Structured Settlements 4Real: What's Real News in the Structured Settlements, Settlement Planning, Consulting and Lawsuit Recovery Space?

Executive LIfe of New York Liquidation (ELNY) -2

In this December 2011 video Structured Settlement Experts John Darer and Mark Wahlstrom renew their discussion about the Executive Life Insurance Company of New York (ELNY) Proposed Liqudation and its impact on ELNY structured settlement annuitants

        

John Darer and Mark Wahlstrom previously discussed Executive Life of New York in the following April 2011 video segment which also featured on the Speaking of Settlements channel on Legal Broadcast Network  Link to the April 2011 Executive Life of New York video   

Settlement Preservation Trust

A settlement preservation trust (SPT) is a personal injury settlement planning and recovery management tool when a plaintiff needs some liquidiity for the anticipated and unexpected as well as protection from temptation and potentially harmful outside influence as well.

Settlement preservation trusts provide claimants with spendthrift protected payments as well as liquidity and flexibility.  It can be used as an alternative periodic payment funding device and can be used alone or in combination with a structured settlement annuity. New York City/ Connecticut area Registered Settlement Planner John Darer explains in this informative pod cast video

     

Additional Information about Settlement Preservation Trust (also known as a Settlement Planning Trust or Recovery Management Trust)

Dumbest Things Said About Structured Settlements- "Structured Cash Settlement"

 

My financial "Illiteradar" has beamed onto " Structured Settlements: Methods, Suitable Clients and Assistance", "made for advertising"  (22 ads!) shlock published by yet another anonymous poster whose site is registered through Go.Daddy.com. Here's  a slice of financial ignorance on display at structured-cash-settlement.com :

"The secondary market is the structured settlement company".

"On other hand, the accussed  party will be the one to to pay the life insurance company".

"Unlike the buy and hold method, the third party will be assigned in purchasing thee annuity"

"In yearly payments, the agreed amount will be divided into equal amounts.   It will be distributed on the period that is agreed by both parties".

"In inflation hedging, payments may depreciate or increase over a period of time.  If the economy is good, then the money will likely increase.  On the other hand, if the economy is in crising, then the money will depreciate".

"In monthly indexed installments, the payment can be done by month, every 3 months or 6 months.  Payments that changed in amount due to some financial index is tracked over time".

"Clients must be qualified for Social Securoty benefits either as retiree or must meet the criteria of the U.S. federal health program"

In its post " Fundamentals of Structured Settlements"

"When we say annuities, we mean of regular deposits to regular deposits to a savings account, monthly home mortgage payments and monthly insurance payments.  The payment may be done weekly, monthly, quarterly, yearly or in any time interval as long as it guarantees future payments."

"As long as you settle it properly, the structured settlement may reduce the complainant’s tax obligation and may even lead in tax-free senarios"

"We invest our money to double or triple the money we invest in a couple of years".  "Look for the flaws and the brighter side".

"On the other hand, its not even bad if we squander our money but if we squander it too much.  Then, its bad after all.  Just buy the things that you need and not the things that you want. If not, there will be no money left for you, without you knowing it." 

In its post on Wrongful Death... kudos may be due...

"Your lawyer will "advice" you as to whether a wrongful death clam can be made"

Comment: Not only CAN they "be made", but I've dined at several seafood restaurants that seem to have specialized in "wrongful death clams". Very popular with the "sharks" I might add.

(All emphasis ours!)    Cue the circus music!

 

There are a number of legitimate primary market practitioners who have been unfortunately and unwittingly associated with this tripe due to: 1) their subscription to Google Adwords which placed their ads on the aforementioned website;  2)Due to the website publisher's use of the Amazon carousel widget; 3) Due to the publisher placing a video podcast of them on the site. I was actually tipped off by a Google news alert which referred to the posting of a video on the site which featured an industry colleague.

 

 

 

 

 

 

Huver Structured Settlement Text "Hoovering" Up Value on Amazon!

Apparently a used "Huver" is more valuable than a new one, at least according to online auction site Amazon.com.

