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Settlement Planning & Preservation

Structured Settlements

Securing Your Financial Future Through Structured Settlement Annuities

At Paramount Settlement Planning, we believe that structured settlement annuities are the most effective and secure method of satisfying the unique, long-term financial needs of plaintiffs and their families. Our goal is always to help injury victims secure the highest quality of life by ensuring that their financial future is secure.

Our team of settlement advisors includes experienced trial lawyers and financial professionals that can help you understand the benefits of structured settlement annuities and how we can help you prepare, protect, and preserve your case proceeds.

What is a Structured Settlement?

Structured settlement annuities are income-tax-free, fixed products that help plaintiffs preserve their settlement proceeds and secure their financial future. The United States Congress passed the Periodic Payment Settlement Act of 1982, modifying the Internal Revenue Code to allow an income tax exclusion for payments received out of a claim for damages based on personal injury.

Additionally, Section 104(a) of the Internal Revenue Code allows for tax-free accrual of interest on the sum of money used to fund plaintiffs’ periodic payments. These two provisions make it more likely that an injury victim will receive greater benefits if they establish a structured settlement as opposed to traditional, taxable investments.

How Can a Structured Settlement Annuity Help?

Structured settlement annuities provide a fixed, stable source of income tax-free payouts. Structured settlement annuities are also flexible, helping to meet the needs of individual plaintiffs.

A structured settlement can help with providing:

  • Lost income replacement
  • College tuition assistance
  • Financing your home
  • Supplemental retirement fund
  • Beneficiary Protection

With appropriate planning, structured settlement annuities can also offer protection from creditors and bankruptcy.

College Planning

When considering a settlement where the plaintiff is a minor, or if the plaintiff is an adult who has children college-age or younger, college financial aid considerations must play a role in the planning process.

Remember, a structured settlement is not an asset owned by the plaintiff, and therefore not considered “income” under Section 104(a) of the Internal Revenue Code. Payment streams from structured settlement annuities are not to be counted against potential students when applying for financial aid.

Structured annuity payments can even be custom-tailored to pay out each semester when the tuition payment is due. This scenario proposes that one payment be made to the plaintiff at or around the start of the Fall semester and the second payment be made at the start of the Spring semester.

By structuring payments in this manner (assuming the sums are used to pay the respective semester’s tuition bill), no excessive funds are available to the student at the time the FAFSA form is completed and submitted to the university.

Establishing a Trust

At Paramount Settlement Planning, we can also assist you with using settlement proceeds to fund a lifetime structured settlement annuity. You can establish a trust and designate the Trust as the payee of future periodic payment streams. This practice establishes a “benefit bank” that the Trust beneficiary cannot outlive.

Common trusts established with settlement proceeds include:

  • Supplemental/Special Needs Trusts
  • Spendthrift Trusts

Our settlement advisors can also help you designate a beneficiary to your annuity and ensure that they are protected.

Preserve Your Government Benefits After a Settlement

If you are receiving or will soon be able to receive government benefits such as Medicaid or supplemental security income (SSI), a substantial financial settlement from a personal injury case could affect your eligibility. Needs-based programs can be impacted by your payment, which is why you must discuss your rights and responsibilities with a financial advisor before settling your case.

What We Do

At Paramount Settlement Planning, LLC, our advisors will work with you to determine how government benefits that you are entitled to or will soon be eligible for will be affected by a financial settlement. In many cases, we can help to protect and preserve your government benefits through a structured settlement.

Without the help of an experienced settlement advisor, you could forfeit your government benefits or lose your upcoming eligibility based on your settlement. To protect and preserve your benefits, our advisors may suggest establishing a Special Needs Trust or another advantageous way to structure your settlement.

Types of Government Benefits

Depending on the type of government benefit that you are receiving, your case proceeds may be treated as an asset and therefore disqualify you from receiving needs-based assistance.

Common types of government benefits that may be affected by your settlement include:

  • Medicaid
  • Supplemental Security Income (SSI)
  • Section 8 or another form of subsidized housing
  • Food stamp programs
  • Other needs-based assistance programs

Government Benefits That Are Not Needs-Based

It is important to distinguish between needs-based government programs and public benefits that are not subject to income qualification. For instance, Medicare and Social Security Disability Income (SSDI) are based on your work history and are not considered needs-based public benefits or low-income assistance. Therefore, your settlement will not disqualify your Medicare and Social Security Disability Income benefits.

However, your Medicare benefits can still be affected by your settlement if there is compensation for future medical expenses. To protect Medicare’s future interests, congress established what is known as the Medicare Secondary Payer. Depending on your situation, you may need to set up a Medicare Set Aside to avoid liability and preserve your benefits.

Paul Isaac looks into distance

Planning is Paramount

Let’s talk about your needs and goals. Call us at (716) 712-0127 or submit the form and one of our advisors will contact you soon.

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