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Advantages of Attorney Fee Structures

When attorneys structure all or some of their fees, they are gaining a dependable, low risk stream of income that offers long-term tax advantages. 

By using a structured settlement as a financial planning tool, attorneys can better plan cash flow for their firms, income needs for their retirement, and manage their tax obligations.

The life company that issues the annuity policy will generate an IRS Form MISC-1099 for the year income is paid to the attorney/firm.

JOINT & SURVIVOR OPTION

Several life companies offer the Joint and Survivor option that allows attorneys and their spouses to receive benefits as long as they or their spouses live.

“RATED AGE” BENEFIT

Attorneys who may be having difficulty obtaining reasonably priced life insurance policies because of medical conditions may find structures a great option. Some life companies offer medical underwriting which may allow attorneys to receive a higher benefit because of their medical condition.

Medical underwriting yields a “rated age” which may allow a discount on any lifetime benefit streams because the life company is willing to take the risk that the attorney will live a shorter time, therefore requiring the life company to pay out for a shorter time. This allows the rate of return to increase depending on the seriousness of the health condition.

BENEFICIARY DESIGNATION

Attorneys retain one of the rights of ownership, in that they may designate a beneficiary.  However, some life companies do not allow attorneys to change beneficiaries, so it is often advisable for the attorney to designate his or her estate. The tax treatment of a structured settlement follows to the beneficiary, making structures a useful tool in estate planning. Consultation with a tax advisor and/or estate planner is highly recommended.


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