The lead attorney at Higgins Settlement Law wrote the tax law for structured settlements in 1983 and has been a resource for tax law advice to the nation’s plaintiffs’ attorneys and structured settlement brokers ever since. Higgins Settlement Law only works with plaintiffs, their attorneys and brokers, ensuring that plaintiffs’ needs are put first.

By seeking counsel at Higgins Settlement Law, you can be sure that you will receive accurate tax law guidance for your important structured settlements from the nation’s most experienced tax attorneys, including public benefits counseling to preserve Medicaid and Supplemental Security Income.

What are structured settlements?

“Structured” settlements are settlements that are received in periodic future payments, rather than in an immediate lump sum. The periodic future payments can be received at any intervals and in any amounts that suit your personal tax and financial planning. Typical payments are received for life, ending on the later of your date of death or a fixed date 10 or 20 years after the case is settled. A beneficiary that you designate will receive the payments should you die prior to the fixed date.

How do I design and implement a structured settlement?

The first design step is to determine your financial needs in the future. The second design step is to weigh the value of the periodic payments with the respective creditworthiness of the issuing life insurance company.

Because we are tax attorneys and wrote the structured settlement tax law, we are uniquely qualified to implement your decisions in drafting the necessary language for the settlement agreement to ensure that your payments are received tax-free. We know the legal requirements and have historically advised plaintiffs’ lawyers, structured settlement brokers, trade associations, and life insurance companies on that subject.

What are the economic benefits of a structured settlement?

Structuring your settlement will match your income in future years with your needs, provide a source for paying future living and care expenses for yourself and your family and provide you with economic security for your lifetime without the worries of managing a large sum of money over changing economic circumstances. Your rate of return is fixed and will never fluctuate with the market. Money can be scheduled for future known expenses such as college education or home buying. Your payments are made by a highly rated life insurance company whose creditworthiness you will be able to review prior to making any decisions.

For minors and incompetents, structured settlements work particularly well in protecting funds that will be needed for future expenses from being unwisely spent once the minor reaches majority or if the incompetent were to receive a large lump sum.

What is the income-tax benefit?

If your settlement arises out of a physical personal injury, then the income tax benefit is that the earnings on the value of your settlement will be received free of tax in future years. No income tax will ever be due on the structured settlement payments that you receive.

If your settlement arises out of an injury that results in taxable damages, then the income-tax benefit is that income tax will be paid in future years at the time you receive periodic payments. The income tax that you would have paid in the current year on a lump sum will instead be invested and earn income that will be paid to you in future years.

What is the estate tax consequence?
Typically, a structured settlement includes an initial period of 10 or 20 years during which payments will be made even if you die. If you die during that period, any payment due after your death will be given a value on the date of your death and be subjected to estate tax. You should therefore have liquidity to pay that estate tax during that initial 10 or 20-year period. During 2009, the maximum estate tax rate is 45% with an exemption of $3,500,000. In 2010, the estate tax rate is zero. In 2011, the estate tax rate is 55% with an exemption of $2,000,000.

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