How is CCI able to provide the win-win situation described in the last answer?
Simple. A window of opportunity exists at the moment of settlement. If the plaintiff took cash and left, he or she could purchase an annuity or make an investment that would provide a monthly cash flow. However, some or all of that cash flow would be taxable. Since the entire cash flow from a structure is tax free, the plaintiff would have to invest a greater amount to achieve a greater gross monthly cash flow in order to have a net after tax amount equal to the amount we can provide as part of a structured settlement. In the preceding answer, the plaintiff would need $1.1M to achieve a net after tax amount equal to what the defendant can provide for $925,000. If the case was worth $1M, both plaintiff and defendant are better off with the structure than with cash. That’s called “splitting the subsidy”.
