Forever Settlements

  • 16 February, 2024
  • 42 MB

This week on the Justice Team Podcast, we explore legal settlements’ financial intricacies with Nick Coccimiglio, settlement consultant and founder of Justice For Life. Bob and Nick discuss structured settlements and QSFs, highlighting their tax benefits and smart financial management post-settlement. Nick emphasizes the crucial role of professional QSF administration, and he and Bob touch on preventative health, connecting financial wisdom with overall wellness through the Resilience Code.

Nick Coccimiglio, Justice For Life


Bob Simon (00:07):
Welcome to this edition of the Justice Team Podcast, part of the Justice Team Network. And today we’re going to start talking about you as a lawyer are making money. How do you then save that money? What to do with it? How do you reinvest it in different systems, and what do you do for clients? This is about financial responsibility, is what we’ll be talking a lot about here today. And we are very, very, very, very blessed to have on Nick Coach Coccimiglio.

Nick Coccimiglio (00:33):
That’s right.

Bob Simon (00:33):
Coach Coccimiglio.

Nick Coccimiglio (00:33):
That’s right.

Bob Simon (00:34):
So we could throw that graphic up because people that are watching could be able to see the cool little graphic that he has for Justice for Life with Coach. Looks like Coach Bill Parcels next to Emilio. I was like Emilio!

Nick Coccimiglio (00:46):
Emilio Estevez.

Bob Simon (00:48):
Emilio Estevez. Son of?

Nick Coccimiglio (00:50):
Oh, Charlie, right? No, Charlie’s… Martin.

Bob Simon (00:53):
Martin Sheen.

Nick Coccimiglio (00:53):
Martin Sheen. Yeah Charlie’s his brother.

Bob Simon (00:55):
Charlie’s his brother. More of the degenerate brother.

Nick Coccimiglio (00:58):

Bob Simon (01:00):
So Nick is a licensed settlement broker. He also does qualified settlement funds, which we’re going to talk a lot about here today. I think a lot of lawyers are very good at making money, and then what they do or how they’re tax sheltering or doing things thereafter is always a big question mark.

So we’re going to talk a lot about that today and how he can help clients in some walkthroughs and landmines that you have to do. So Nick, we’re filming here in Los Angeles, but you flew in this morning.

Nick Coccimiglio (01:27):
I did, yes. Right in the Hawthorne.

Bob Simon (01:29):
Nick’s also a pilot and he flies around the country in his own little plane coming to and fro helping all the peoples out.

Nick Coccimiglio (01:36):
Yeah, so no bourbon for me.

Bob Simon (01:37):
No bourbon. Well, you can drink and fly.

Nick Coccimiglio (01:39):

Bob Simon (01:40):
Big, big, big, no?

Nick Coccimiglio (01:41):
Big no.

Bob Simon (01:41):
But you can’t even drink the day before you fly either.

Nick Coccimiglio (01:43):

Bob Simon (01:47):
Well, we will be drinking Diet Coke and coffee as opposed to bourbon on this episode. So Nick, why don’t you first tell us what is a structured settlement? Just walk us through just generally what that is and how their use case today for all of our listeners that are doing consumer law.

Nick Coccimiglio (02:06):
So I think we should start maybe on how I got introduced to structured settlements. And that was due to a tragedy in my own family. My uncle was a victim of medical malpractice and the anesthesiologist put him under, got up, left the room without noticing a kink in the hose, providing him with air. And when they came back in, his heart had stopped. They had to shock him back to life.

And he lived, but was severe brain damage. Right before trial. They ended up settling and that settlement included some cash and then monthly payments for the rest of my uncle’s life. And my grandparents were not given any instruction on what to do with the cash. They did. What most people do is ask friends and family for advice. They got introduced to somebody that promised them the world and then got taken advantage of and the money was gone six months later.

And the only thing that we had to take care of my uncle was this structured settlement payment that came in every month for the rest my uncle’s life. And it made his life as good as it could be. And I grew up knowing that we relied on that to take care of him.

Bob Simon (03:04):
I mean, similar story for my uncle who was paralyzed due to a drunk driver and they settled actually in trial and they were able to give him a quality life through, with Pennsylvania, it’s a little bit different law. Wasn’t so much a settlement fund, it was paid for the medical care continuing through life.

