Is there a minimum or maximum amount that can be placed into Settlements Plus™ (SP)?
The minimum amount to fund a Settlements Plus™ account is $250,000.00. There is no maximum.
Must the claimant structure the entire settlement?
No, a claimant can structure all or a portion of the settlement proceeds. The portion to be structured is paid directly to the assignment company, which purchases the funding instrument. Payments are then made to the claimant.
Is the claimant limited to one type of settlement product for the case?
The claimant has flexibility to split the settlement proceeds across any combination of a cash lump sum, multiple structured settlement products, and other programs.
What are the advantages of Settlements Plus™ over a traditional annuity?
Traditional annuities provide various benefits including flexible design, ability to defer unlimited amounts of settlement income, and tax-free or tax-deferred investment growth. Settlements Plus™ ups the ante by adding potential market-based returns and the ability to adjust risk tolerance according to changes in the financial landscape.
Can the claimant view the balances in the Settlements Plus™ account online?
Yes, online view-only account access is available whether the claimant chooses the trust company or a personal financial advisor.
Where are the assets funding the Settlements Plus™ (SP) payments held?
To take advantage of the U.S.-Barbados Tax Treaty, the SP funds are initially sent to a Barbados-domiciled assignment company. Upon receipt of the funding amount, the assignment company immediately sends funds via wire transfer to a trust company in the United States for custodianship and management. At the completion of the transaction, the assets are held by a United States-domiciled trust company as the funds’ custodian. Additionally, if requested, the trust company may transfer the funds to an external financial advisor’s platform.
What are the fees for Settlements Plus™ (SP)?
The fees for SP are as follows:
- One-time assignment fee of $1,000
- One-time administrative fee of $400
- Annual program fee equal to 1% of the value of the SP account, deducted at the time of account establishment and on or about each annual anniversary thereafter.
The fees for investment advisory services by an external financial advisor or active management by the trust company are in addition to the fees outlined above.
What does the Settlements Plus 1% program fee cover?
The competitive 1% program fee covers the ongoing program administration costs, operating expenses of the assignment company, and custodial and administrative services provided by the trust company.
Why is the assignment company located in Barbados?
The assignment company is domiciled in Barbados to make use of the benefits of the U.S.-Barbados Tax Treaty to create tax efficiency and prevent the initial settlement sum from creating a taxable event to the assignment company.
What is the role of the trust company?
The trust company serves as administrator and master custodian of the Settlements Plus™ program. It is responsible for accounting, tracking, reporting (including tax reporting), and calculations on behalf of the assignment company.
What type of tax reporting is required for Settlements Plus™?
For taxable settlements, the trust company, on behalf of the assignment company, will issue a 1099-MISC to the claimant during the year(s) that payments are made. The claimant will then report payments as ordinary income for tax purposes.
Are the assets within the Settlements Plus™ (SP) accounts protected from creditors of the claimant?
While the claimant is the payee of the future SP periodic payments, the assets used to fund the SP payments are owned by the assignment company pursuant to a Non-Qualified Assignment Agreement and Release (NQAR). Since the claimant has the right to receive periodic payments but does not have ownership rights in the underlying assets, the assets are not subject to claims made by the claimant’s creditors.
What happens to the settlement payments in the event of the claimant’s death?
Upon the death of the claimant, payments would continue to be made to the claimant’s beneficiary according to the original payment schedule.