May 24, 2013 – Shortly after I posted my blog on Structured Attorney Fees earlier today, the following MarketWatch article popped up on my in-box:

“3 money moves to beat back higher taxes –

How to navigate new rules and put more cash in your pocket”

Money Move No. 1 from this Dow Jones affiliate especially caught my eye since it was squarely on point with the blog on Structured Attorney Fees I had just posted.

Since the holiday weekend is upon us I won’t elaborate beyond the link.

But I thought it was important enough to pass along as a postscript given the fact it reinforces the benefit of delaying recognition of income for tax efficiency.

Happy Memorial Day to all.  Please be safe.

May 24, 2013 – Message I received earlier this week from a long-time plaintiff attorney client after I assisted him and several of his co-counsel with placing some structured attorney fees:

“Thank you, Dan, for being so great to work with the last 20 years.”

Talk about a nice way to end your day!

Receiving validating messages like this from appreciative clients sure adds to the pleasure I get from helping  people make smart decisions about their finances.

And if recent history is any indication, attorneys structuring their fees is a trend on the verge of exploding in popularity.

What makes me believe such a thing?

In the past two weeks alone, I have assisted with the structuring of EIGHT (Yes,  8 ) individual attorney fees.

That’s eight smart attorneys who decided it makes more sense to pay fewer taxes in future years than higher taxes in the current year on fees they earn.

Several more structured attorney fees are pending resolution of the claim.

While I’d like to believe this recent success is attributable solely to the publication of my article on Taxable Damage Structured Settlements in this month’s issue of Advocate, published by the Consumer Attorneys Association of Los Angeles, the more plausible explanation is that the legal community at large more widely recognizes structured attorney fees as a sensible tax and retirement planning opportunity unique to contingency fee-based attorneys.

Especially in California where the passage of Proposition 30, in addition to the federal American Taxpayer Relief Act of 2012 (ATRA), really elevates the importance of structuring taxable dollars to unprecedented levels.

We Invite You to Join the Party

We’re proud of the strong, long-term partnerships we have with numerous plaintiff attorneys who have trusted us to help them structure their fees for years and who continue to view structured attorney fees as a routine part of their practice.

But for those clients and potential clients who have kicked the tires but have yet to take the structured attorney fee plunge, we invite you to call for a confidential review and evaluation.

The economics are in your favor like never before.

And we promise we won’t tell you that you need to structure your fees.

We’ll simply lay out the numbers you give us, present you with some options, project the money you can save and let you decide for yourself if structuring your attorney fees makes sense.

Or better yet, call your CPA first and ask if it makes sense to defer some of your anticipated fee into a future year.

Then call us after your tax professional says, “Absolutely!”

For additional reading, we invite you to visit:

MyStructuredFee.com

Structuring Your Attorney Fees for Future Security and Tax Deferral

May 15, 2013 – A note of appreciation to one of my colleagues in the structured settlements industry and best selling author, Don McNay, for calling my attention to an interesting article appearing in The Lane Report, a periodical focusing on business and economic issues in and around Don’s home state of Kentucky.

The article, “Pike County economy gets $54 million boost each year from pensions,” sheds light on a little talked-about economic reality:

People receiving regular, ongoing cash flows stimulate economies!

Much is written about the benefits of steady income, whether from pension, structured settlement or Social Security payments.  So much so that most of us can extol their benefits in our sleep:

Makes it easier to pay your bills;
Safe, secure cash flows help lower stress;
Steady income creates peace of mind;
“Protects the needy from the greedy” (to quote attorney Joe Jamail);
And so on

But the focus of all the dialog is almost always on the benefits to the recipient of the cash flows.

This article goes a step beyond, quantifying the benefit of guaranteed cash flows to the broader economy.

Big lump sums might be nice.  For a short while.

But when windfalls are spent, what then?

Who benefits when individuals no longer have the means to take care of themselves because they have no cash flow?

Not them.  Not their families,  And not their economy.