But yeah, it was just, I remember my aunt had essentially become the case manager, caretaker as part of the plan to allocate those funds. So how does that work? We resolve a case. I know we’ve done some big ones before and it’s like, Hey, can you meet with our client to see if it’s something they’d first be interested in?

Nick Coccimiglio (03:36):

Bob Simon (03:36):
So walk us through because a lot of us listening and watching have struggles, even with our clients agreeing to structure their money to put it away for tomorrow rather than for today.

Nick Coccimiglio (03:46):
And I think that traditionally people are asked to make that decision really before they have enough information to do that. They’re having to put the cart in front of the horse and make this irreversible financial decision before they’ve shopped for a house, before they’ve negotiated their liens and they don’t even know how much money they’re going to get. And so with the QSF, I think it opens-

Bob Simon (04:08):
The QSF stands for?

Nick Coccimiglio (04:10):
Qualified Settlement Fund.

Bob Simon (04:11):
Thank you.

Nick Coccimiglio (04:12):
It puts that horse back in front of the court and allows the client to separate the decision of settling their case with the decision of doing a structure. And then we can go pay off all their debts, buy them a new car if that’s what they want.

Bob Simon (04:28):
So for a QSF, they can take the money, put it directly into this fund, use some of it when they need it, and use some of it for tomorrow while it accrues interest.

Nick Coccimiglio (04:37):
Right. And I think a barrier to structures is often that they’re so focused on now, they’re stressed out, they haven’t had money for years and maybe even their whole life. And so the idea of locking it up is scary to them.

Bob Simon (04:53):
It’s rigid.

Nick Coccimiglio (04:55):
Yeah, it is. If they can put the money in a place where they have the option of doing the structure later and can gain some more experience, we can even give them six months worth of how much they think they’re going to spend, and they can start to live their life and see if that is sufficient.

And often they spend that six months worth of whatever their budget is in about three months. And it scares them. And then all of a sudden they’re wanting to be like, how can I protect the rest of this money? And then they’re on board with setting up a structure not being told to.

Bob Simon (05:32):
Yeah, so it’s kind of the crawl before you walk with putting your money away in the future. So what are some of the advantages? Because I think a lot of hurdles that our listeners and viewers have is, first, how do we get our client be able to sign off on something like this? I know a lot of times you’ll go meet with our clients, fly to them, talk to them, walk them through it.

But sometimes we have clients that say, I literally had a client tell me once that he wanted to take all the money in gold bricks. It was $10 million. He just wanted gold bricks, no joke.

It took us almost a month and a half to talk him out of taking gold bricks because these things happen. So how do you sit down? He ended up, I think, structuring some of it, thank goodness, but at least putting it into a bank account. Not gold bricks, but how do you talk people down that want just gold bricks?

Nick Coccimiglio (06:14):
Well, we start by having them assign purpose to the money. So it’s not just to put in a pile of bricks, that money’s going to get used for something. And if they can start to lay out those things that are most important to them and then we can assign a value of providing that for the rest of their life, then they’re attaching this thing that’s really important to them, to the structure and then it becomes something that they’re on board with.

Bob Simon (06:43):
So you kind of interview them first and figure out what’s important to them and make sure there’s buckets set aside in the future for that.

Nick Coccimiglio (06:49):
Yes, and we do the same thing for attorneys.

Bob Simon (06:51):
Love it. Yeah. Because we will talk about the work you do for attorneys too, because it’s kind of the same thing, although with attorneys, they don’t have the biggest… with clients, if they put the money away in a settlement, they’re not taxed on it going in, or on it coming out. With attorneys, we’re taxed going in.

Nick Coccimiglio (07:06):
That’s right.

Bob Simon (07:07):
Yeah, so it’s a little different, although we can have it grow and use it special, which we’ll talk about the QSF for attorney. So the first half, QSF for clients we’re talking about is putting money away first before you see if you want to structure it. It’s a little more malleable than a rigid structure. That’s A1 for using it for them. The second one we’re going to talk about is how lawyers are able to, and I think a lot of people listening here are lawyers, and they always talk about how do I leave money, how do I have my retirement plan set?

