MTVA Spotlight

A 2022 Investment Tool for Mass Tort Plaintiffs

July 18, 2022

As litigation wraps up, the most important next step for an injured plaintiff is to properly plan for settlement. It’s rare that an individual knows what to do at this step without guidance. Mass tort attorneys can ensure their hard-earned settlement is as beneficial as possible by connecting their clients with a trusted settlement expert.

At this point if you’re thinking, ‘Settlement planning’ just means creating a structured settlement annuity, then you haven’t been privy to the latest tools in the field. These days, it’s not a one-size-fits all approach – it’s all about strategizing for the individual. There are various trust options, ways to remain eligible for government benefits, and investment opportunities for plaintiffs receiving a mass tort settlement.

The most innovative settlement planning option in 2022? The investment-backed structure. Technically, it’s a structured settlement – but not the kind you’re picturing.

Traditionally with structured settlement arrangements, the money from a settlement is placed into an annuity to provide the claimant with a schedule of payments over years. But returns on annuities were significantly impacted by the 2008 recession, and today, traditional structured settlement annuities typically offer less growth than they used to. Still, the security and tax implications of structuring are extremely valuable to many plaintiffs who receive a settlement.

As a newer alternative, investment-backed structures are a strong solution for some plaintiffs who are to receive periodic payments, as they can offer more substantive expected growth based on market activity.

An investment-backed structure offers a higher yield on settlement payments over time, without the tax burden that typically comes with an investment portfolio. By utilizing an investment-backed structure composed of a diverse investment plan, clients can grow their funds for years (or even decades), reaping the benefit of not only their settlement, but also the tax-free growth of their settlement.

Correctly mapping out a settlement helps ensure that the recovery a plaintiff receives is as beneficial as possible. Investment-backed structures help provide long-term income in predetermined increments with a customized design best suited for the individual. The payments from the structure are 100% exempt from federal and state income tax, and so is the growth on the account. This modern settlement design is a no-brainer, especially for younger plaintiffs.

Traditional fixed-annuity-based structured settlements are still a viable option for plaintiffs and attorneys. When the time and place are right, market-based structures could act as a supplement, resulting in greater growth when discretionary dollars from the settlement are available.

The structured settlement industry continues to evolve, and with it, so does wise investment advice and settlement planning strategies. Each case is unique, and a market-based solution is not always appropriate for every claimant. A comprehensive settlement plan, when used in combination with a future payment plan, is often key in addressing future needs while providing market-based investment growth for discretionary settlement dollars. If you’d like to learn more, please give us a call today.

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