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Sample Structured Settlements
| TAX
ANALYSIS |
|
COMPARISON
OF A CASH SETTLEMENT TO A STRUCTURED SETTLEMENT |
| |
|
|
| STRUCTURED
SETTLEMENT |
|
|
| |
Amount
Invested |
$200,00 |
| |
Monthly
Structured Settlement income |
$911.56 |
| |
Annuity
Term period |
20
years |
| |
|
|
| |
Annual
Structured Settlement |
$10,939 |
| |
Additional
Annual Income Earned |
$23,300
|
| |
LTD Benefit
received |
$23,300
|
| |
Total
Annual Income |
$55,839 |
| |
Taxable
Annual Income |
$44,900
|
| |
|
|
| |
Income
Tax Due- Estimated @ 30% on $44,900 |
$13,470 |
| |
|
|
| |
Net
Spendable Income |
$42,369 |
| |
|
|
| At
the end of 20 years, the Structured Settlement allows
for a $200,000 return of capital |
| The
result is, the Structure pays $10,629 more per year spendable
dollars than the cash settlement provides in annual interest
payments. Over a period of 20 years, this creates a differential,
in favour of the structure, of $212,580 |
| Keep
in mind that the Structure payments usually flow on a
monthly basis whereas the interest income on the cash
settlement is payable only on an annual or semi-annual
basis in arrears. |
Any additional income earned will only make the differential
between the structure and the cash settlement more dramatic. |
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