How do structured fees compare to other investments? Consider the following three examples comparing structured attorney fees with taxable investment accounts.
Example 1: Required Rates of Return
Compare a structured settlement annuity with an alternative taxable investment account. The taxable account would require an additional 1.9% rate of return to match the structured settlement annuity level payout.
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 $4,113 less than the structured settlement payout each year — that’s a total of $61,695 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 $70,558 less in after-tax payments than the structured settlement annuity payout and is depleted sooner.
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