Tax-Free Settlement Design

Tax-Free Settlement Design

Utilizing intelligent settlement design gives plaintiffs options to set up the most advantageous financial future with their settlement money. The best part? It’s all tax-free. 

Tax-free settlement design enables a plaintiff to receive a series of tax-free distributions or payments over a designated timeframe. These plans and timelines are customizable to meet the future needs of an individual and their family. Instead of receiving a settlement as a lump sum payment, settlement design offers a way for injured parties to maximize their settlement and think strategically about how the end of their lawsuit can be the beginning of accomplishing future life goals. 

The distributions are tax free, and the growth on the settlement account is tax free. If you are an attorney and you are not telling your clients about tax-free settlement design, start today. 

What Does Tax-Free Settlement Design Entail?

Traditional settlement plans have routinely relied on fixed, low-yielding instruments. But the settlement planning landscape is ever-evolving. By working with Milestone’s team of expert settlement planners, attorneys can help their clients design an innovative investment plan, with modern tax advantages and higher earnings growth.

Milestone’s tax-free settlement designs are professionally managed with diversified portfolios, giving clients the ability to earn on their settlement dollars, tax-free. Based on typical market performance, these earnings could be between 7-9%.

These plans incorporate a combination of:

  • Fixed Income
  • US Treasuries
  • Investment Grade Corporate Bonds
  • Dividend Stocks
  • Private Equity
  • S&P 500
  • Russell 2000 Index
  • Fixed-Index, Traditional, or Secondary Market Annuities

What Are the Benefits?

Correctly mapping out a settlement helps ensure that the recovery a plaintiff receives is as beneficial as possible. This takes into account consideration of future necessities such as medical bills, equipment, long-term care, and other expenses related to the injury. Milestone’s tax-free settlement designs provide financial security and long-term income in predetermined increments. These payments are 100% exempt from federal and state income tax, and so is the growth on the account.

Key features of tax-free settlement designs with Milestone:

  • Tax-free gains!
  • Liquidity 
    • A fixed payment schedule
    • A one-time, no-fee hardship provision
  • Security
    • Automatic default judgement
    • A national custodian with multiple levels of coverage and protection 
  • Customization
    • One-on-one initial consultations and ongoing check-ins
    • All investment options available
    • Daily account management
    • Quarterly reporting 
  • Confidentiality


Watch our webinar below to learn more about when and why to use tax-free settlement design.