What is a Non-Qualified Assignment?
The Non-Qualified Assignment (NQA) product is designed to accept the transfer of a periodic payment obligation for cases that fall outside of personal physical injury claims and litigation as defined under IRC Section 104(a)(2) and are not eligible for an IRC Section 130 qualified assignment. Below is one example of how a NQA could be used to resolve an Attorney Fee Contract Dispute.
Case Study: Contract Dispute
John, a city bus driver, fails to fully stop at an intersection and collides with another vehicle.
The collision was minor, however, there were 20 passengers who incurred minor injuries. Seven of the injured passengers are represented by Attorney Heather Towne; the remaining 13 are represented by Attorney Richard Wright.
During the mediation, Wright disputes the initial plan of a 50/50 allocation split for their attorney fees. Further, both attorneys differ on how they prefer their individual fees be disbursed: Attorney Wright wants to structure his fees, while Attorney Towne has decided that a lump sum will best suit her needs.
There is a two-part settlement.
1. Injury Settlement
The bus company and the 20 claimants agree to settle for $200,000. To resolve its own suit with the injured passengers and the allocation dispute amongst the attorneys, the bus company issues the total $200,000 to Attorney Towne who will be responsible for distributing the funds to each claimant. All claimants opt to receive their settlement awardsin cash.
2. Attorney Contract Dispute
Then, the attorneys settle their own dispute by executing a separate settlement agreement with Attorney Towne now acting as the defendant and Attorney Wright, the claimant.
Both attorneys ultimately agree on the 65/35 allocation split of attorney fees. Towne takes her portion of the fees in upfront cash. Afterwards, Towne uses the remaining settlement proceeds that were originally allocated to Wright for his portion of the fees to fund an NQA that will issue annual payments to Wright over the next ten years.
Consistent cash flow with a trusted, highly rated carrier: Winning a settlement can make a difference in an attorney’s life and business. By agreeing with Towne to purchase an NQA annuity through Met Tower Life, Wright will receive a steady stream of income immune to market volatility. This will help support his business for years beyond the settlement.
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