Strategies for a Bear Market
Every bear market feels like the end of the world. As a plaintiff attorney, a bear market looming on the horizon may leave you scrambling to protect your clients, keep your firm’s finances in order and trying to manage your own retirement nest egg, but the reality is we’ve been here before and we’ll be here again.
Surviving a volatile financial market comes down to one thing: diversification. If your clients have been taking their settlements in cash or you have been accepting your contingency fees in a cash lump sum, it’s time to get educated on alternatives and rethink your game plan.
Challenges Facing Claimants
Injured claimants face a variety of obstacles when settling a case, regardless of the state of the economy and regardless if they are trying to protect their retirement or they are just starting to invest. Claimants accepting lump sum cash settlements during volatile financial times are even more susceptible to:
- Family and “friends” asking for money
- Predatory financial “advisors”
- Emotional spending
- Poor investment choices
- Loss of needs-based government benefits.
Structured Settlement Annuities: Long Term Safety & Security
A structured settlement annuity provides what no other financial product can promise: a guaranteed1 safety net during difficult financial times. Kiplinger’s agrees. In a recent article, the personal finance site listed annuities as one of the top five tools to make retirement savings last. By utilizing structured settlement annuities as a reliable revenue stream to cover basic living expenses, the remainder of a portfolio can be diversified to include more aggressive investments. Even the structured settlement annuity payments can be reinvested down the line to offset current low-interest rates.
Diversification Options for Plaintiff Attorneys and Claimants
By working with your trusted Sage settlement consultant, you and your clients have access to a range of financial vehicles that can help create a diverse portfolio that balances safety and growth potential.
Insurance-Based Options
- Structured Settlement Annuity: Flexible payment design, guaranteed1 payments, no overhead or annual fees
- Deferred Income Annuity (DIA): Payments starting after 12 months, guaranteed and lifetime payments, no underwriting
- Fixed Indexed Annuity (FIA): Lump sums, lifetime or annuitization (period certain & life) with a guarantee of principal and upside tied to an index (S&P 500 or similar)
- Multi-Year Guaranteed Annuity (MYGA): Fixed-rate and guaranteed payments for a specific term, guarantee a return of principal
Market-Based Options
- Settlements Plus™: For the injured plaintiff looking for tax-free income and market-based returns, and the ability to use their own financial advisor
- Fee Structure Plus®: For any contingency fee attorney looking for tax-deferral, market-based returns, and the ability to use their own financial advisor
- Investment Accounts: Low-cost platforms offering financial education and investment management services
- Special Needs Trusts, Pooled Trusts, Minors’ Trusts, Settlement Preservation Trusts and more: Depending on the claimant’s age, individual needs, income, and level of disability, options are available to preserve settlement proceeds while providing for life’s necessities
Contact Sage Settlement Consulting Today
The verdict? Don’t panic and don’t let fear get the best of you and your clients. By taking a proactive approach, you can face any financial downturn with confidence in your financial choices. Contact Kimberly Overby today to learn more.
1 Guarantees are subject to the claims-paying abilities of the issuing insurance company.
How to Improve Your Mediation Strategy in 2020
The fastest route to resolving your client’s case at mediation is coming to the table armed with an expert and a strong game plan. By bringing a settlement consultant on board as soon as you open a case, not only can you be sure your client is appropriately compensated and their recovery is protected, but in the process, you can also save your firm valuable time and money.
Pre-Mediation: Develop a Comprehensive Overview
Before mediation, the settlement consultant can meet with your client to review life care plans, assess needs-based government benefits, and assess your client’s financial needs and goals. By developing this kind of comprehensive overview, the settlement consultant can provide you with a detailed accounting of your client’s financial needs while you focus your efforts on preparing a strong case. In the meantime, the settlement consultant will also educate your client on the pros and cons of all available settlement options.
During Mediation: Have a Game Plan Ready
At this point, the claimant should already have a realistic idea of what to expect in terms of an offer from the defense. The claimant will also have a better understanding of relevant settlement options and any potential implications the proceeds may have on needs-based government benefits. At no cost to you or your client, an experienced settlement consultant can attend mediation and help create a solution that works for all parties involved, helping you reach resolution faster and avoid a potential impasse.
Post-Mediation: Create a Continuum of Care
Another benefit to involving your settlement consultant is the post-mediation continuum of care it creates. Reputable settlement consultants typically provide support for the life of the settlement plan. With a solid plan in place and a trusted resource to turn to for future questions, you can rest assured that your client will be in the hands of an expert for years to come. What better way to wrap up a case than with a satisfied client (and potential referral source!) for you and your firm?
Contact Sage Settlement Consulting for Mediation Assistance
Whether you are just opening a case or preparing for mediation, make sure you contact Kimberly Overby today.
Tax-Free Income with Competitive Returns: Why Your Clients Need to Consider Structured Settlements
Structured settlement critics often advise taking lump sum cash settlements and investing the funds in the open market. While the stock market has historically averaged over 10%, many investors struggle to achieve the same result. Structured settlements provide a competitive solution, with benefits that a lump sum cash settlement can’t match.