Apparently the dog-eared edition of Joe Huver's sage advice on structured settlements is valued at $999.00 compared to only $146.49 for a new edition.

Download Huver Structured Settlements Text Amazon 12-26-2011

Consider that a hardcover text used for the Certified Structured Settlement Consultant and Registered Settlement Planner courses, Structured Settlements and Periodic Payment Judgments  (a/k/a "S2P2J")  which weighs more than 5lbs, new or used,  is valued at only $594.95

Download Amazon.com_ Structured Settlements and Periodic Payment Judgments (9781588520371)_ Daniel W. Hindert, Joseph J. Dehner, Patrick J  Hindert

I think it's safe to say " Stand Proud Joe!"

Structured Settlements: An Alternative Approach To The Settling of Claims is a seminal paperback authored by Joe Huver, the Exton, PA based former President of the Natonal Structured Settlements Trade Association, is useful from a historical perpective and it's an easy read.

 

Structuring Oil and Gas Lease Bonus Payments: Tax Planning Opportunities for Landowners in Ohio, New York, Pennsylvania, Other Locations For Oil & Gas Exploration and Drilling

The Structured Oil & Gas Lease Bonus Payment Option allows landowners to take advantage of IRS Revenue Ruling 68-606 by spreading out a lease bonus payment over a number of years, instead of getting whacked all at once in the first year.

In short, by ‘structuring’ the lease bonus, landowners can:

• Reduce current tax liability where the bonus payment pushes them into a higher tax bracket.
• Earn pre-tax interest accumulation to be paid in the future according to a schedule chosen by the landowner. Note: longer schedules provide the greatest advantage;
• Enjoy a customized structured payment plan that meets your anticipated future needs whether that be retirement, education of children or grandchildren, or anything else! 
• Structured lease bonus payments are backed by an Agreement to Pay from Allstate Life Insurance Company,  Allstate is rated A+(Superior) by A.M. Best Company at the time of posting.

FAQ About Structuring Oil & Gas Lease Bonus Payments  (That's "The Frack" Jack!)

A. How Do I Take Advantage of the Tax Benefits?

 

• The oil and gas lease bonus payment must be ‘structured’ BEFORE the land lease is signed. If you’ve been offered a bonus from an oil and gas company during negotiations for lease payments on your property, DONT WAIT until everything is settled.
  
• You can only structure your lease bonus payment. Landowners cannot structure future royalties. They are not eligible.
• The critical details in the process for the Structured Oil & Gas Lease Bonus Payment Option must be handled properly and involve an insurance agent or firm that is licensed in your state, appointed and authorized by Allstate Life Insurance Company for structured settlements (or Allstate Life Insurance Company of New York, for New York landowners), together with your attorneys and/or other advisers. 

B. What is the Basis for the Spreadout of Lease Bonus Payments on Oil and Gas Drilling and Exploration by Landowners?

Here is the Revenue Ruling citation:

Rev. Rul. 68-606, 1968-2 C.B. 42.378.40  Lease bonus income; installment contract.
Cash-method taxpayers who receive an installment bonus contract as consideration for an
oil or gas lease must include its value in gross income for the year in which the lease is executed
if the obligation is transferable and readily saleable. §§1.61–1, 1.446–1, 1.451–1. (Secs. 61, 446,
451; ’86 Code.)

C. What is the fee for structuring lease bonus payments?

If a structured lease bonus is elected, our firm receives a commission from Allstate Life Insurance Company or Allstate Life Insurance Company of New York for the placement of the funding vehicle.

D.  What is the transaction flow for structured lease bonus payments?

1. Parties agree on the terms of the oil and gas lease installment bonus contract, which includes the structured payments.
   
