Settlement: Strategies & Solutions
Plaintiffs can regularly keep more of their recoveries with our Trust Solutions. And while they plan, trial lawyers can receive their fees.
Settlement taxation follows two statutory rules. IRC § 61 treats all income as gross income unless excluded. IRC § 104(a)(2) excludes damages received on account of personal physical injury or sickness. Punitive damages remain taxable regardless of injury. Emotional distress is excludible only when caused by physical injury. Strategic allocation within the settlement agreement controls which rule applies to each portion.
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Strategies
We develop settlement strategies with planners and counsel across the country. And our Expert Team is always educating.
Tax language at settlement can cut tax, even in tax-free settlements. Structured settlements can defer tax and provide subsidies. And lawyers can boost fee value through deferral and retirement plans.
We’re glad to talk through issues and refer you to the right advisors.
Solutions
Increase the amount plaintiffs keep in taxable cases.
Case & Plaintiff Tax Details
Plaintiff Net Proceeds After Tax
Estimated after-tax cash to the plaintiff, net of attorney fee, taxes, and the PRT Charitable Contribution.
PRT Net Increase in Proceeds
Illustrative only, based on a $1,000,000 taxable recovery, a 40% contingency attorney fee, and a 40% combined income tax rate. PRT cost modeled at a fixed 3% of the taxable recovery ($5,000 minimum). Not tax advice; actual results depend on individual facts. See the full PRT Calculator for a detailed estimate.
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