Even though people spend about one-third of their lives sleeping, you’d never consider going to sleep in 2013 expecting to wake up twenty-five years later, would you?  (Although this option would have appealed to a number of my college friends)

And for the same reason it’s healthier to eat several small meals during the course of a day than it is to consume all your calories in one sitting, it’s better to have your financial means spread out over time.

All of this speaks to the wisdom of the “slow and steady wins the race” philosophy.

Pensions, structured settlements and retirement annuities.  The Big Three of safety and security.

By the way, this article just emphasizes the benefits of pensions payments to one county in one state.

Imagine what happens if we extrapolate these statistics across the entire country and include structured settlement and annuity payments?

That’s a lot of economic stimulus that doesn’t cost the taxpayer a dime.

So, in a way, it’s not just a pretty good idea to choose a structured settlement instead of a lump sum when anticipating a personal injury settlement.

It’s practically your patriotic duty to do so!

May 15, 2013 – Expect the unexpected.

Sage advice generally but a recent Ameriprise Financial Retirement Derailers Survey finds these words of wisdom to be especially true for those with retirement goals in mind.

This comes on the heels of another study we referenced in yesterday’s blog, “Peace and the New Retirement Realities,” so we’re not surprised to see so much attention to this demographic given the 79 million baby boomers in America just beginning to retire.

The Ameriprise study, though, confirms what most people understand intuitively and what Robert Burns observed in his poem “To a Mouse, on Turning Her Up in Her Nest with the Plough” way back in 1785:

“The best-laid schemes o’ Mice an’ Men/ Gang aft agley”

At least that’s how 18th century Scottish poets cautioned people to expect the unexpected.

Yes, chances are good it will rain on your retirement parade at some point.  But with the right umbrella, you might be able to protect yourself from some of those those unpleasant surprises.

For instance:  Most of the retirement annuities we offer have penalty-free withdrawal provisions which allow those working toward retirement to access some of their funds when unforeseen circumstances arise.

Also, one of the best “planning for the unexpected” opportunities that exists today is for plaintiff attorneys who structure their contingency fees.  By electing to spread their fee (plus pre-tax interest they can earn) over a number of years into the future, they can effectively build a series of “rainy day funds” that will pay lump sums throughout their retirement.

And, of course, everybody should have some form of emergency fund that doesn’t have a magnetic stripe on the back.

So whatever your situation, let us help you get ready for your retirement.  With an emphasis of safety and risk mitigation, we’re committed to helping you achieve your financial freedom.

May 13, 2013 – No sooner does FINRA and the SEC come out with warnings to, for and on behalf of people who might be considering buying and/or selling structured settlements and pensions (see our May 9 blog post) than we read about one state, Massachusetts, looking into practices of nine firms that buy these future cash flows.

InvestmentNews reports today that, among other things, the Commonwealth is looking into whether or not such offerings amount to unregulated securities.

This “Mass(achusetts) probe” comes on the heels of a similar effort in the State of New York where even stronger phrases like “fraud, misrepresentation and violation of usury laws” are being bandied about.

We expect to hear more about efforts like these and will be following this story very closely.

Stay tuned.

May 9, 2013 – You’ve seen the silly commercials.

Your intuition told you there was something wrong, possibly immoral, about a company advertising on TV to buy future income payments from someone in a wheelchair at a very steep discount only to turn around and sell those benefits to others at a hefty profit.

You put these companies in the same category as the guy who steals from his baby’s college fund to buy booze.

You understand and believe in the benefits of structured settlements and for years the practice known as factoring has been a bone of contention with you.

Well, as evidenced by today’s joint News Release issued by the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC), you are not alone.

The Investor Alert entitled “Pension or Settlement Income Streams – What You Need to Know Before Buying or Selling Them” tells us that you weren’t the only one concerned.

In 2009, Sen. Dick Durbin (D-IL) addressed the National Structured Settlements Trade Association (NSSTA) about concerns he and his Senate colleagues had about some of the practices they were hearing about involving factoring.

Here’s a video excerpt of Sen. Durbin’s comments.

We won’t editorialize too much here because we want you to get right to the text of the alert.  You can form your own opinions on the issue.

But understand that factoring, under current law, is legal.

