Industry

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

Trust Solutions

• 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.

¹ Guarantees are subject to the claims-paying abilities of the issuing insurance company.

Earn Tax-Advantaged Supplemental Income Without Lifting a Finger

It’s no secret that a successful legal career doesn’t necessarily equal a predictable paycheck. Case volume ebbs and flows, offering little certainty. Plaintiff attorneys with an eye on the future are wise to explore investment options that deliver regular income with minimal effort. Fortunately, solutions exist that fit the bill without taking time away from your practice.

Attorney Fee Deferrals: Your Financial Weapon of Choice

 Plaintiff attorneys have a leg up on their defense counterparts when it comes to investment options. Fee deferrals allow placement of an attorney’s contingency fees in a financial vehicle that spreads payments out over time. Payment streams can begin immediately or in the future (depending on the product), allowing you to create a predictable source of income to supplement your current cash flow or to support future expenses, such as college tuition or retirement. If you have an existing deferred comp plan, attorney fee deferrals are an excellent funding tool.

You may find additional benefits when it comes time to file your taxes:

• Since payments will be spread out over time, you may be able to remain in your current tax bracket, rather than moving up to the next bracket. Less taxes = more fees in your pocket.
• By deferring your payments as a part of your retirement nest egg, you may be able to take advantage of a lower effective tax rate in retirement.
• Your CPA can help you to determine if deferred fees will help reduce your AMT liability.

Fixed Annuities

 For several years, structured attorney fees using fixed annuities have been the deferral investment of choice. The plan design is flexible and there is no income cap, nor any annual or lifetime contribution limits. With no overhead or management fees, the guaranteed¹ rate of return is comparable with many traditional investments. Payments are fixed and guaranteed, allowing you to set this stream of income on autopilot and pay taxes only on the income received within each tax year.

Fee Structure Plus^®

Attorneys seeking additional growth potential may want to explore Fee Structure Plus^® (FSP) as an alternative. FSP uses a low-cost platform to invest your fees in market-based portfolios. In addition to providing many of the same benefits as fixed annuities, FSP accounts can be managed by your financial advisor as a part of your comprehensive financial portfolio. You can defer unlimited amounts of contingency fee income, with taxes payable only in the years in which you receive your FSP payments.

Alternative Options for Attorney Fee Deferrals

In addition to fixed annuities and Fee Structure Plus®, there are other attractive options that employ a variety of underlying investments including Vanguard Funds, U.S. Treasury Bonds, and fixed indexed annuities. The varied investments offer a broad range of solutions to diversify your portfolio and maximize your wealth management and tax planning efforts.

Contact Sage Settlement Consulting Today 

Deferred fees provide you with a stress-free source of long-term, tax-advantaged income. To learn more, contact Kimberly Overby today.

Securing a Child’s Financial Future

When a child is traumatically injured in an accident or is the recipient of a financial windfall resulting from a settlement involving a parent, the unknowns of the child’s financial future can compound an already emotional transition. Fortunately, there are settlement solutions available to help ensure that the child’s financial future is protected.

Implications of Settling with Cash

 There are many reasons why accepting a lump sum cash settlement is not in the best interest of a minor child (and in fact, some states will not allow cash settlements for minors):

Fast Depletion of Funds: An injury settlement is often the largest sum of cash a family has ever handled at one time. Compounding medical bills, education expenses, lending money to friends and family, and emotional spending are all common pitfalls that can quickly eat up settlement proceeds, especially if the family is inexperienced at managing large amounts of cash.

Ineligibility for College Financial Aid: A lump sum cash settlement could render the child ineligible for financial aid. Even if the family intends to use the money to cover the costs of caring for the injured child, college financial aid offices typically consider those funds when offering financial assistance.

Loss of Government Benefits Eligibility: Most states use income and asset tests in determining one’s eligibility for needs-based government benefits (e.g., SSI, Medicaid, CHIP, etc.). If the child or the child’s parents accept a lump-sum cash settlement, the family will almost certainly lose access to important needs-based benefits.

A Better Approach: Proactive Planning

There are a few different options for handling a minor’s settlement that will help avoid many of the negative consequences associated with a lump sum cash payment:

 Option 1: Defer Payment Until After College

With private college tuition averaging over $30,000 a year before room and board, a four-year degree can easily top out at over $100,000. By placing settlement proceeds in a structured settlement and arranging to have the first payment deferred until after college, the child may be able to obtain eligibility for financial aid assistance. The deferred payments will be valuable to a young adult regardless of his/her chosen personal or professional path.

Option 2: Utilize a Minor’s Trust

Minors with more extensive medical needs may benefit from a minor’s trust. There are state-specific (and in many jurisdictions, county-specific) guidelines that must be followed to gain court approval. A minor’s trust is managed by a trustee, who is often a close loved one (i.e., a parent, grandparent, or guardian), but in some cases, could be a court-mandated professional or bonded trustee.

