Fee Structure FAQ
Does the personal injury victim have to structure a portion of their settlement before the attorney fee can be structured?
No. The claimant can take one hundred percent cash and the attorney fee can still be structured.
How does fee structuring work?
Structuring an attorney fee works very similarly to structuring the victim’s settlement. The most important thing to remember is you can’t take receipt of the fees.
Why structure my attorney fee in a fixed interest rate annuity?
Every portfolio should have some portion of the investments in fixed income. An attorney fee structure is a fixed income investment but unlike all others an attorney can make, the fee structure is a pre-tax investment. Whether a fee structure is appropriate for you will depend on a variety of factors, including your age, health, risk tolerance, retirement goals, tax bracket as well as your current and long-term needs. However, structuring your attorney fees could provide beneficial tax relief as well as secure and stable tax deferred income up to, and including, your lifetime.
Can I receive the same types of income streams the victim can with their settlement proceeds?
Yes, you can have lifetime benefits. You can have a period certain for a defined amount of time or a future lump sum payment as well as a series of lump sum payments. You can select immediate or deferred payments. You can have multiple income streams such as lifetime payments coupled with lump sum payments.
Can I only structure contingent fees from a personal physical injury or wrongful death settlement?
No. You can structure contingent fees from nearly any type of settlement. Companies have developed innovative products to expand the availability of attorney fee structures.
What is the legal basis for structuring attorney fees?
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 amounts are received. See Childs v. Commissioner, 103 T.C. 36, aff’d 89 F.3d 856 (11th Cir. 1996).
What do I need to do to prepare for structuring my attorney fees?
You should negotiate the inclusion of the fee structure when settling the case since the creation of a tax-deferred fee structure does require the cooperation of the defendant similar to when the victim’s settlement is structured.