Personal injury attorneys are often familiar with the option to defer legal fees through the use of a structured settlement annuity. However, many are unaware that there are other options — in addition to the annuity-based — that provide greater payout flexibility and no defense involvement.
One of the most popular alternatives to annuity-based deferrals is the private deferred compensation plan approach. Under this approach, personal injury attorneys can defer the receipt of their legal fees on a case and invest those fees in a portfolio of their choosing. The payout timing and schedule of the deferred compensation plan approach provides attorneys with more flexibility (whereas in an annuity, once the payout dates are set, the dates cannot be changed).
Attorneys need to get in touch with a settlement planning professional if they are interested in setting up a private deferred compensation plan before the underlying case settles, or at the very least, before signing the release agreement in the case.
Setting up a deferred compensation plan does not take very long. The attorney will fill out some basic plan application documents, and the rest of the plan set up will be handled by the settlement planning professional and the administrator of the deferred compensation plan.
Once the process is completed and the case settles, the funds will be sent into the Interest on Lawyer Trust Account (IOLTA). Attorneys can fund their private deferred compensation plan directly from their IOLTA account.
If you’ve got a case coming up and you are interested in deferring your legal fees to reduce your income taxes in the current year and build for the future on a pre-tax, tax-deferred basis through a private deferred compensation plan, give us a call. 92% of Fortune 500 companies use deferred compensation plan for their highly compensated executives. The Fortune 500 executives know what they’re doing — and you can follow their lead and get your own plan set up in less than an hour.
Contact us and we can help you get your own private deferred compensation plan established today.