 If funds for the minor child are not needed immediately, the trust does not necessarily need to distribute payments during the minor’s youth; instead, the trust can be set up to begin distributing funds when the minor reaches the age of majority in his/her state. To determine the most appropriate approach, families will want to consider medical needs, anticipated financial needs (whether there will be a loss of earnings or a large future purchase), and the minor’s ability to handle funds at the age of majority. Structured settlement annuities can be used to fund a minor’s trust, providing an added layer of protection while also maximizing the proceeds. When selecting this option, consideration must be made for the amount of funds going into the trust vs. the bonding and court fees for the time the trust is in existence.

 Additional Options for Minors

Depending on the jurisdiction and the discretion of the judge, options for settlement may also include a guardianship account or a court registry account. In an effort to maximize and preserve the settlement proceeds, families are encouraged to explore the possibility of a structured settlement annuity or a combination of a structured settlement and a minor’s trust.

For more information regarding your next case involving a minor, contact Kimberly Overby at Sage Settlement Consulting today. Our experienced settlement consultants will help create a stable financial future for your minor clients.

Volatile Markets are No Match for this Financial Option- Kimberly Overby

Volatile Markets are No Match for this Financial Option

Trade wars? Historic tariffs? With uncertainty as to which direction the markets are heading, investors are considering the best strategies to protect their portfolios. Injured claimants are particularly vulnerable, especially those whose quality of life depends on a steady income. Fortunately, there is a solution that offers protection from market volatility while providing a source of stable, long-term income: structured settlements.

Steady Gains, Lasting Peace of Mind

Both the term and the rate of return for a structured settlement annuity are locked in, and payments are guaranteed¹, so when the market drops—even in a recession—the structured settlement payments remain unaffected. Structured settlement annuities are issued by highly-rated life insurance companies, making them one of the safest, most attractive financial vehicles available.

With no overhead fees, structured settlement annuities often yield returns competitive with traditional investments. Certain life companies also offer a rider that provides additional growth potential based on the S&P 500—without any market loss.

Claimants who can incur a degree of market-related risk may want to consider combining a structured settlement annuity with a market-based structured settlement program. Such an approach creates a truly balanced settlement solution.

Your Client Needs a Solid Plan

Claimants have a one-time opportunity to structure their settlements. The decision must be made before settlement, and the settlement agreement must include the proper language. Your settlement consultant can walk your client through the various settlement options, helping to establish realistic expectations and to ensure that a proper plan is in place to preserve the settlement proceeds.

You Need a Plan, Too

Many of the nation’s leading attorneys leverage the benefits of structured attorney fees to defer taxes on their contingency fees. As with structured settlements for claimants, attorney fee structures provide guaranteed, fixed income to create a predictable source of income immune to market volatility.

Take Control of Your Financial Future: Contact Us Today

None of us can control the economy, but we can mitigate some of its negative implications. Contact Kimberly Overby today to protect your clients and your practice.

How to Preserve Settlement Proceeds for Future Medical Needs

Despite success at the mediation table, settlement proceeds do not always sufficiently provide for an injured claimant’s future medical expenses. After paying attorney’s fees and liens, the typical claimant still needs money to cover medical costs incurred long after litigation ends, such as doctor’s bills, surgeries, medications, home modifications, and more.

Moreover, the Centers for Medicare and Medicaid Services (CMS) projects that from 2018 to 2027 the price of healthcare goods and services will grow at a faster rate than it has historically. CMS also estimates that healthcare spending will increase at an average rate of 5.5% per year during the same time frame.

Rather than leaving your client in a vulnerable financial state, it is best practice to develop a solid plan at the time of settlement. Here are two simple ways your settlement consultant can help protect your client’s long-term medical and financial needs:

#1: Provide Education Regarding Financial Pitfalls

Outside of advising your client against taking a cash lump sum and risking quick depletion, there are additional obstacles that claimants need to avoid, including:

Loss of Needs-Based Government Benefits Eligibility: Claimants who receive needs-based government benefits will likely lose their eligibility for such benefits if they accept a lump sum cash settlement. For example, in most states, assets totaling as little as $2,000 ($3,000 for couples) are considered enough for a claimant to be ineligible for Medicaid (Medi-Cal in California), SSI, and CHIP. 

Medicare Non-Compliance: Although Medicare is an entitlement benefit, claimants who receive Medicare benefits have additional responsibilities when it comes to the cost of their future medical care. Medicare Secondary Payer provisions encourage Medicare-eligible claimants to set aside a portion of their settlement proceeds to cover future medical costs, typically in what is referred to as a “Medicare Set-Aside.” While in the past, many in the legal community have paid closer attention to future medical expenses in workers’ compensation cases, an MSA industry leader reported a recent case in which Medicare sought reimbursement for future medicals in a liability settlement.

#2: Offer Strategies for Preserving and Maximizing Settlements Long-Term 

Once the potential complications have been identified, several solutions exist that may help your clients provide for their long-term medical and financial needs:

Special Needs Trusts: Disabled claimants under the age of 65 may meet the criteria for a special needs trust (“SNT”; also known as a (d)(4)(a) trust). Settlement proceeds placed in a special needs trust are not considered countable assets when determining eligibility for government benefits. The claimant can continue receiving their needs-based benefits while supplementing their financial needs with approved distributions from the SNT.

