by John Darer CLU ChFC MSSC CeFT RSP CLTC
Non qualified assignments have been concluded in thousands of non personal injury cases since Liberty Mutual introduced the BARCO program in the late 1990s. Allstate and Prudential versions of the non qualified assignment program soon followed. Today non qualified assignments are used in a wide variety of situations , including the resolution of employment cases.
Even with a large number of cases concluded, there was always the feeling that a larger number of claimants and their attorneys would feel comfort is there was a definitive IRS ruling.
Integrated Financial Settlements, the holding company for a number of NSSTA member companies, today announced such a favorable Private Letter Ruling, or PLR, which while based on an employment claim, opens the door to using periodic payments to resolve a multitude of taxable claims, such as non-physical injuries, fraud, slander, wrongful imprisonment and other types of claims not excluded from income under the Internal Revenue Code.
According to press release, the PLR was requested on behalf of a client with an employment claim stemming from a hostile work environment. Had the claim been paid out in a lump sum, as is so often the case, most of the settlement would have been lost to taxes; instead, a series of periodic payments, via a non qualified assignment, will provide the claimant with a secure, tax-deferred income stream, specifically tailored to the claimant’s future needs.
IFS is to be commended for seeking the ruling. Others in the structured settlement and settlement planning industry are encouraged to invest in the business and to seek such rulings which benefit all parties and the industry. If you have a unique situation and the tab seems too much to bear, don't wish to invest your own money consider partnering up with other firms in the common interest.