Not all settlements fall under the traditional tax-exempt structure of IRC Section 104(a)(2). For cases involving employment disputes, defamation, wrongful termination, emotional distress, discrimination, and other non-physical injury claims, a Nonqualified Structured Settlement can provide a valuable alternative.
While nonqualified settlements do not receive full tax exclusion like personal injury cases, they offer tax deferral benefits that allow claimants to receive periodic payments rather than a lump sum, potentially lowering their overall tax burden.
✅ Tax-Deferred Growth – Payments are taxed only when received, spreading the tax liability over time.
✅ Financial Security – Provides a steady stream of income rather than a lump sum that may be quickly depleted.
✅ Customizable Payment Schedules – Payments can be designed to meet individual financial needs, such as retirement planning.
✅ Creditor Protection – Structured payments may be shielded from certain creditors, depending on jurisdiction.
TLC works with claimants, attorneys, and financial professionals to design nonqualified structured settlements tailored to long-term financial needs while maximizing tax advantages.
Selling a business or real estate can result in significant capital gains taxes, often reducing the net proceeds available to the seller. A Structured Installment Sale under IRC Section 453 provides a tax-efficient strategy that allows sellers to spread capital gains tax liability over time, instead of paying it all in the year of sale.
1. Pre-Sale Agreement – The seller agrees to receive payments over time instead of a lump sum.
2. Third-Party Assignment – The buyer pays a structured settlement company, which assumes the obligation to pay the seller.
3. Deferred Payments – The seller receives scheduled, tax-deferred payments, reducing immediate capital gains exposure.
✅ Reduced Capital Gains Tax Impact – Payments are taxed only as they are received, potentially keeping the seller in a lower tax bracket.
✅ Steady Cash Flow – Provides predictable income over time rather than a one-time lump sum.
✅ Investment Growth Potential – Payments can be linked to an index for market-based returns.
✅ Flexible Payout Options – The seller can choose customized payout schedules to align with financial needs.
TLC assists business owners and real estate investors in structuring sales for maximum tax efficiency and financial stability.
For settlement recipients who depend on means-tested government benefits like Medicaid, Supplemental Security Income (SSI), SNAP (food stamps), or housing assistance, receiving a large lump sum from a settlement can jeopardize their eligibility for these critical programs. TLC provides Government Benefit Analysis to help claimants structure settlements to protect their financial security and public assistance eligibility.
⚠ Risk of Disqualification – Many public benefits have strict asset and income limits. Receiving an improperly structured settlement could cause recipients to lose eligibility.
💡 Strategic Planning – TLC works with attorneys and financial professionals to design settlement plans that preserve eligibility while securing long-term financial stability.
✅ Identifying At-Risk Benefits – We review the claimant's eligibility for Medicaid, SSI, and other assistance programs.
✅ Special Needs Trusts & Settlement Trusts – We help integrate structured settlements with Special Needs Trusts (SNTs) or other vehicles to shield assets from counting against eligibility limits.
✅ Income Management – We create structured payouts that meet legal thresholds, ensuring continued access to necessary benefits.
TLC specializes in balancing financial recovery with government benefit preservation, ensuring that settlement funds provide lasting support without disrupting essential assistance programs.
When a settlement involves an individual who is Medicare-eligible, federal law requires that a portion of the settlement be set aside to cover future medical expenses that would otherwise be paid by Medicare. Medicare Set-Asides (MSAs) ensure that funds are properly allocated for Medicare-covered treatments, preventing claimants from facing penalties or losing benefits.
An MSA is a designated fund within a settlement that covers future medical expenses related to the injury, ensuring that Medicare remains the secondary payer.
MSA Analysis & Calculation – We coordinate with MSA specialists to determine the appropriate allocation amount based on expected future medical costs.
Funding Options – TLC helps claimants structure MSA funding for long-term management, reducing immediate tax burdens and ensuring financial stability.
Compliance with CMS Guidelines – We ensure that MSA funds are properly reported and administered, protecting claimants from potential disputes with Medicare.
✅ Preserves Medicare Eligibility – Properly funded MSAs ensure claimants remain in good standing with Medicare.
