Counting down, here is the top 10 list of things to remember when creating a structure.
10) When settling a case at mediation, let the defense know of your structuring intentions.
Since the defense’s cooperation is necessary for the implementation of release documents, the qualified assignment and check issuance, communicate your position.
9) Give your broker the correct birth date for your client.
This sounds easy enough, but surprisingly, mistakes occur. Always take the time to verify birthdates and relay those dates to your broker when requesting proposals.
8). Request that your broker lock in annuity rates.
Once you have decided on a payment plan, request that your settlement broker immediately lock in the rate/ benefits for your client. Most printed quotes are guaranteed for only seven days.
7) Be sure a Medicare Set Aside is done right.
The use of the annuity can lower the overall cost of the MSA leaving more settlement funds available for other client needs.
6) Attach an addendum to the Minor’s Compromise that indicates whether annuity payments go to the minor or to a Special Needs Trust (SNT).
If not spelled out, the court may approve payments directly to a blocked account when payments to a SNT would provide a better outcome.
5) Have your broker (not you) explain annuity proposals to your client.
The structured settlement and its many options should be explained by your broker to your client. This is the broker’s responsibility.
4) If you plan to use an SNT with the settlement, make sure your trust person lets your broker know.
Your broker will need the correct name of the trust to ensure that the annuity payments from the life insurance carrier are made directly to the trust and not to the individual.
3) Alert the defendant and your broker if you are structuring a portion of your fee.
If you decide to structure a portion of your fee, specific language and instructions must be included in the settlement agreement and release to ensure you receive the tax deferral benefit.
2) Don’t sign an “all cash” release.
An “all cash” settlement release triggers an immediate tax liability for the plaintiff and/or attorney. If an all cash release is inadvertently signed, ask the defense to redo the release immediately.
1). Never put your client’s settlement or the fees you want structured into your firm’s trust account.
The previous nine “things to remember,” in most cases, can be rectified if caught early enough. This last point, however, cannot. If your client’s settlement amount or your legal fees are deposited into your firm’s trust account, they automatically belong to you and your client.
For any questions above the above, please feel free to give me a call, or contact me.