Nick Coccimiglio (07:35):

Bob Simon (07:35):
Right. And we talk about this all the time of not so much money putting it away for 20, 30 years from now. I’m talking about money just for next year and money for five years after that to put up a qualified settlement fund that can pay just my property taxes and then pay these other things. So it’s on autopilot.

Nick Coccimiglio (07:54):

Bob Simon (07:54):
Did you see what I did there with autopilot?

Nick Coccimiglio (07:56):
I like that. That was good.

Bob Simon (08:00):
Yeah. So walk us through what’s different for attorneys and clients and how it’ll help. What’s the best use case?

Nick Coccimiglio (08:06):
And so I think one of the points of confusion is that QSFs are somehow a replacement for an IOLTA. And they’re not. They’re a replacement for the defendant and the insurance company. So when we create a QSF, there is a cash release with the defendant and the insurance company. They make payment into the QSF and once they make payment, they’re fully released. They’re out of the picture.

Bob Simon (08:33):
Got it. I know we have a lot of fight with some of the carriers that try to pull that, well, we can’t do a QSF. It’s like, come on guys.

Nick Coccimiglio (08:41):
Yeah, and I’ll go into the reasons why they’re giving that pushback, but once it’s funded, they’re out of the picture. And now you can have a cooperative defendant insurer replacement that you can structure money from and that while it’s in there, the clients retain eligibility for needs-based benefits while they decide if they want to do a special needs trust or they want to do maybe an Affordable Care Act plan.

They’re also going to earn interest, which is different than IOLTA. So that money that’s sitting there, it’s going to earn interest in a lot of interest right now where it more than covers the cost of the QSF itself and then starts to benefit both the plaintiffs and the attorneys while it’s in there.

Bob Simon (09:29):
So the defendants, the carriers, they get a forward lease as soon as you fund the QSF, then the plaintiff then has the money in this account. So who’s the person that then controls when to release those funds?

Nick Coccimiglio (09:45):
So just like when you’re resolving a case with the defendant, you enter into a release, so you then say, I want to resolve a million dollars of my settlement, and then a release is signed and money is transferred from the QSF either in cash or in form of structure.

Bob Simon (10:05):
So what are the tax implications?

Nick Coccimiglio (10:07):
So the underlying tax implications are the same with the QSF. It just carries it forward. So if the causes of action are personal physical injury in nature, then anything arising out of that for the plaintiff is completely tax-free. If it doesn’t fit within that exemption, then it’s likely going to be taxable.

And so it’s even more important for them to plan because if they take all that money right away, they’re going to get taxed. They make that much money every year.

Bob Simon (10:37):
Wow. Yeah. So you got to almost time it if you do with that vehicle.

Nick Coccimiglio (10:42):
That’s right.

Bob Simon (10:42):
But who’s controlling like, Hey, I need to take money out of the QSF to buy a car. Who has to set that up? Who’s controlling it once it goes in?

Nick Coccimiglio (10:49):
So whoever the plaintiff attorney is in the office that is appointed to serve in that role, they would be signing off on distribution requests. They get submitted. And we ask that you also provide us with a distribution agreement or settlement statement so that we’re all on the same page as to who’s getting what.

Bob Simon (11:10):
But isn’t that a little, I mean, what if the law firms has a lot of these, they’re inundated with clients requests every other day for releasing funds. Is there a workaround?

Nick Coccimiglio (11:19):
Well, yeah. What I think the workaround is doing proper planning so that they’re making big decisions where they’re making a list of all the things that they need right away.

And ideally, there’s only two distributions for the plaintiff. There’s one in cash and one in a structure. But if they need more time to plan, they might need two or three before we get to that point.

Bob Simon (11:43):
Can you hire a different administrator to be the person that maybe gets paid a monthly amount to do that, or does it always have to be the law firm?

Nick Coccimiglio (11:51):
The law firm or somebody that is authorized by the law firm. So you can have staff that is authorized to sign on behalf of the law firm and then they can do it.

