Human Rights Hammer Book

Qualified Settlement Funds

Three requirements must be met before a Qualified Settlement Fund can be used in a settlement:

  1. The Qualified Settlement Fund must be any fund, bank account or trust that is determined to meet the criteria set forth by the court. If using a trust, the trust must fall under applicable state law.
  2. Assets to fund the trust must be separate of other assets held by the transferor.
  3. The claim must be eligible for a QSF (i.e. torts, damages, class action).

Incredible Benefits

Tax-Free

IRS Code 104(a)(2) stipulates that periodic payments in the form of a structured settlement are 100% tax-free

Guaranteed Payments

The schedule of payments is determined at the front end of the transaction, resulting in a steady source of safe, reliable income for the claimant.

Rate of Return

With a locked-in rate of return, injured claimants can rest assured that market volatility will not affect their structured settlement payments.

Defendants, usually insurance companies, are allowed to either pay their policy limits to plaintiffs or negotiate a future settlement, leaving them in litigation.

The person administering the QSF must make sure the account is funded for the amount previously agreed upon by all parties involved. Once the account is funded, the liability of paying for the claims is transferred from the defendant to the Qualified Settlement Fund, in what is known as a novation. A novation places the obligation of the original defendant to make periodic payments to the designated new party (the QSF).

Qualified Settlement Funds are usually established to meet short-term needs, as they are of short duration. Once the settlement funds are paid out from the QSF, the trust closes and the administrator will file a final tax return. Qualified assignment established by the QSF declares the settlement reward for the plaintiff as qualified; therefore making the disbursement tax-free once it is paid out to the plaintiff in accordance with the Internal Revenue Code.

To learn more about Qualified Settlement Funds and ask if they are appropriate for your case please contact one of Our Team at Vega Settlement Group today.

Securities America Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of Securities America.

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What is an Attorney Fee Structure?

What qualifies an Attorney to Structure Fees?

Cases where an attorney is paid hourly or paid up front can not qualify to be structured. Cases that have an unknown value at the inception and are paid upon settlement are the cases that will qualify for the attorney to structure their fees. These cases usually involve injury or sickness, where evaluation of expenses are too hard to estimate during early stages. Other factors are involved as well including the attorney’s risk tolerance, retirement goals, tax bracket, and current and long-term needs. An attorney must agree to structure a fee prior to the case being resolved, meaning before a client signs documents and before checks are issued.

Incredible Benefits

Tax Advantages

Electing to receive periodic payments prior to settlement provides the opportunity to receive income in a more tax-efficient manner.

Guaranteed Payments

The schedule of payments is determined at the front end of the transaction, resulting in a steady source of safe, reliable income for the claimant and attorneys.

Rate of Return

With a locked-in rate of return, injured claimants can rest assured that market volatility will not affect their structured settlement payments.

JurisPrudent Deferral Program

A well-designed fee deferral program offers a variety of benefits, from reducing your tax burden and enhancing your wealth accumulation to improving financial flexibility and helping you retain key associates. The JurisPrudent Deferral ProgramTM gives attorneys the same level of benefits and protections that corporate executives enjoy — providing a level of safety, service, and transparency that is unmatched across the industry.

  1. Reduce Tax Burden — Increase Wealth Accumulation
    You can base fee payments on a customized investment portfolio where just like in a 401(k), your money grows tax-deferred. But in this case, unlike with a 401(k), there are no limits on the amounts you can defer.*
  2. Flexibility for the Future
    Like Fortune 500 executives deferring their compensation, you can have flexibility regarding the timing of income and resulting taxation. With added flexibility you can plan for your financial success by creating future payment streams that can be tailored to your needs and goals.
  3. Retain Key Associates
    Fee deferrals can be used by your law firm to fund a retention plan for key associates and employees, mitigating the risk of important people leaving the firm and taking valuable cases with them.

At Vega Settlement Group, we make it our commitment to have these payments reflect the future obligations and goals of the client, thus protecting them from outliving their financial resources.

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What Is A Structured Settlement?

The immediate benefits that Structured Settlements provide are:

  • Financial security because the injured party is guaranteed future payments, with the proper plan design.
  • Opportunity for growth on your settlement proceeds.
  • Tax benefits since any gains on the proceeds are tax-free, under Section 104(a)(2) of the Tax Code.
  • No disruption of health care eligibility for those receiving aid, with the proper trust in place.

Incredible Benefits

Tax-Free

IRS Code 104(a)(2) stipulates that periodic payments in the form of a structured settlement are 100% tax-free

Guaranteed Payments

The schedule of payments is determined at the front end of the transaction, resulting in a steady source of safe, reliable income for the claimant.

Rate of Return

With a locked-in rate of return, injured claimants can rest assured that market volatility will not affect their structured settlement payments.

Structured Settlements provide you with an opportunity to benefit from earning interest without federal tax consequences. How great does that sound?

Congress encouraged the use of Structured Settlements in 1982 by writing Section 104(a)(2) of the Tax Code, with the intent to benefit its recipients. The Internal Revenue Service (IRS) is also in favor of Structured Settlements, as they have ascertained that an individual will never pay taxes on either the principal or interest received throughout the disbursement phase, if they decided to structure. Once the settlement is structured distributions can be paid in future lump sums, on specified dates, monthly, quarterly, annually or in some combination of these options.

At Vega Settlement Group, we make it our commitment to have these payments reflect the future obligations and goals of the client, thus protecting them from outliving their financial resources.

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We specialize in offering our clients the confidence that only long-term planning can provide.

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Am I Eligible?

Not only can a Structured Settlement provide you with a guaranteed source of income for life, but it can also protect you from inflation and bearish markets.

Another advantage of a Structured Settlement is the tax benefit. Not only is the premium nontaxable, but interest earned is also tax-free under section 104(a)(2) of the Tax Code. Once the parties have agreed to a Structured Settlement the structure becomes a permanent part of the settlement.

Since Structured Settlement payments cannot be altered after the settlement, we do not typically direct clients to place the full amount of their proceeds in the structure. We usually suggest to leave a small sum of the settlement in a liquid account but this changes from time to time, depending on the financial needs and preferences of each client.

Incredible Benefits

Tax-Free

IRS Code 104(a)(2) stipulates that periodic payments in the form of a structured settlement are 100% tax-free

Guaranteed Payments

The schedule of payments is determined at the front end of the transaction, resulting in a steady source of safe, reliable income for the claimant.

Rate of Return

With a locked-in rate of return, injured claimants can rest assured that market volatility will not affect their structured settlement payments.

What is the Process?

The process in structuring your settlement would begin with a series of questions to better understand your future financial needs. The more we are able to understand about your projected income needs and expenses, the better job we can do in assisting you with the design of the ideal structure for your unique situation. Once we have this information, we prepare illustrations that we believe will be best suited for each individual client.

This is why it is of vast importance to work with professionals who specialize in Structured Settlements, as we do at Vega Settlement Group.

Take the next step.

We specialize in offering our clients the confidence that only long-term planning can provide.