Structured Attorney's Fees

Structuring your attorney fees using an annuity can help guarantee income for life and may save on taxes by spreading out your taxable income over time. It can even provide guaranteed income for the lives of both you and your spouse. You can use this powerful strategy even if the claimant chooses not to structure a settlement.  All guarantees are subject to the claims-paying ability and financial strength of the issuing insurance company.

 

Watch now to learn more about the benefits of structuring attorney fees. 

Benefits of a Structured Strategy

Potential benefits of structuring fees include:

  • Reduced income-tax burden: If not structured, the lump-sum payment of your fee would be taxed on the entire amount. Structuring your fee means income payments are reported to the IRS in each year that taxes are due.

  • The ability to plan for the long-term: Push out fees to a time that makes sense for your financial future.

  • Spread taxable income over time: With proper planning, income-tax deferral can result in lower overall taxes—and a higher net income for you.

Customize Your Payment Streams

Pacific Life allows you to specifically customize your payment streams to help manage future needs. Taking advantage of this flexibility can yield several positive results.

  • Predictable income that you cannot outlive.

  • Payment increase potential with the Payout Plus benefit option or the optional Index-Linked Annuity Payment Adjustment (ILAPA) rider.

  • Payments for a specific period to address future concerns, such as paying your home mortgage or funding educational costs.

  • Lump sums to help pay for a large purchase.

Add Index-Linked Benefit Option with the Potential to Increase Payments

Two optional benefits are available that can increase your payments based on the performance of the S&P 500® index, subject to a cap. If selected, there will be a lower guaranteed baseline payment than when selecting a traditional structured settlements annuity.

Place image

Index-Linked Annuity Payment Adjustment Rider

This option can increase payments annually by up to the 5% cap (maximum amount of index return used) after you begin taking payments.

  • If the index returns 5% or more, your payment increases by 5%. 
  • If the index increases less than 5%, your payment increases by same percentage.
  • If the index is flat or negative, there is no change to your most recent payment.

 

 

Place image

Payout Plus Benefit Option

Not available in New York

Payout Plus provides the potential for payments to increase after the first year. Although it may have a lower starting payment than the Index-Linked Annuity Payment Adjustment option, it may increase payments more than that option over time. Payments may also decrease.

  • Designed for varying and higher caps, allowing greater S&P 500 index performance to be used in the payment calculations. 
  • A negative index return is adjusted to 0% but payment amounts can decrease due to an adjustment rate. They will never fall below the minimum guaranteed payment amount known as the baseline payment.

 

Payout Plus and the Index-Linked Annuity Payment Adjustment Rider Can Work Together

It's possible to set up two different payment streams, one with the Index-Linked Annuity Payment Adjustment rider and one with Payout Plus. For example:

  • You could start payments under the Index-Linked Annuity Payment Adjustment rider immediately to increase current income, either for life or a specific period of time.
  • You could defer another set of payments with Payout Plus, perhaps until retirement, knowing that the payment amount may grow during deferral.
  • Selecting the Index-Linked Annuity Payment Adjustment rider or the Payout Plus benefit option will result in a lower guaranteed minimum payment for each payment stream than on a traditional structured settlements annuity.

A Word About Constructive Receipt

Careful consideration must be taken to avoid constructive receipt of the fees. The settlement agreement must be completed before the judgment is final and without any "property" being transferred to you. After the judgment is final, you are considered to be in constructive receipt of the fees and will be subject to immediate taxation.

For Use with Clients

 
Form W-9 (Rev. March 2023)
Potential Benefits of Structuring Attorney's Fees
Structured Attorney Fees
No data found
Load More
 

Additional Content

Marketing Opinion Letter
No data found
Load More

For more information, contact your Structured Settlements Consultant. 

Pacific Life Insurance Company

Pacific Life & Annuity Company

  

25-318B

SSQ1389-02 2/26 E229

Selecting an optional index-linked benefit option may result in a varying benefit amount based on the annuity type and period selected.

Contract Form Series: ICC11:10-1213 Rider Form Series: ICC13:20-1280 and ICC15:20-1290 State variations to contract form and series may apply.

Optional index-linked benefit options do not participate directly in the stock market or any index, so they are not investments.

Pacific Life is a member of the National Structured Settlements Trade Association.

 

Pacific Life, its affiliates, distributors, and respective representatives do not provide tax, accounting or legal advice. Any taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor or attorney.

 

Insurance products and their guarantees, including optional benefits, annuity payout rates, and any crediting rates, are backed by the financial strength and claims-paying ability of the issuing insurance company. Look to the strength of the insurance company with regard to such guarantees because these guarantees are not backed by the independent broker/dealers, insurance agencies, or their affiliates from which products are purchased. Neither these entities nor their representatives make any representation or assurance regarding the claims-paying ability of the issuing company.

 

Pacific Life refers to Pacific Life Insurance Company and its subsidiary Pacific Life & Annuity Company. Insurance products can be issued in all states, except New York, by Pacific Life Insurance Company and in all states by Pacific Life & Annuity Company. Product/material availability and features may vary by state. Each insurance company is solely responsible for the financial obligations accruing under the products it issues.

 

The home office for Pacific Life & Annuity Company is located in Phoenix, Arizona. The home office for Pacific Life Insurance Company is located in Omaha, Nebraska.

No bank guarantee • Not a deposit • Not FDIC/NCUA insured • May lose value • Not insured by any federal government agency

For structured settlements consultant use only. Not for use with the public.