Bob Simon (12:01):
Interesting. So that seems like the easiest way for people to feel comfortable with putting money away for tomorrow because they can test it.

Nick Coccimiglio (12:09):
And another misconception, I think, is that it somehow slows down the settlement process, and it’s quite the opposite because you don’t have to figure out all the details about MSAs and liens and structures. You can enter into a cash release right away, get that clock ticking for when they’re obligated to pay. And then during that timeframe in parallel, we can start that planning process.

Bob Simon (12:36):
And while the money’s sitting in the QSF, it accrues interest, which benefits the plaintiff tax-free if it came from a personal injury lawsuit while you’re negotiating the liens or doing other things.

Nick Coccimiglio (12:46):
Right, so any savings on the lien is then eligible for any of those tax advantaged products.

Bob Simon (12:53):
Oh, interesting.

Nick Coccimiglio (12:54):
It normally wouldn’t be if it was paid to the IOLTA account.

Bob Simon (12:56):
Oh, because they’re getting interest.

Nick Coccimiglio (12:58):
Well, they’re getting interest and it’s also, if say the lien starts out at a million and then you eventually negotiate it down to like 250. Now that $750,000 is available to structure even if it’s six months down the road.

Bob Simon (13:11):
Oh, wow. So it could sit in there.

Nick Coccimiglio (13:13):

Bob Simon (13:13):
Accrue interest and everything. Oh, that’s awesome. Okay, so let’s go over the second part of this. Let’s use this for lawyers.

Nick Coccimiglio (13:20):

Bob Simon (13:21):
Some lawyers I know put into a QSF that they pushed the income to the following year and then allocate it all to operating expenses to the firm. I know a lot of law firms that have already paid for their operating expenses for the next year because they put in QSF when they had a big recovery for the proceeding year.

Nick Coccimiglio (13:42):
And the reason they would want to do that is because if you have the money come into the firm, even if it’s going to be used for business expenses and will be a write-off when you pay those expenses, if the income comes at the end of the year in say 2023 and you’re planning on using it 2024, that money’s going to get cut in half in California and it’s going to, you’re going to have taxes due in April.

If instead the money goes into the QSF and you only take the amount of money that you need for this year and let the rest of it roll into the next year and then resolve your claim for attorney fees in January, then you can have all of your firm’s expenses covered. And then you might even set up a fee structure that covers all of your expenses into 2025, ’26 and beyond.

Bob Simon (14:32):
So if you’re not as a law firm owner, you’re not taxed on the income coming in if it goes to directly into a QSF.

Nick Coccimiglio (14:39):
Correct. Because it’s a replacement for the defendant, not an account that’s under your control.

Bob Simon (14:44):
Wow. So is there a code or any type of statute that controls that?

Nick Coccimiglio (14:50):
There is.

Bob Simon (14:51):
What is that?

Nick Coccimiglio (14:52):
Going all the way back to 1986, internal Revenue Code 468B created designated settlement funds. And then that was expanded in 1993 through Treasury regulations, which created the Qualified Settlement Fund.

Bob Simon (15:07):
So it’s all there in the code.

Nick Coccimiglio (15:09):
It’s all there in the code. It’s been in the code for qualified settlement funds for 30 years now. And not a single QSF has ever been invalidated by the IRS.

Bob Simon (15:18):
So, let’s say, say hypothetical dollars here, say hypothetically, I have a million dollars and attorney’s fees due from one case. I put that all into a QSF, I deploy a hundred thousand dollars a year going forward to pay for operating expenses at the firm. First, I can do that.

Nick Coccimiglio (15:35):
Yes you can.

Bob Simon (15:36):
And when do I pay taxes on that million?

Nick Coccimiglio (15:38):
Only in the year in which you receive the funds and if it exceeds your business expenses. So if that money all gets used to building a firm and a growing firm, you’re often spending more and more money each year, then you could end up not paying taxes on it at all because you have offsetting business expenses.

Bob Simon (15:55):
But when I put the million in to begin with, not taxed until we take it out.

Nick Coccimiglio (15:59):
Correct, yeah. It’s not reported to you until it’s received by the firm.

Bob Simon (16:04):
So are you operating with lawyers or law firms that have multiple QSFs?