Spend-Down: In certain states, “spending down” the settlement proceeds may allow an injured claimant to maintain needs-based benefits, including Medicaid. The spend down method has many stipulations related to the timing of purchases, what constitutes an allowable expense, and whether or not needs-based benefits will be suspended for the month in which the settlement proceeds are received. Claimants who are considering a spend-down should always consult with their caseworker or agency representative before receiving the settlement proceeds.

ABLE Accounts: Individuals who became disabled before the age of 26 may be eligible for an ABLE (Achieving a Better Life Experience) account, a tax-advantaged savings account. Funds held within an ABLE account can be used to cover qualified disability expenses, including healthcare, education, housing and transportation for the disabled individual. While annual and lifetime funding limits for an ABLE account may vary by state, ABLE account funds are exempt from asset tests for needs-based government benefits, provided the total funds in the account do not exceed $100,000.

Professional MSA Administration: While some claimants choose to personally administer their own Medicare Set-Aside accounts, professional administration provides management of future medical funds by experts that can save your client money and help them live worry free. Post settlement, a professional administrator handles all of the claimant’s medical concerns pertaining to pharmacies and doctors, insurers, employers, attorneys, medical providers and Medicare. A professional administrator automatically files all reporting requirements for Medicare Set-Aside accounts to CMS, allowing the claimant to treat freely. CMS “highly recommends” the use of professional administration to make sure the funds are preserved as long as possible through discounts only a professional administrator can provide.

Some administrators also offer subject matter expertise and consultation on federal and state benefits for beneficiaries of worker’s compensation and liability settlements.

Certain programs even offer transparent pricing into the real-time cost of prescriptions and treatment, providing the injured party visibility into the actual pricing of these services.

Contact Sage Settlement Consulting to Learn More

To learn more about these settlement planning solutions, contact Kimberly Overby today. Our experienced team will help you and your client create a customized financial plan to secure a better future.

A Qualified Professional is of Paramount Importance

When making important financial decisions, such as those arising from a lawsuit or settlement, it’s often assumed that a financial advisor can provide the best guidance. While that may be true in certain circumstances, effectively safeguarding a settlement requires the specialized expertise of a Settlement Consultant.

Here are 3 reasons why your client NEEDS a settlement consultant.

Reason #1: Specialized Knowledge

A settlement consultant’s training goes beyond traditional wealth management strategies. It also encompasses experience with providing solutions specific to the financial intricacies of injured claimants and plaintiff attorneys, to include structured settlements and attorney fee deferral products.

In particular, settlement consultants are familiar with roadblocks that can prevent a smooth settlement resolution. From helping prevent the loss of government benefits to knowing whom to consult when a lien report is inaccurate, a settlement consultant has specialized experience needed to provide the most comprehensive level of service during and after settlement negotiations.

Reason #2: Holistic Approach

Not only are an injured claimant’s financial needs unique and different than those of a non-injury victim, but there is also an emotional aspect to settlement planning that a settlement consultant is better equipped to navigate. When someone has experienced a traumatic injury or the death of a loved one, their wrong can never be made right regardless of the amount of money they receive through a settlement. Newfound wealth can often feel like more of a burden than a blessing — especially if the windfall came as a result of a loved one’s death. A settlement consultant is an advocate for the injury victim and can help navigate emotional storms while keeping claimants focused on goals and a well-thought-out plan that provides for financial stability.

Whereas the typical financial client may be focused on investments that can provide for retirement savings or funding extensive vacations, injured claimants must deal with economic complications as a result of an accident, and planning for the costs of their future medical treatment. The cost of prescription drugs, prosthetics and home modifications; eligibility for needs-based government benefits; replacing lost income; and trying to adjust to a new reality are all elements that must be considered in an effective settlement plan.

Settlement consultants work daily with injured claimants and their family members, and they understand how to provide detailed, expert guidance while offering empathy and emotional support.

Reason #3: Team-Based Solutions

Different than the typical solo approach often associated with advice provided by a financial advisor, the best settlement consultants recognize the strengths that other experts offer in the settlement process and will choose the right professional partner to quarterback every component of settlement resolution for the claimant. Reputable settlement consulting firms have access to a broad range of tax, government benefit, lien resolution, estate planning, trust services, and wealth management experts that can help the claimant create a seamless plan for his/her financial future. Moreover, settlement consultants are not captive agents, guaranteeing that they will only consider the best interests of the claimant when recommending products and services.

Contact Kimberly Overby Today

Sage is proud to be the largest plaintiff-oriented settlement planning firm in the nation. With offices from coast to coast and a national network of experts, we have the resources you need to ensure that your clients are receiving the best advice. Contact Kimberly Overby today to learn more.

Tax Season is Upon Us- How Will You Define Your Tax Year?

It’s that time of year again when attorneys across the country cringe upon
receiving their tax bills. Fortunately, if you’re a contingency fee-based
attorney, you have the opportunity to leverage tax-advantaged investments
to keep more of your fees where they belong—in your pocket. Keep reading
to learn how.