✅ Tax Efficiency – Structured MSAs can provide tax advantages by spreading payments over time.
✅ Predictable Medical Funding – Ensures that claimants have consistent access to medical care without depleting their settlement.
TLC helps attorneys, claimants, and insurance professionals navigate the complex Medicare compliance landscape, ensuring that settlements provide lasting financial protection.
For many settlement recipients, a lump sum payment can present challenges related to financial management, tax efficiency, and government benefit preservation. Integrating a trust with a structured settlement can provide a secure and strategic way to protect assets, manage distributions, and ensure long-term financial stability.
🔹 Protect Government Benefits – Claimants relying on Medicaid, Supplemental Security Income (SSI), or other means-tested programs can lose eligibility if a settlement is not properly structured. A Special Needs Trust (SNT) can shield settlement proceeds from asset limits while ensuring funds are available for supplemental expenses.
🔹 Prevent Financial Mismanagement – Large lump-sum settlements can be quickly depleted due to poor financial decisions, family pressure, or fraud. A trust provides structured distributions with professional oversight.
🔹 Tax Efficiency – Trusts can help reduce tax burdens by deferring income and managing distributions in a way that aligns with tax planning strategies.
🔹 Creditor & Legal Protection – Depending on the trust structure, assets may be protected from creditors, lawsuits, and divorce settlements.
✅ Special Needs Trust (SNT) – When an injured person is receiving needs-based public benefits like Medicaid or Supplemental Security Income (SSI), a direct settlement payout can jeopardize their eligibility. A Special Needs Trust (SNT) is a planning tool that allows settlement funds to be set aside for the individual's benefit without disqualifying them from vital government assistance.
At TLC Structured Settlements, we collaborate closely with plaintiff attorneys, guardians, and settlement recipients to ensure that structured settlements are fully integrated into the trust planning process. We help coordinate with trust attorneys and corporate trustees to ensure that the structured annuity complies with trust requirements and benefits the individual over the long term.
✅ Settlement Protection Trust (SPT) – Designed for claimants who do not currently need an SNT but may require financial management and creditor protection, ensuring settlement funds last a lifetime.
✅ Attorney Fee Deferral Trusts – Attorneys who structure their fees can use trust-based solutions to enhance investment growth and tax deferral benefits.
🔹 Case-Specific Planning – We analyze the recipient's financial needs, eligibility for benefits, and long-term goals to recommend the most suitable type of trust.
🔹 Collaboration with Trustees – We coordinate with professional trustees, financial advisors, and estate planning attorneys to ensure a seamless trust setup.
🔹 Structured Settlement Funding – Trusts can be funded with structured payments, ensuring tax efficiency and longevity while maintaining flexibility.
By incorporating trust planning into a structured settlement, TLC helps clients achieve financial security, long-term asset protection, and peace of mind.
At TLC structured settlements, we provide strategic settlement planning support tailored to the unique needs of personal injury litigators navigating mediation. As trained and licensed attorneys ourselves, we bring a deep understanding of the legal and financial complexities involved in settlements, enabling us to work seamlessly with attorneys and their clients. Our team delivers critical financial insights, structured settlement options, and benefits guidance—whether in person for select cases or remotely via cutting-edge communication tools—helping to ensure well-informed decisions that support long-term financial security.
Modern, Tech-Enabled Assistance
Our specialists are available in real time via secure video conferencing, phone, and email, ensuring that settlement planning insights are always at your fingertips. We provide structured settlement illustrations, answer questions on government benefits, and deliver key financial guidance without disrupting the flow of mediation.
Integrated, Client-Centered Approach
We respect your strategy and the nuances of each case. Our team integrates smoothly into mediation discussions, providing essential input while allowing you to maintain full control of negotiations.
Early Engagement for a Streamlined Process
By involving us before mediation, we can help educate your client on available financial strategies and accelerate the post-settlement implementation process. This proactive approach ensures a smoother, more efficient resolution.
In-Person Support for Select Cases
While our modern communication tools allow us to provide full support remotely, we recognize that some cases benefit from in-person assistance. For appropriate matters and upon request, we may be available to attend mediations in person to provide hands-on guidance.
