Havelet has obtained tax advice from leading US Law Firms regarding the tax position of Havelet, the attorney and the claimant. A full tax opinion is available to our prospective clients.
In summary, the attorney / claimant should not be subject to current U.S. income tax on the full amount of their fee / settlement award since they will not be in constructive receipt of the funds nor should any other tax consequences apply (including U.S. federal estate, gift or transfer tax) to the structure. Upon receiving distributions from Havelet, the attorney / claimant will be subject to tax on such distributions at ordinary rates.
Regarding the 3.8% Affordable Care tax on net investment income, Havelet has been advised that that the entire amount of each payment from Havelet to the client represents deferred legal fees or deferred settlement awards and not net investment income subject to tax under Code Section 1411.
Havelet is based offshore so that the reduced withholding tax on dividends can apply. Barbados-US Treaty benefits, specifically Article 22(2) and IRS section 72(u) are substantial and can mean a tax savings of up to and including 30%.
Havelet does not offer client specific tax, legal or investment advice but is able to liaise with your advisors in this regard.