by John Darer® CLU ChFC MSSC RSP CLTC
Structured settlements are not just for personal injury, medical malpractice and wrongful death settlements. Structured settlements are also a solution for settlements with taxable damages, such as employment lawsuits and commercial disputes, through non qualified assignments and periodic payment reinsurance.
Possible Tax Benefits of Non Qualified Assignments and Periodic Payment Reinsurance
Help spread tax liabilities throughout future years, smoothing out income and potentially alleviating high tax obligations in the year of settlement.
- A potentially greater overall payout than would otherwise be achieved with a single lump sum payment even taking into account taxes that ultimately have to be paid.
- Avoidance of higher tax brackets
- Preserve tax deductions that may be lost at higher income levels
- Avoidance or mitigation of the alternative minimum tax (AMT)
- Annuity funded non-qualified assignments are currently available through appointed agents and brokers for Liberty Life Assurance Company of Boston and the BARCO Assignments, Ltd. facility, a Barbadian entity. Under the program, Liberty Life Assurance Company of Boston provides assurance that BARCO will have the minimum amount of net assets to conduct business under Barbados law,a nd if at any time BARCO has insufficient funds to make and reuqired payment under the terms of any obligation it has to a creditor, Liberty Life Assurance Company of Boston will contribute to BARCO funds BARCO needs in order to meet its payment obligations. Liberty Mutual Insurance Company owns 90% of Liberty Life Assurance company of Boston and provides a guarantee of its payment obligations. Liberty Mutual Insurance Company has been in business for over 100 years, founded in 1912.
- Treasury Funded Structured Settlements can be used and are currently available through Structured Assignments, Inc (SAI). SAI is a Barbadian company, like BARCO,the big difference being that obligations are funded through the purchase of United States Treasury Obligations which are held in a sub-trust of a master trust at Midwest Trust Company. the SAI facility may also be used for structured installment sales, enhanced attorney fee structures (EAFS) and more.
- Periodic Payment Reinsurance is available through National Indemnity Company, a unit of Berkshire Hathaway and a unit of American General. Many of the same transfers of risk can be accomplished as with non qualified assignments, however periodic payment reinsurance can only be utilized where the paying party is an insurer. An individual cannot fund a liability using periodic payment reinsurance.