged as a unique and powerful way to protect claimants and attorneys from large and unnecessary state and federal income tax burdens on taxable damage settlements and attorney fees by deferring those taxes into future years.

A Non-Qualified Assignment is a transaction where the defendant and/or their insurer agrees to make future periodic payments to the claimant and/or attorney. The obligation to make these payments is then “Assigned” to a third party (the Assignee). When the Assignee accepts the assignment, they assume all obligations to make the future periodic payment, and the defendant/insurer are fully released from the future periodic payment obligation.

Taking periodic payments over time can greatly reduce the tax obligation to the claimant. Deferring taxable income can include:

  1. Avoiding higher tax brackets.
  2. Avoiding the alternative minimum tax (AMT).
  3. Customized payments (weekly, monthly, annual, etc.)
  4. Can provide Lifetime income if selected, cost of living adjustments are also available.
  5. Guarantee provided by an A rated carrier or higher.

Below are a few common examples of taxable structured settlements:

-          Employment Disputes (Excluding Lost Wages)
-          Sexual Harassment
-          Age Discrimination
-          Wrongful Termination
-          Divorce
-          Attorney Fees

Contact Adam Pierce, adam@lawyersmutualnc.com or 800.662.8843, at Lawyers Insurance for any questions regarding Structured Settlements 

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