The Essentials of Settlement Planning

Settlement planning is a challenging and rewarding area of practice. One of the more challenging aspects is working with and marketing to trial attorneys. This seminar will discuss the unique challenges that arise when working with the trial attorney bar. Oftentimes, the trial lawyer's interest is wrapping up the case as quickly as possible to allow the plaintiff and the plaintiff's attorney to obtain the financial assistance and fees they have worked so hard to obtain. This can be a challenge for the settlement planner who needs time to prepare a complete settlement plan. Plus, marketing to the trial attorney can be difficult provided their distinctive personality traits and need to resolve matters quickly.

The federal tax treatment of litigation settlements or judgments and related legal fees can have a significant impact on the net value of a settlement or award. Ideally, tax consequences should be considered from day one of the litigation process. While proper planning can make a good settlement better, failure to adequately plan can transform an otherwise good settlement into a bad one or make a bad settlement even worse. This seminar will identify the fundamentals of proper income tax planning for a settlement or judgment.

Medicare and Medicaid include subrogation and lien rights that are typically superior to any other interest on a settlement or judgment proceeding. This seminar will discuss Medicare and Medicaid's right to recover from a plaintiff's litigation proceeds as well as how to identify, advise, and negotiate Medicare and Medicaid liens.

An ERISA health plan or private health plan may attempt to seize a portion of the settlement amount - or, in some cases, the entire settlement - to cover the medical benefits it has distributed on behalf of the plaintiff. This seminar will discuss the legal rights for ERISA and private lien recovery and how to properly identify, advise, and negotiate these liens.

Qualified Settlement Funds (QSFs) are tax qualified trusts for litigation settlement proceeds. They are relatively easy to establish, and offer unparalleled tax and structural benefits. Defendants obtain an immediate tax deduction and full release, and plaintiffs can defer their income, structure their recovery, and protect needs based benefits. They are revolutionizing case settlements, from complex class actions to more traditional actions. This seminar will discuss the legal requirements for a QSF, its uses in settlement planning, and options for the settlement planner in establishing QSFs.

The Medicare Secondary Payor Act applies to third party liability situations in which the settlement or award includes payment for future medical expenses. If Medicare determines that the injured party will have future medical expenses then a Medicare Set-Aside Arrangement (MSA) may be required. For smaller MSA accounts, the MSA can be self-administered. For larger MSA, a custodian usually administers it. This seminar will discuss the legal MSA requirements and how the special needs planner is involved in establishing and administering MSAs.

It is important that the settlement planner understand the lifetime financial needs of a plaintiff. This is especially important for the plaintiff with a disability. Plaintiff and Special Needs Attorneys should consult with a special needs financial planner early in the process to assure that the settlement plan meets the unique needs of the person with a disability well into the future. A comprehensive care plan that defines budgets, manages client expectations, and protects against inflation and investment risk is essential to client outcomes. This seminar will provide an overview of financial projections, investment plans and restrictions for plaintiffs with disabilities, as well as processes to evaluate the components of a settlement proposal.

Structured settlement annuities are an integral part of many settlement plans. A structured settlement is a future periodic payment arrangement that is made a part of a personal injury settlement. Under Section 104(a)(2) of the Internal Revenue Code, all of the future periodic payments are income tax-free to the injury victim even though the payments include interest they earn. In general, large well-capitalized life insurance companies offer the annuities. While the transaction and the concept might seem very simple, there are many serious issues and even pitfalls that the planner should understand. This seminar will provide an overview of the structured settlement annuity process and then an insider's view of the critical things the special needs planner should be on the lookout for in the use of this settlement planning tool.

The implementation of the Affordable Care Act (ACA) presents new challenges and opportunities for plaintiffs with disabilities who receive a litigation recovery. In the past, preservation of public benefits was essential for the ongoing care of a person with a disability. This seminar will provide a roadmap for the planner to review to make sure he or she is using this valuable new tool to best enhance the quality of life of the plaintiff. This seminar will also review how the ACA may affect overall litigation recoveries.

If public benefits are not at issue, but the plaintiff requires assistance with managing financial assets because of lack of sophistication, unfamiliarity with managing assets, or questionable capacity, the settlement planner should be familiar with creating other types of “Settlement Trusts.” In this seminar, we will learn how to create a trust that provides a stream of income and a cash reserve the plaintiff can use when the need arises. We will also learn about the use of traditional estate planning tools that can be of assistance to the plaintiff.

Many public benefits that are available to persons with disabilities, such as Supplemental Security Income (SSI) and Medicaid, place limits on income and certain types of assets. Exceeding such limits can lead individuals to lose benefits. Therefore, individuals receiving a litigation recovery must make sure their lawsuit proceeds are not “countable.” The first party Special Needs Trust can be established or joined to hold a person’s assets and will not be “countable” for purposes of qualifying for SSI or Medicaid. This seminar will provide the do’s and don'ts of using special needs trusts to hold settlement proceeds.

Settlement planning is the process of ensuring that a plaintiff who has a significant disability, lacks capacity, or has a complex financial situation will receive his or her litigation proceeds in such a way that it fully enhances his or her quality of life. Settlement planning typically involves multiple professionals including attorneys, accountants, financial advisors, life care planners, and others who work together to provide the best available plan. This seminar will provide proven steps to add settlement planning as part of your business model. It will also provide tips on how to build and maintain a settlement planning practice.