The Settlement Alliance

If an Attorney Wants to Structure Fees, Does the Claimant Also Have to Structure?

If an Attorney Wants to Structure Fees, Does the Claimant Also Have to Structure?

Mar 28, 2017

Structured attorney fees can be an excellent strategy for an attorney who wants to spread out their tax burden over time or add a stable source of reliable income to a retirement portfolio. The ability to structure fees must be included in the settlement agreement—but does the claimant have to structure their settlement proceeds in order for the attorney to structure their fees?

Making the Decision Early—and Getting it in Writing

In order to finalize the settlement, both sides need to agree to the terms of the settlement agreement. Waiting too long to introduce your intention to structure your fees could result in resistance from the defense. By bringing up your intention to structure early, you have time to work through any issues the defense may have. Once the settlement agreement is signed, your time is up.

Luckily, even if your client decides not to place their settlement proceeds in a structured settlement annuity, you can still structure your fees. You just have to make the decision to do so before the settlement is finalized. It’s a good idea to bring in your settlement planner as early as possible to help you walk through your options and make sure that the appropriate language is included in the settlement agreement.

Why Would You Want to Structure Your Fees?

Structuring all or a portion of your fees can provide you with a number of benefits, including:

  • Spreading out your tax obligation over time: Instead of paying taxes on the entire lump sum (and possibly bumping yourself up to a higher tax bracket), if you structure your fees, you only pay taxes on the funds for the tax year(s) in which you receive them.
  • Creating a stable foundation for your investment portfolio: When you structure your attorney fees, you lock in your rate of return. Even if the market takes a dive, your structured fees remain intact. You can rest assured that your fees will continue earning interest and providing you with guaranteed payments for the life of the structured fee agreement.
  • Planning for future life events: The design of structured fee agreements is flexible, so you can decide whether you want to receive your payments annually, bi-annually, or monthly. You can also choose to have a few future lump sum payments—perhaps to pay for a new home, college for your children, or to supplement your retirement funds (without the contribution limits of a traditional IRA or 410(K)!)

Get the Answers You Need Today

For more information about the language to be included in the settlement agreement or to discuss your fee deferral options, contact our settlement planning experts today at 800-464-2500 or info@settlement-alliance.com.

We are proud to partner with the highest rated structured settlement providers in the industry:

  • American general Life Companies
  • Berkshire Hathaway Structured Settlements
  • Liberty Life Assurance Company of Boston
  • MetLife
  • Mutual of Omaha
  • New York Life
  • Pacific Life
  • Prudential