At the same time you resolve your client's personal injury case, consider the benefits of structuring attorneys' fees rather than receiving one-time lump sum immediately. By structuring a portion of your attorney fees under a qualified structured settlement, you can defer income until a predetermined time in the future. Not only can this reduce your current taxable income – it also offers a secure way to set aside income for your future needs (i.e. education, retirement, etc.).
Your tax advisor or CPA can confirm that if the transaction follows the Child's v. IRS case, referenced below, you too can take advantage of this window of opportunity and accomplish some of your own financial objectives.. The U. S. Court of Appeals for the 11th Circuit affirmed in Richard A. Childs, Et al. v. Commissioner of Internal Revenue that attorneys may structure their fees, holding that taxes are payable on structured attorney fees when the annuity payments earmarked for fees are actually received. To read the full decision, click here.
Structuring Your Fees provides great flexibility and advantages:
- Defer all or any part of your fee – there is no limit.
- Reduce your taxes by spreading out income over time.*
- Choose when your payments will commence - immediate or deferred. Your payments are reported (via 1099) as income in the years received.
- Arrange lump sum payments to cover predictable future needs such as college tuition for your children.
- Supplement your retirement plan with payments guaranteed for life.
- There are no initial or ongoing investment management costs.
- Payments will be entirely predictable – unaffected by future market performance and guaranteed by one of the strongest financial institutions in the nation (ranked A+ Superior by A.M. Best Co.)
For more information or a quote for structured attorney fees, please contact us.
* please consult your tax advisor