If you are an attorney who has claims for legal fee's in the Owens Corning asbestos settlement you need to be aware that you have an excellent opportunity to structure your legal fee so that your financial future, or firms cash flow is both secured and tax deferred.
As most people know Owens Corning recently agreed to a $5.2 billion settlement of all past and future asbestos claims as a result of their use of asbestos in their products over the past decades. While it is common knowledge that injured victims can structure their payments out of the settlement using section 104 tax law and section 130 qualified assignments, it is not as widely known or understood that trial lawyers who represent these people may elect to structure their legal fee's in the same fashion.
With out getting into all the details it's important to note the following:
1. A section 468B trust was established back in 2003 to accept funds and make payments to beneficiaries of the trust. This is important as the code and body of law built up around section 468B is quite clear that it is permissible for claimants of the trust to establish periodic payment plans, or structured settlements, and for the trustee to sign off on those plans and make the assignment of ownership and liability for future payments to the assignment companies of the funding life insurance markets.
2. The same 468B qualified settlement trust also allows for trial lawyers to take their legal fees in one of three ways. All of the payment in cash, all of it in a structured annuity or periodic payments, or a combination of cash or structured settlement annuity.
3. This means any trial lawyer with a claim for payment in this case is faced with a major decision. That decision is do you want to take all your money at settlement in 2006, and pay top marginal rates of up to 40% depending on what state or city you reside in. Or, do you want to look at your options to defer payments into future tax years, thus reducing dramatically the initial tax bite and effectively keeping your money in your pocket, earning interest, for use in a future tax years.
4. Please note, and this is very important, this is a method of tax deferral and not tax avoidance! You will pay taxes on the earnings, plus interest, in which ever tax year you elect to take your payments in.
5. You have almost unlimited choices on how to structure your legal fee payments. Lump sums, retirement income, life payments, deferred income streams, joint annuities with your spouse, etc. Its up to you.
6. You MUST elect this prior to filing your fee petition for payments with the Owens Corning trustee. If you wait until after you have received the funds, you are in constructive receipt, you will have to report it in 2006, and there is no possible method for you to change your decision.
7. Contact a competent settlement professional to discuss your options. If you don't work with someone already, you can contact Mark Wahlstrom at 800-444-5924 to review your choices. With over 25 years of experience and a full range of annuity markets, Wahlstrom & Associates is the expert in structuring your legal fees.