Nick Coccimiglio (16:09):
Oh, yes.

Bob Simon (16:10):
Oh yeah.

Nick Coccimiglio (16:10):
Yeah, yeah. Once they start utilizing a QSF on the big cases, they use it for every significant case. And so a lot of the firms that we work with will have 15, 20 QSFs open at any given time.

Bob Simon (16:23):
So you use the web every time there’s a big case, they put the attorney’s fees to QSF.

Nick Coccimiglio (16:26):
That’s right.

Bob Simon (16:26):
Wow. But who’s actually, because this is a whole, I mean, this is a financial, a lot of lawyers just are, I mean, present company included. I’m not that financially savvy to operate a QSF to be the operator, like the person that deploys when we, sure.

Nick Coccimiglio (16:40):
To deploy.

Bob Simon (16:41):
What’s taxable when it’s tax. I know who to ask, it’s my CFO, but what’s the tips you will give lawyers to operate to QSF?

Nick Coccimiglio (16:48):
So we always use a professional administrator. There are a couple of different providers that we work with, and we can go to them and get them to compete for the business and make sure you’re getting the highest interest rate possible and the lowest administrative costs.

And those professional administrators are then serving as another layer of protection. So if say Gerard and Keith had qualified settlement funds, what happened? There never could have happened.

Bob Simon (17:16):
Never could have happened.

Nick Coccimiglio (17:17):

Bob Simon (17:18):
Because the fiduciary duty of the operator administrator that you hire. It seems like it’s a no-brainer for law firms that have large buckets of money on, for one you can defer taxes until the following year, even if you deploy all of it and offset it off operating costs. So what about the money that’s in there? Are you accruing interest on it?

Nick Coccimiglio (17:37):
You are.

Bob Simon (17:38):
And what happens to that income?

Nick Coccimiglio (17:39):
So that income is taxable to the QSF. It’s its own tax entity. And so while you do earn interest, once it exceeds the administrative costs, which are typically minimal, then it’s going to be taxed at the QSF level. So if you earn 5%, then your net will be more like 3%, but it’s better than zero.

Bob Simon (18:03):
I mean, I’ve heard people having the ability on their QSFs to borrow against it.

Nick Coccimiglio (18:10):

Bob Simon (18:11):
How does that work?

Nick Coccimiglio (18:12):
When the money’s deposited into a QS, it can be custodian in a bank account where it’s like a money market account or really any other asset. And one of those options as an asset could be a promissory note where a loan is made to another entity and then the interest is paid back to the QSF, and then that loan could be at anybody.

Bob Simon (18:38):
So I think there are viewers and listeners. First of all, how do they get a hold of you? I think one, a lot of people would be interested in the QSF, but then also equally interested in that administrator to help them figure all this stuff out. The tax implications. I mean, I think lawyers are great at again, making money, not so good at tax sheltering and being smart about it thereafter.

Nick Coccimiglio (18:57):
And the greatest part about it is that you can do what you do best, get as much money as possible for you and your clients. And the QSF is really the best way to make sure that more money doesn’t equal more problems.

Bob Simon (19:12):
More money, more problems. Who said that best?

Nick Coccimiglio (19:16):
Biggie Smalls.

Bob Simon (19:17):
Biggie, biggie, biggie. Can’t you see?

Nick Coccimiglio (19:19):

Bob Simon (19:20):
So Nick and I also share something else in common. We have the same cardiologist in Boone and the same resilience code in Colorado, outside of Colorado. So if everybody’s watching, I mean, Nick is freaking jacked. Look at this dude. I mean, it’s outrageous, but that resilience code is superhuman stuff.

Nick Coccimiglio (19:39):
It saved my life.

Bob Simon (19:40):
Yeah, I heard that.

Nick Coccimiglio (19:41):
It really did. Yeah. I started going there after I had an issue between my C5 and C6. C6, C7, was a bulging disc pushing up against the nerve, whole left arm went numb.

And I went and interviewed a bunch of different doctors, some here in LA, and then I went out to Colorado with the suggestion of my friend Jason Jordan. And I sat down with Chad Pressmac, who runs resilience code.

