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Earn Tax-Advantaged Supplemental Income Without Lifting a Finger

Earn Tax-Advantaged Supplemental Income Without Lifting a Finger
Sage Settlement Consulting

It’s no secret that a successful legal career doesn’t necessarily equal a predictable paycheck. Case volume ebbs and flows, offering little certainty. Plaintiff attorneys with an eye on the future are wise to explore investment options that deliver regular income with minimal effort. Fortunately, solutions exist that fit the bill without taking time away from your practice.

Attorney Fee Deferrals: Your Financial Weapon of Choice

Plaintiff attorneys have a leg up on their defense counterparts when it comes to investment options. Fee deferrals allow placement of an attorney’s contingency fees in a financial vehicle that spreads payments out over time. Payment streams can begin immediately or in the future (depending on the product), allowing you to create a predictable source of income to supplement your current cash flow or to support future expenses, such as college tuition or retirement. If you have an existing deferred comp plan, attorney fee deferrals are an excellent funding tool.

You may find additional benefits when it comes time to file your taxes:

  • Since payments will be spread out over time, you may be able to remain in your current tax bracket, rather than moving up to the next bracket. Less taxes = more fees in your pocket.
  • By deferring your payments as a part of your retirement nest egg, you may be able to take advantage of a lower effective tax rate in retirement.
  • Your CPA can help you to determine if deferred fees will help reduce your AMT liability.

Fixed Annuities

For several years, structured attorney fees using fixed annuities have been the deferral investment of choice. The plan design is flexible and there is no income cap, nor any annual or lifetime contribution limits. With no overhead or management fees, the guaranteed1 rate of return is comparable with many traditional investments. Payments are fixed and guaranteed, allowing you to set this stream of income on autopilot and pay taxes only on the income received within each tax year.

Fee Structure Plus®

Attorneys seeking additional growth potential may want to explore Fee Structure Plus® (FSP) as an alternative. FSP uses a low-cost platform to invest your fees in market-based portfolios. In addition to providing many of the same benefits as fixed annuities, FSP accounts can be managed by your financial advisor as a part of your comprehensive financial portfolio. You can defer unlimited amounts of contingency fee income, with taxes payable only in the years in which you receive your FSP payments.

Alternative Options for Attorney Fee Deferrals

In addition to fixed annuities and Fee Structure Plus®, there are other attractive options that employ a variety of underlying investments including Vanguard Funds, U.S. Treasury Bonds, and fixed indexed annuities. The varied investments offer a broad range of solutions to diversify your portfolio and maximize your wealth management and tax planning efforts.

Contact Sage Settlement Consulting Today

Deferred fees provide you with a stress-free source of long-term, tax-advantaged income. To learn more, contact our attorney fee deferral experts today.

1 Guarantees are subject to the claims-paying abilities of the issuing insurance company.

Sage Settlement Consulting, LLC and its affiliates (collectively, “Sage”) does not provide advice or services related to the purchasing of, selling of, or investing in securities or other financial instruments. Any discussion of securities contained herein is not intended or written to be used, and cannot be used, as advice related to the purchasing of, selling of, or investing in securities or other financial instruments. Sage does not provide legal, tax, or accounting advice or services. Any discussion of legal or tax matters contained herein is for illustrative purposes only and is not intended or written to be used, and cannot be used, as legal advice or for avoiding any penalties that may be imposed under Federal tax laws.

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