2. The parties execute the Representation and Acknowledgeemnt Statement for Oil and Gas Lease Installment Bonus s  Download Rep Acknowledgment for Oil and Gas Installment Bonus
3. Lessor signs Hold Harmless Agreement Download Structured Oil and Gas Lease Hold Harmless
4. Lessor and Lessee execute an Assignment of Obligation Agreement. See sample Download Structured Oil Gas Lease Bonus Assignment of Periodic Payment Obligation
   
5. Money goes from the Bonus Payor (Lessee) to Allstate International Assignments, Ltd. , in Barbados subject the assignment of obligation (non qualified assignment).
6. Allstate International Assignments, Ltd purchases funding agreement from Allstate Life Insurance Company (Allstate Life Insurance Company of New York, if you are a New York landowner)
7. Allstate Life Insurance Company (Home Office: Northbrook, IL) issues an Agreement to Pay to back up Allstate International Assignments, Ltd.
   

E   Is Allstate International Assignments, Ltd. Safe?

Link to Allstate International Assignments, Ltd.

		QUESTIONS? PLEASE CALL JOHN DARER  4structures.com LLC 888-325-8640

 

 

ELNY Liquidation: A.M. Best Concerned About Impact on Settlement Purchasing Companies' Investors

The proposed liquidation of Executive Life of New York (ELNY) has potential fall out for investors in at least one structured settlement securitization, according to "the world's oldest and most authoritative insurance rating and information source", A.M. Best Company.

In an October 11, 2011 press release A.M. Best stated that it "has placed the debt ratings on three tranches of securities issued by 321 Henderson Receivables V LLC (Series 2008-3) (the issuer), a special purpose Nevada limited liability company, under review with negative implications. The rating actions were taken on the $74,646,000 Class A-1 8.00% Fixed Rate Asset Backed Notes, Series 2008-3; the $9,389,000 Class A-2 8.00% Fixed Rate Asset Backed Notes, Series 2008-3; and the $4,695,000 Class B 10.00% Fixed Rate Asset Backed Notes, Series 2008-3.

"The rating action was attributed to the fact that the Superintendent of Insurance of the State of New York has petitioned (dated August 31, 2011) the Supreme Court of the State of New York County of Nassau for an Order of Liquidation and Approval of a Restructuring Agreement for Executive Life Insurance Company of New York (ELNY), a life insurance carrier, who issued annuities intended to cover payments to claimants under the structured settlements. Those payments were subsequently purchased by the issuer. A.M. Best believes that the Liquidation and the Restructuring Agreement indicates that ELNY's ability to meet its ongoing contract obligations will be diminished". (emphasis ours)

Some settlement purchasers such as 321 Henderson, which is affiliated with JG Wentworth, purchase structured settlement payment rights from selling annuitants and then package the cash flows for sale to other investors, including insurance companies.

According to the ELNY Schedule 1.15 156 structured settlement annuities are estimated to have been factored.  Industry colleague Patrick Hindert informs us in his November 27, 2011 blog ELNY Liquidation-3. that  "reliable industry sources have informed S2KM the actual number of current ELNY SSAs previously factored is considerably higher".

According to Schedule 1.15, the total percentage of each ELNY SSA contract value "protected" by ELNY's remaining assets, state guaranty fund payments plus additional enhancements varies from 34 percent to 100 percent depending upon the individual contract

For those who are interested, the September 29, 2011  A.M. Best publication "Securitization of Period-Certain and Life-Contingent Structured Settlements" may be helpful reading.

Link to information about A.M. Best credit rating methodologies

 

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Dumbest Things Said About Structured Settlement "Cash Outs"-1

"Selling your structured settlement for a lump payment of money can be a good option for people who need to get their full settlement soon to pay off debt or are planning to use their settlement money"

- website of structured settlement factoring broker December 23, 2011 10:00am EST  (emphasis ours)

The statement is bogus because should someone try to sell their structured settlement payments, they will NEVER NEVER NEVER get the full settlement.

An offer to purchase structured settlement payment rights involves the discounting the structured settlement payments to present value. There are also legal fees and other costs, whether they are built into the discount rate at the time of solicitation, or disclosed up front.

Over Lawyered "Holiday Greeting": Why Not Just Say What You REALLY mean!

Some take lawyering just a little too far...