Investing the Lump Sum Cash Settlement: Assumptions
Let’s say your client decides to take the lump sum cash option and invest it. The stock market’s 10% average annual return assumes that:
1) your client has received adequate investing advice;
2) your client follows through with the investing advice; and
3) your client leaves the money in the investments for the long term, allowing the money to grow while riding the waves of the stock market.
In reality, many people choose poor investments or pull their money out at the wrong time, effectively decimating their portfolios.
The Non-Monetary Part of the Equation
The other key element to remember is the emotional implications of injury settlements. A settlement is often the result of a tragedy or life changing event with life altering effects on one’s emotional state, at the same time, it is often the largest single sum of money an individual will ever receive. Suddenly having to handle a financial windfall, combined with the emotional ramifications of an injury or death of a loved one can leave a claimant in distress and vulnerable to financial disaster.
Focus on Stability—With a Competitive Return
A structured settlement annuity can provide a stable foundation for your client’s future. Here’s how:
- Income tax exemption: Structured settlement payments—including growth—are 100% income tax-free. While lump sum cash settlements are income tax-free for physical injury cases, if the money is placed in a traditional investment, then any growth is subject to income taxes.
- Guaranteed rate of return: A fixed rate of return frees your client from worrying about market volatility.
- No overhead fees: Unlike traditional investments, structured settlement annuities do not have any management fees. That means more money in your client’s pocket over time—and with the guaranteed rate of return, a highly competitive, yet safe financial vehicle.
For claimants who can afford to take market risks with settlement proceeds, structured settlement plans can also incorporate market-based options. Market-based structured settlements offer additional growth opportunities and can be managed by the claimant’s financial advisor.
Contact me today
Sage Settlement Consulting’s team is the national leader in structured settlement annuities. For more information, contact Kimberly Overby today.
A More Flexible Retirement Solution
Most retirement plans leave high earners confused when it comes to tax planning and contribution limits. As a contingency fee attorney, you have an opportunity that is not available to most taxpayers. Attorney fee deferrals are a flexible, tax-advantaged solution for substantially increasing your existing retirement portfolio.
Deferred Income Tax Liability
If you take your contingency fees up front in cash, then you’ll be liable for income taxes on the entire lump sum. A banner year could bump you up to a higher tax bracket.
Attorney fee structures provide periodic payments, thus spreading out your fees and corresponding tax liability over time. Structured attorney fees grow tax-deferred, with a 1099-MISC issued only for funds received within a given year.
The proactive planning nature of attorney fee structures keeps more fees in your pocket, offering a simpler solution for deferring fees in much larger amounts and even better, without the administrative headaches of setting up a 401(k) or a defined benefit plan.
Distributions on Your Schedule
Unlike IRAs and 401(k)s, attorney fee deferrals do not have a required minimum distribution, nor do they have an age restriction for when you begin receiving payments. Instead, you have the power to design a payment schedule that works best for your personal circumstances. You may receive monthly, quarterly, semi-annual, or annual distributions, or even a series of future lump sums.
Unlimited Savings Potential While Stabilizing the Firm’s Income
One of the greatest financial hurdles contingency fee attorneys face is unpredictable income. Case volume ebbs and flows, and with that, so do anticipated contingency fees. With that in mind, structuring your attorney fees can provide you with a dependable, fixed future income. Being able to secure a predictable income can take care of routine expenses such as fixed overhead or funding for lengthy cases. Best of all, it provides peace of mind that a steady flow of cash will be available – regardless of market conditions.
Attorney Fee Deferral Options
You have several options for structuring your fees, including structured settlement annuities, market-based structured settlements, and U.S. Treasury Bonds:
- Structured settlement annuities offer a guaranteed1 rate of return and no overhead fees, allowing them to remain competitive with traditional bank investments. Backed by highly-rated life insurance companies, fixed annuities are a secure choice for fee deferrals. Additionally, fixed index annuities can now be used within a structured settlement to provide additional upside market-based performance based upon an index like the S&P 500.
- Market-based structured settlements provide an even greater opportunity for growth. Rather than placing the contingency fees into an annuity, the funds are directed into an investment account on a pre-tax basis. Market-based structured settlements can be managed by a professional fund manager or the attorney’s financial advisor.
- Treasury Funded Structured Settlements™ (TFSS) utilizes U.S. Treasury Bonds as the underlying investment. TFSS payments are held in a trust, with the attorney listed as the trustee. The bonds are backed by the full faith and credit of the U.S. government, making them a safe, reliable addition to an attorney’s retirement portfolio.
Contact Kimberly Overby for Attorney Contingency Fee Deferrals
Sage Settlement Consulting provides the most innovative attorney fee deferral solutions. Contact me today to create a flexible, tax-advantaged plan for your contingency fees.