Every day, we at Milestone Consulting have an opportunity to elaborate on the concept of deferred income or structured attorney fees with lawyers who are finalizing a significant payday for themselves in the near future.
Through the use of periodic payments, trial lawyers working on cases via a contingency fee agreement have the opportunity to defer an unlimited amount of income. If you’re new to the world of structuring attorney fees, we’ve got you covered. Check out this post to get started.
A structured fee or attorney fee deferral is unique to lawyers practicing on contingency. The practice began in the early 1980s, when interest rates were in the double digits. The IRS challenged an attorney taxpayer, Kenneth Childs, which became the landmark case. The court found that if an attorney has not “earned” the fee, even though a case may be settled in principle or formally been put on the record, the payment of the fee has yet to occur. This case covers “the intent of the parties” in creating a payment other than cash.
Through our holdings, Milestone Consulting, Seventh Amendment Holdings, and our wealth management firm, Monolith Advisers, we provide one of the truly plaintiff attorney-based comprehensive corporate structures that provide the attorney with the most options, security, disclosure, and support in determining the tax position and whether deferral is appropriate.
Our consulting approach is to provide a comprehensive expert team that will provide the attorney with client resources, information and research, unbiased opinions, experience, and advice on strategies. Uniquely, our program offers four types of assets to back our periodic payment obligations. These are:
- Wealth management accounts: The investment options are limited to any stock, bond, mutual fund or ETF or ALP listed on a US exchange. The accounts are custodian at major US Custodians like Fidelity, Schwab, or TD Ameritrade.
- Permanent life insurance: This option provides an immediate death benefit, which may be useful in reducing after tax insurances that partnerships may already be purchasing for buyout, key man, or other risk management.
- Indexed annuities: These provide guarantee no risk of principle and market participation.
- Fixed guaranteed annuities: Your traditional structure.
To set up and administer a QSF, the annual fees will run $2,500 to $10,000. Based upon the assets mix that you choose, you are looking at one of the following:
- A four percent commission on annuities,
- Eight to 15 percent of life insurance, or
- One to three percent annually on the management of the assets.
We believe our program is the least expensive in the country with the QSF running $2500 all in, and the professional wealth management fee of 1.5 percent annually on the assets managed. Our program also uniquely offers you to designate a Limited Power of Attorney and have your own trusted advisor have access to the account and to provide their professional advice on your deferred portfolio — just as they do for your individual accounts and perhaps retirement accounts.
Feel free to contact Milestone Consulting with questions about attorney fee deferrals. Our comprehensive settlement planners can get you on the right track.
A West Point graduate where he served as captain and military aviator, John Bair continues his commitment to our country through his efforts within the settlement planning industry. He has represented families of victims lost in the Flight 3407 crash, offered pro bono services to the families of 9/11 victims and drafted the first consumer protection bill for plaintiffs (H.R. 3699).