Understanding Attorney Fee Deferrals Part 2

Settlement planning can greatly benefit both the plaintiff and their attorney. As we discussed in the first section of this two-part article, similar to the process of creating a structured settlement or settlement trust for a plaintiff, a settlement planner can tailor a financial plan that aligns with the long-term, financial goals of the attorney as well. As we will discuss in more detail in this section, there are many advantages for attorneys to create an attorney fee deferral.

The Process of Deferring Payment

Once a settlement agreement is finalized, the plaintiff’s attorney fees are paid by the defendant to an assignment company. The assignment company then purchases a “qualified funding asset” or annuity to finance the structured payments to the attorney. This structured annuity is a periodic payment that the attorney receives.

Flexibility in Design

The settlement planner can assist the attorney by devising a structured annuity plan that can compensate the attorney monthly, quarterly, semi-annually, annually, or with deferred payments over the course of several years. This all simply depends on the structured plan that the attorney desires to implement to receive these payments. Of course, this flexibility offers the attorney many advantages.

Long-Term and Short-Term Benefits

Primarily, the best short-term benefit to utilizing a structured plan is that the settlement payments can prevent the attorney from being designated into a higher tax bracket. Another long-term benefit is that the structured fee is a guaranteed form of income that has a return value as compared to a more conventional investment. An attorney can also coordinate lump-sum payouts that can help them plan for future expenses like overhead expenses for their business, retirement plans, or college tuitions for their children.

Contract Review

Employing a settlement planner before reaching a settlement is crucial as they can ensure that the contractual agreement of the settlement plan can include this deferred payment process. If the settlement has already been finalized before consulting with a knowledgeable professional in settlement planning, the attorney cannot utilize this structured payment method.

As we have covered in this two-part article there are many advantages to hiring a settlement planner to create a structured settlement plan for attorney’s fees. Attorneys can experience tax benefits, enjoy a nice long-term guaranteed return, and plan for sizable payments down the road by allocating timely lump sums.

For more information or to schedule a consultation, please submit our contact request form.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.


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