And even we’d be hard pressed to disagree with those who insist that there are hardship instances when trading one’s guaranteed future security for cash today is beneficial.

Nonetheless, we champion this alert and are glad this is on the radar of these two regulatory organizations.

FINRA and the SEC exist to protect investors and to ensure the fairness of capital markets and they don’t issue these warnings lightly.

So we sincerely hope you’ll take the time to read this Investor Alert before buying or selling any structured settlement or pension benefits.

From our May 6, 2013 Newsletter:

Be sure to read my latest article

“Taxable Damage Structured Settlements:
Solving the unintentional verdict and settlement unfairness problem caused by Prop 30 and ATRA”

appearing in the May, 2013 issue of Advocate:

Click [HERE] to read the article online

For those outside the area who may be unfamiliar with this particular periodical, Advocate is a monthly publication of the Consumer Attorneys Association of Los Angeles, the nation’s largest local association of plaintiffs’ attorneys.

While the topic of structuring taxable settlements, verdicts and attorney fees is nothing new, recent changes to top end tax brackets, particularly in California and other high income tax states, have elevated the importance of this subject to unprecedented levels.

In short: Many taxable cash settlements come with a high cost attached which, for most, can be ameliorated by structuring.

For this reason, we have developed some proprietary analytical tools designed to specifically address the impact of Proposition 30 and the American Taxpayer Relief Act of 2012.

We invite you to contact us anytime for a complimentary and confidential demonstration so we can help you make more informed decisions about these taxable matters in advance of settling any of your pending cases.

BONUS: Schedule Your MCLE Session TODAY

As a service to the California legal community, we even created a seminar based on this timely topic which has been submitted for Minimum Continuing Legal Education (MCLE) credit. If your law firm, bar association or other attorney group wants to learn more more, please let us know how we can help.

I hope you enjoy the article and find it helpful in your practice.

Thank you for the opportunity to be of service and best wishes for continued success!

May 2, 2013 – When HAIR: The American Tribal Love-Rock Musical debuted at The Public Theater in 1967 as the venue’s first-ever production, our country’s social fabric was in the midst of a rinse cycle involving some pretty harsh chemicals.

Literally and figuratively.

Just twelve years earlier, the most popular album of the time was Frank Sinatra’s In The Wee Small Hours.

By 1967, it was Sgt. Pepper’s Lonely Hearts Club Band.

Yes, the world was changing.  People were rejecting the values of those who preceded them.  Sacred cows were no longer sacrosanct and established norms were feeling nearly as faded as Bobby McGee’s lover’s jeans.

This was the Dawning of the Age of Aquarius we would soon learn.

Annuities/(Let The Sunshine In)

Fast forward forty-six years and a similar rejection of what’s always passed as conventional wisdom is afoot when it comes to retirement planning.

More specifically, as Sheyna Steiner, writing for bankrate.com asks rhetorically in her weblog “Retiring on CDs Not Viable,”

“Is this (the dawning of) the age of annuities?”

And she’s not talking about compact discs, by the way.

The old rule of thumb that any retiree could choose a sensible mix of stocks and bonds and/or other securities, “draw down” their retirement nest egg 4% each year and have enough money to live on for the rest of their life no longer holds up to scrutiny in a post-Great Recession world.

Side Bar:  We were ahead of this trend!  For a link to one of our earlier posts on this very same topic, be sure to check out: 

July 4, 2011:  A Paycheck for Life

In fact, sticking with this previous generation’s establish formula could easily lead to financial ruin and even poverty tarnishing those Golden Years you worked so hard to achieve.

The failure rate for this draw down approach, or the probability of running completely out of money while you’re still alive, is estimated to be as high as 57%.

Life annuities, on the other hand, solve this problem for retirees and soon-to-be-retirees.

As we’ve advocated for years, annuities help people sleep better at night since they know the annuity will keep paying as long as they live.  The highs and lows of market conditions do not impact guaranteed cash flows offered by annuities.  Like a pension, you know exactly what you’re going to receive each month for as long as you live.

