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Milestone Consulting, LLC
(716) 883-1833

It’s hard to believe, but the end of 2020 is just around the corner (thank goodness). And as a trial lawyer, it’s time to think ahead to your financial goals for next year. After all, planning for your (and your firm’s) long-term success is an important component of being the best advocate for your clients.

No matter where you’re at in your legal career, it’s never too early to think about retirement, your investment portfolio, and future life purchases. Maxing out your 401K or profit sharing plan might not be enough. Fortunately, there are some smart tools that trial attorneys can use to smooth out their influx of fees into a future-focused income plan.

The qualified settlement fund (QSF) is one of these tools. It’s a tax-qualified trust or account that holds settlement proceeds from litigation and allows for more simplified and organized settlement administration for both trial lawyers and their clients. With a QSF, everyone on the plaintiff’s side has enough time to plan for the incoming monies. You can choose to have individually-ordered QSFs for single- or multiple-claimant cases, or you can have a firm-level QSF. With a firm-wide QSF established, you can plan for your and your firm’s year-end inventory of cases that may resolve before 2021. The defendants in your cases can make their payments into the fund in exchange for a general release from the litigation as soon as they conclude – regardless of any liens, holdbacks, Medicare, Medicaid, or other issues on the table. Then, your clients have extra time to consider any financial arrangements that could help them keep government benefits eligibility and/or make their settlements as beneficial as possible.

And as their attorney, you are offered year-over-year planning for your fees when you use a QSF. Collecting a big fee (or fees) at once could bump you into a higher tax bracket next spring, and it doesn’t provide you with any clarity or time to think ahead to the future. But when you allow a QSF to hold your fees, you then have the power to think ahead to tomorrow, to next year, and even to retirement.

Once your fees are in a QSF, you have the time to consider fee deferral – which allows you to receive incremental, strategic payments over time and spread the tax burden associated with your fees. Of course, just because you put fees into a QSF doesn’t mean you will make a deferral; it just hits the pause button until you have a better picture of the year you have had and can strategically think about timing, and your goals.

Look at it like this. If you settle a big case in October, but you could make the decision on December 1 about whether to defer your fee, wouldn’t it be easier to make that decision? In December, you’ll know what kind of year you and your firm have had. You’ll know what goals you hope to accomplish, professionally and personally, in 2021. By creating a QSF for your firm, this is the power of time that you can gain. If you’re interested in hearing more about QSFs and/or fee deferrals for year-end planning, give my team at Milestone a call.

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