ABOUT STRUCTURED SETTLEMENTS
A structured settlement is a highly secure stream of triple tax-free (federal, state and local) periodic payments designed to meet the financial needs of a claimant in a personal injury or wrongful death settlement. Structured settlements are typically funded by purchasing one or more annuities from a highly rated life insurance company which makes the payments to the injured person. These payments may be made for any length of time, even for the individual's lifetime. In the event of the injured party's death, the guaranteed portion of the settlement may be made to the estate or a named beneficiary such as a spouse or child.
The flexibility of the structured settlement proposal is limited only by the creativity of the structured settlement broker and the information provided. The role of the structured settlement consultant is to sit down with the injured party to ascertain the injured party's situation and exact needs. The structure consultant then designs proposals that will fund the injured party's needs with a secure, triple tax-free stream of future payments.
- TAX-FREE - IRS Code 104(a)(2) stipulates that periodic payments in the form of a structured settlement are completely tax-free.
- SECURE - Structured Settlements are funded through the most secure life insurance companies in the world.
- RATE OF RETURN - Structured Settlements grow at a guaranteed fixed rate of return unaffected by the volatility of the market. The table below illustrates the taxable rate-of-return required to match the return offered by a structured settlement assuming the stated tax brackets.
| Stucture Return Rate: |
Tax Bracket: |
| |
27% * |
30% * |
35% * |
38.6% * |
| 5.0% |
6.85% |
7.14% |
7.69% |
8.14% |
| 5.5% |
7.53% |
7.86% |
8.46% |
8.96% |
| 6.0% |
8.22% |
8.57% |
9.23% |
9.77% |
| 6.5% |
8.90% |
9.29% |
10.00% |
10.59% |
| 7.0% |
9.59% |
10.00% |
10.77% |
11.40% |
| 7.5% |
10.27% |
10.71% |
11.54% |
12.21% |
* Figures would be even higher with state and local taxes. |
|
When to consider Structured Settlements:
- Temporary or permanently disabled injured parties.
- Individuals attempting to retain some portion of their settlement for future use.
- Total or partial wage loss for any period of time. Guardianship cases, including minors.
- When the settlement is a large portion of all of the injured party's future support.
- As an alternative to investing part of settlement proceeds.
- Severe injury, especially shortened life expectancy, and the mentally incompetent.
- Death cases with surviving spouse and/or children needing monthly/annual income.
- Deferred payments for college funds, retirement, mortgages or attorney fees.
- Workers' compensation cases.
- Any case where a secure, tax-free, high yield income makes sense.
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