Many people, including attorneys, are surprised to learn that there is an option for their clients who win a compensatory judgment to receive tax-free future payments. This is true no matter if they live in Fort Lee, Cherry Hill, Roseland, Hackensack, Jersey City, or the surrounding areas, this is a valid option if you understand structured settlements.
At Settlement Funding Associates, we have been helping attorneys with structured settlements for themselves as well as their clients for years. Let us provide the guidance you need to ensure that your client has tax-free future payments set up properly. Contact our office to learn more.
Why Tax-Free Future Payments Exist
When it comes to different judgment types, some are taxable and some are not. Punitive damages, which are monies awarded as punishment for the responsible party’s actions, are treated as taxable income. Compensatory damages, which are monies paid to compensate for future lost wages, etc. are not taxable. It is these compensatory damages that can turn into tax-free future payments for your clients.
A structured settlement is where instead of receiving a lump sum of money, for example $5 million dollars, that money is put into an annuity where periodic payments are issued to the recipient on a regular basis. The idea is that if the person was to receive the entire amount all at once, they could misuse the funds rather than use them what they were designed for.
It is important that you have the right guidance when it comes to putting compensatory damages into a structured settlement. You will need to spell out the frequency that payments will be made, the amount of money to be disbursed for each payment, and to provide a full schedule of what this structured settlement will look like. All parties involved will need this to plan accordingly for a structured settlement.
Get The Right Help to Set Up the Payments
Settlement Funding Associates has decades of experience in developing customized structured settlement plans for every type of claim. It makes sense to bring in an expert for these tax-free future payments so that they are set up correctly and important details are not missed. We have helped attorneys and their clients all over Fort Lee, Cherry Hill, Roseland, Hackensack, Jersey City, and the surrounding areas. Contact us today to learn more about structured settlements and how we can make the process fast and easy.