Structured sales and 1031 exchange, tax deferral options for capital gains

In this weeks edition of Speaking of Settlements, Mark Wahlstrom looks at the idea of whether or not 1031 exchange tactics can be used to "wait out" the current void in the structured sale market caused by the departure of Allstate Financial as an underwriter of structured sale annuity funding programs.

Structured sale and 1031 exchange, the key to tax savings?

Structured sale and 1031 exchange, the key to tax savings?

Both concepts, the 1031 exchange and the structured sale, have been around for decades and used successfully in the pre-real estate melt down era of the late 1990's and mid 2000's. However, over the last 5 to 7 years, the collapse of both residential and commercial real estate, coupled with concerns about potentially increased capital gains rates, largely smothered the potential of this once promising concept of tax deferral and cash flow planning using structured sales.

Evidence so far in 2013 suggests that interest in structured sales is surging as real estate prices have begun to rebound at the exact same time as the first substantial increase in capital gains and ordinary income tax rates became law in 2013. More sellers of real estate have been looking for options to spread out the tax hit in a secure fashion and structured sales appear to fill a growing need of tax planners, CPA's and real estate investors of all sizes. In this weeks video Mark examines some timely ideas for those who have pending sales or potential sales and are wondering what options there might be in the interim.

Mark Wahlstrom is the President of Wahlstrom & Associates and one of the nations leading experts in structured sales, Oil & Gas lease bonus structures, structured attorney fee's and mass tort settlement administration.

Structured sales. What to do now that Allstate has left the structured sale market

In this weeks edition of Speaking of Settlements, Mark Wahlstrom looks at the implications of Allstate Financial's recent decision to shut down their structured settlement division, and with it the ability to use their off shore assignment company to write a wide variety of taxable damage and property sale structures.

These unique products fall under a couple of categories, but each of them has the common thread that they require the use of an off shore assignment and benefited from the Allstate Financial name, deep pockets and marketing muscle to get them done.

  1. Structured Sales- The ability to spread out over time the tax hit on the sale of real estate assets. 
  2. Structured Oil and Gas Lease bonus payments- The ability to structure or spread out the tax burden on the up front bonus payments for leasing ground to drill on. A huge new market in the oil-shale fields across the US.
  3. Structured Divorce cases- Again a tool that allowed certain aspects of a divorce settlement to be funded but paid over time.
  4. Structured celebrity endorsement income- A huge potential market focused on spreading out endorsement payments over time.

Each of these were powerful, unique markets and Mark Wahlstrom look's at how you should approach each of them now that the major underwriter is out. There are choices but you need to know what your options are and how to proceed.

Looking to structure your divorce settlement so as to save taxes and secure income? Allstate has the answer.

Divorce is rarely a happy event but a successful divorce settlement that can bring tax advantages and greater security to both sides of the transaction is going to be great news for many divorce attorney's and their clients across the country.
Today Allstate Financial has continued it's tradition for innovation and expansion in the structured settlement marketplace by announcing to brokers nationally that Marital Property Transfers, ie Divorce settlements, are now eligible to be structured using their Allstate International Assignments, Ltd, facility and Allstate Life Insurance Company as the funding mechanism. 

This one area of structured settlements has been for the settlement planners who specialize in structured settlements in taxable damage situations, sort of the holy grail, as it is an area of the legal profession where there is a lot of activity and financial planning stress due to the nature of the situation involved. Now with the ability to use a structure to bridge the negotiation gap between parties, the potential exists to provides real value to both sides of the transaction in money saved and security added. 
Mark Wahlstrom, the host of The Settlement Channel will be doing a commentary on the entire process later this week on Settlement Expert TV, and at that time will provide a more detailed tutorial on how structured divorce settlements work, the tax implications and advantages for both parties if they elect to structure a divorce settlement and who might be most interested in pushing funds into future years and securing cash flows. 
Obviously the initial benefit of a marital property transfer being funded through a structured divorce settlement is the payer gets a full tax deduction for the amount funded, while the beneficiary of the payments has a secured cash flow from a AA+ rated credit and only pays taxes on the funds in the years in which they receive them. Mark will discuss the creative application of this powerful tool in his commentary later this week. Until then to learn more about the Allstate Financial divorce structured settlement program, keep checking back to our web site and contact Mark Wahlstrom for more details.