Litigation

Qualified Settlement Fund As "Settlement Planning Standard" Caveat -1

By John Darer

If a money manager was going to charge you 3% to manage your money in a money market fund for a few weeks or a month would you do it?

If your answer is no, you might want to question the wisdom of any structured settlement broker or settlement planner who recommends going through the trouble of setting up a qualified settlement fund even on the smallest of cases.

Setting up and administering a qualified settlement fund carries attendant costs. There is a cost for the trust document, there is a cost for filing the final tax return, there may be bank charges and of course the trustee or administrator must be paid.

Here are some examples which show the percentage ultimately coming out of the plaintiff's hide.

$2,000 fees on $50,000 equals 4%

$3,000 fees on $50,000 equals 6%

$3,000 fees on $100,000 equals 3%

$4,000 fees on $200,000 equals 2%

Many states do not allow settlement professionals to offset the costs of the QSF.

Plaintiff attorneys should be mindful of these costs, particularly when a settlement professional is recommending a Qualified Settlement Fund on a single plaintiff case simply so that the plaintiff attorney can structure attorney fees as a settlement solution. Such a self serving purpose means that the attorney will have to justify costs that exceed most reasonable money management fees to his/her client.

Full post as published by Structured Settlements 4Real on February 22, 2009 (boomark / email).