Structured Attorney Fees
Benefit for the Attorney
You’ll receive a steady income stream to meet your needs now, a year from now and for decades from now, with significant tax advantages along the way.
By structuring your fees:
- You create substantial tax savings by deferring the tax liability of a one-time lump settlement.
- You’re taxed only on the income earned each year, not the total amount of your settlement.
- Payments can be tailored to fit your needs. For example, you can use your Structure income to pay your firm’s monthly expenses, thereby ensuring that you always have enough income to address your expense obligations, especially during the ‘dry’ periods of income flow.
- You can Structure your fees even if your client does not. Your payments are guaranteed.
Legal Analysis
Under the IRS analysis adopted by the courts, and given the language in properly drafted settlement agreements and assignment documents, there is a strong argument that all of the periodic payments assigned to an annuity provider are really ‘received’ by the plaintiff and as such are excludable from gross income of the plaintiff under IRC 104(a)(1) or (2), satisfying the requirement in IRC 130 (c)(2)(d).
Further Legal Analysis and Precedent
In Childs v. Commissioner, 103 T. C. 634 (1994), aff ’d w’out publ. op 89 F.3d 856 (11th Cir. 1996), the tax court held that the attorney was not subject to immediate taxation under the ‘Economics Benefit Doctrine’ and did not have constructive receipt of the funds.