Bob Simon (20:10):

Nick Coccimiglio (20:11):
And a neurosurgeon. It’s the only functional medicine group run by a neurosurgeon. And I asked him, so what’s different about you? And he goes, well, if you go with me, I’m going to take care of you before, during, and after this procedure. I’m going to help you prepare for it. I’m going to take all the time I need and make you my only patient all day long, and I’m going to do it in a way that’s better for your recovery, even though it’s less convenient for me.

And then afterwards, we’re going to get you on a program. We’re going to do blood testing every six months. I’m going to send you over to Dr. Boone. When I went there, they found a 38% blockage in my right leg.

Bob Simon (20:49):
Oh, I had a lot of blockage in my leg too.

Nick Coccimiglio (20:50):

Bob Simon (20:51):
I had my call with him. We were filming this in November 2023. My call with Dr. Boone was last week.

Nick Coccimiglio (20:56):
There you go. Yeah. So my granddad died at 32 of a heart attack, and they said that something like that is probably what killed him. And by finding that blockage, they’re then able to treat you with medication. I’m sure you’re on Repatha, right? And that brings down all the bad cholesterol so low that the plaque slowly dissipates and is completely gone.

Bob Simon (21:24):
Yeah, it’s preventative health. I didn’t know we were going to segue into that, but Nick’s big into preventative health, and I think lawyers have to be their healthiest versions of themselves to help their clients. People tend to have a very destructive lifestyle. We teach the opposite for lawyers to have a quality of life where that never happens.

And a lot of our friends turned us on. My wife and I go to the same place in Colorado, so I don’t quite look as healthy as my counterpart over here for the podcast. My wife may, but I enjoy my bourbon a little more, but I’m not a pilot, so I can drink it.

Nick Coccimiglio (21:54):
Yeah, you certainly can. And you just started going, right?

Bob Simon (21:58):
Yeah, yeah. We just started this year.

Nick Coccimiglio (21:59):
All right. So I started going in, I think it was almost three years ago. We’ll see in two years how things are going.

Bob Simon (22:10):
We shall see. I just eat too much. I’m more of a grazer. I’ll just eat all day if it’s around, but if it’s not, I won’t. But if it’s there, I’ll eat it.

Nick Coccimiglio (22:19):
That’s okay.

Bob Simon (22:20):
So anything else as we wrap up this episode? Well first of all, Nick, how do they get ahold of you?

Nick Coccimiglio (22:24):
So email is a great way, Nick, [email protected].

Bob Simon (22:31):
And for those viewing, I think we’re going to try to drop in the QR code for Nick to get ahold of him as well. And then Wealth of Knowledge. If you have any questions, again, go to You can click anything there and we’ll be able to get back to you. Put you in touch with Nick or give us advice for any other types of product or what we just found out. Or just maybe we put you in touch with the Boone Heart Clinic since we’ve been plugging that in the resilience code. The adjacent wealth, Dr. Pacar, was it?

Nick Coccimiglio (22:56):

Bob Simon (22:56):

Nick Coccimiglio (22:58):
Chad Pressmac.

Bob Simon (22:58):
Mac. Chad Pressmac. Cool. Well Nick, thanks for coming on. Thanks for flying in today. Where do you fly out of next? What’s your deal?

Nick Coccimiglio (23:04):
Going to Hawthorne back home, up north. So it’s been about half my time in California, another half in Wyoming, and we’re in California today. So I’m going to fly back up north to Danville.

Bob Simon (23:18):
To Danville. And I know you have home in the beautiful big sky country.

Nick Coccimiglio (23:24):
Hang a little south in Wyoming,

Bob Simon (23:25):
But it’s not considered Big Sky.

Nick Coccimiglio (23:27):
No, no. It’s just south of Jackson Hole Ski Resort.

Bob Simon (23:31):
Nice. Well very cool. Well Nick, thanks for coming on Coach Emilio. Now I’m going to remember that graphic forever, shit man. Any questions, go to This has been the Justice Team podcast on financial responsibility with Justice for Life. Nick, Coach Emilio.

Nick Coccimiglio (23:48):
Thank you, Bob.

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