Structured settlement annuities, for those who are able to take advantage of them, can be even better and offer unique advantages unavailable to the general public.

But for the vast majority of Americans with 401(k) balances or other savings looking to secure their future as sensibly and cost effectively as possible, nothing can replace the peace of mind that comes with knowing that periodic payments, guaranteed by a highly rated life insurance carrier, will be there whether you live to age 75, 85, 95 or beyond.

If you were lucky enough to dodge the 2008-2009 stock market bullet, don’t take chances this time around.  Convert a portion of your nest egg to a life annuity to secure your future.  We have lots of choices available to you.

So call us TODAY for a quote so we can help you align your retirement Jupiter with your life expectancy Mars.

Then, all you gotta do is let the sunshine in!

April 23, 2013 – Today’s announcement that Sen. Max Baucus (D-MT) will NOT be seeking a seventh term is indeed a “mixed emotions” news item for the structured settlements community.

While we all wish our industry’s long time friend the absolute best life has to offer as he retires to the magnificent Big Sky country he calls home, his departure leaves a void that will be deeply felt.

“Our industry will miss you, Mr. Chairman.”

As Chairman of the powerful Senate Finance Committee, Sen. Baucus has continued to fight for the rights of accident victims.

He was an original sponsor of the tax rules that Congress enacted in 1982 which paved the way for more widespread use of the then-still evolving claims negotiation, resolution and settlement technique known as “structured settlements.”

It is because of Sen. Baucus’ ongoing commitment to the long-term well-being of those who are anticipating settlements for personal, physical injury claims that these laws exist today.

In addition to the original tax laws, Sen. Baucus was always at the forefront of other important pieces of structured settlement-related legislation.  Among those to make their way into the law of the land were:

Taxpayer Relief Act of 1997

Victims of Terrorism Tax Relief Act of 2001

It might be fitting to someday create a Mt. Rushmore-like sculpture to honor those dedicated Americans who made structured settlements possible.  If and when that day comes, surely the mountain will be in Montana and Sen. Max Baucus its most prominent figure.

Until then, I feel comfortable in speaking for the entire structured settlements community in saying,

“Thank you, Sen. Baucus, for more than thirty years of dedicated service to the structured settlements industry.  We appreciate everything you’ve done for so many.”

You will be missed.

But never forgotten.

April 22, 2013 – With all apologies to Dean Martin, Tony Bennett and anyone else who ever crooned the old Hague/Horwit standard, it turns out “young” folks aren’t so foolish after all.

At least not when it comes to making financial decisions if you believe two recent articles published in InvestmentNews.

The first article, “Throw caution to the wind? Not young boomers,” features a study by Allianz Life Insurance Co. of North America which concludes that younger baby boomers are significantly more willing to accept lower returns in exchange for reduction or elimination of downside market risk.

Among the highlights of this study:

87% of respondents would prefer a 4% return with zero chance of loss to something offering an 8% return with a possibility of market loss

Among women, the preference for risk aversion was even higher with 91% preferring the 4%/no loss combination

It shouldn’t come as a surprise then that indexed and income annuity sales hit record levels last year topping $43.4 billion.

The second InvestmentNews article goes even younger.  “NY Life cuts initial deposit for annuity to attract youth” announces the life company’s decision to cultivate clients from among the sub-boomer population by reducing its minimum initial deposit to $5,000 from $10,000.

New York Life is one of the most admired companies in the world and is also very active in the structured settlement and structured attorney fee market: two of our firm’s core specialties.

Neither of these trends surprise us.

If you’ve been a regular subscriber, you may recall an article we published in our newsletter two years ago this month entitled “Young Workers: Make Mine Guaranteed.”

That piece highlighted a Towers Watson survey of younger employees and the value they placed on guaranteed income.

We’re proud to have been a few years ahead of the trend on that one.

Bottom Lining It For You: 

People generally want safety and security.  Even if it means forfeiting higher potential returns, people across all age and income brackets are choosing the tortoise over the hare to meet basic retirement needs.

You’re never too young or too old to be smart with your money.  After all, it’s yours.  Why not hold onto it and put it to work for you.