Case Study and Comparisons
How do structured fees compare to other investments? Consider the following three examples comparing structured attorney fees with taxable investment accounts.
Required Rates of Return
Compare a structured settlement annuity with an alternative taxable investment account. The taxable account would require an additional 2.7% rate of return to match the structured settlement annuity level payout.
Example 2: Actual Payouts
Let us assume that the structured settlement annuity and the taxable account both offered the same rate of return. Payouts for the taxable account would be $7,071 less than the structured settlement payout each year — that’s a total of $106,065 less.
Example 3: After-Tax Payouts
Assuming equal rates of return and after-tax payments, the taxable investment account ultimately runs out of money during the payout period. Bottom line — the taxable account pays $126,791 less in after-tax payments than the structured settlement annuity payout and is depleted sooner.