Skip to main content

Structuring Arbitration Awards

Like a judgement/verdict (unless on appeal) 99% of the time an arbitration award,especially if it is binding, cannot use a structured settlement as part of the distribution of settlement proceeds. The reason for this is that there are specific things, which are defined in Internal Revenue Code (IRC) 104(a)(2), which need to be adhered to to make a structured settlement income tax free in the eyes of the IRS.  The two most important items in the Code affecting an arbitration award are as follows:

1.) Both plaintiff and defendant must agree to a structured settlement. Because an arbitration is like a verdict or judgement in that BOTH sides are not agreeing to it this is usually is a deal killer when it comes to trying to structure an arbitration.

2.) The settlement funds funding the structured settlement cannot be constructively received by the plaintiff. This includes funds that are deposited into the plaintiff attorney's IOLTA account since they are technically an agent of the plaintiff. The funds funding the structured settlement portion of the settlement must go directly from the defendant or their insurer to the entity funding the structured settlement payments.

I said that 99% of the time an arbitration cannot use a structured settlement because we have successfully used them in a few arbitration cases over the years IF both of the conditions above are agreed to AND the life insurance company funding the structured settlement payments agrees to cooperate.

If you have an arbitration award and would like us to determine whether a structured settlement can be used please contact us and DO NOT have any checks issued or documents drafted.

For 20 years we have been Michigan's best and only plaintiff focused structured settlement adviser. www.whitehousellc.com  (734) 433-1670  cyril@whitehousellc.com

Comments

Popular posts from this blog

LIEN RESOLUTION!

You probably know us best for our Plaintiff Focused Structured Settlement Consulting services.  You may not know that we also help plaintiff attorneys and their clients resolve those nasty LIENS that threaten your hard won settlements through our partnership with PROVIDIO!
Please click the link below for more information on our lien resolution services:




If we can assist you with your lien resolution or structured settlements please call us at (734) 433-1670 or email cyril@whitehousellc.com.
www.whitehousellc.com

NEW FIRM BROCHURE!

We just updated our firm brochure. Download it is it is helpful!


For 20 years we have been Michigan's premier Plaintiff Focused Structured Settlement Consultant. Please contact us early at (734) 433-1670 or cyril@whitehousellc.com and let us help you and your clients maximize your hard earned settlement dollars call!  www.whitehousellc.com

Recycled Annuities” a Bad Alternative for Funding a Structured Settlement

When considering a structured settlement, brokers, attorneys, judges, and settlement claimants are best served by a structure that is tax free and funded by a highly regulated and rated insurance company. Click on the following link for more information on this topic in this excellent article on the American Bar Association (ABA) web site!
ABA Recycled Annuities Article
For 20 years we have been Michigan's premier Plaintiff Focused Structured Settlement Consultant. Please contact us early at (734) 433-1670 or cyril@whitehousellc.com and let us help you and your clients maximize your hard earned settlement dollars call!  www.whitehousellc.com