"You may not have known that a firm of our
relatively small size had a Regulatory Compliance
Team, but even firms of our size have to comply with Federal Law.
In fact, the reason we did not do a mailing this
year has to do with changes in the law regarding
the nature and types of messages and holiday
greetings that are allowed.  Blame the government
if you want, but the greeting here, at least, is
in compliance with the new law.

Of course, (name), (name) and I did not want the
holiday season to go by unremarked, so here is
our Federally approved holiday greeting.


===========================================================================

To All:

Please accept with no obligation, implied or
implicit, our best wishes for an environmentally
conscious, socially responsible, low stress,
non-addictive, gender neutral, celebration of the
winter solstice holiday, practiced within the
most enjoyable traditions of the religious
persuasion of your choice, or secular practices
of your choice, with complete and due respect for
the religious/secular persuasions and/or
traditions of others, including of course, with
absolutely equal respect, their choice not to
practice religious or secular traditions at all . . .

AND…

A fiscally successful, personally fulfilling, and
medically uncomplicated wish to you and yours in
recognition of the onset of the generally
accepted calendar year 2012, but not without due
respect for the calendars of choice of other
cultures whose contributions to society have
helped make America great, (not to imply that
America is necessarily greater than any other
country or is the only "AMERICA" in the western
hemisphere, and certainly, by these caveats, not
to imply that America isn’t great) and without
regard to the race, creed, color, age, physical
ability, religious faith, or sexual preference of the wishee.

(Note - By accepting this greeting, you are accepting the following terms:
-       This greeting is subject to clarification or withdrawal.
-       This greeting is freely transferrable
with no alteration to the original greeting.
-       This greeting implies no promise by the
wisher to actually implement any of the wishes
for you, yours, your heirs and/or assigns etc, or
others, and even her/himself, and is void where
prohibited by law, and is revocable at the sole discretion of the wisher.
-       This wish is warranted to perform as
expected within the usual application of good
tidings for a period of one year, or until the
issuance of a subsequent holiday greeting,
whichever comes first, and such warranty is
limited to replacement of this wish or issuance
of a new wish at the sole discretion of the wisher.)

Best Wishes ABC Law"

Perhaps it's simpler to just say what you mean!

Settlement Trust Fees: "How Much is That Trustee In The Window"?

Do you know how to compare the fees charged for settlement preservation, settlement planning, recovery management or special needs trusts? How do you distinguish the cost structure of two or more trustees? In this and future posts and podcasts we will examine aspects of the decision to select a trustee for your trust. This post helps to sort through the fees and charges that could be directly or indirectly incurred by trust benefciaries.

Yes, "How Much is That Trustee in the Window"?  Start humming while you're reading...

 

There is no question that where they make sense and , if necessary, have been court approved, settlement trusts add value to the settlement planning process. They can provide spendthrift protection, liquidity, flexibility, are an alternate means to create periodic payments when constructive receipt has occurred and, if used in conjunction with a structured settlement, may act as a receptacle to receive periodic payments on behalf of the trust beneficiary to protect them from from hangers-on.

Trust fees fall into these three general categories:

1.Account Level Trustee Fees

Cost associated with the trustee discharging his/her/ its fiduciary duties. What is being advertised in published fee schedule and reflected on account statements in transaction activity. These are fees that you can figuratively see, smell and touch. Is there a minimum annual fee?

2. Investment Costs  (note: could be one , all or some)

Costs inherent in the investment choices made with the trust assets, whether through common trust funds, mutual funds or money managers assigned to a specific asset class.

A. Outside advisory fees

Cost associated with hiring outside advisors and experts ( is it out of trustee's pocket or out of client's pocket)

B. underlying investment vehicles loads, investment charges, within the vehicle and netted out of performance...not on account level.

Note: account level investment charge would show up on statements

C. account level fee charged by trustee or investment advisor

3. Additional Miscellaneous charges

Fee to prepare tax return

Special asset charges

Check charges

Front end load just to set up trust (have seen them range from 2%-4%) One vendor refers to this charge as a "funding fee" 

Fees to manage real estate

 

What is a Uniform Qualified Assignment?

What is a Uniform Qualified Assignment?  The UQA is part of a series of model documents to effect a transfer of structured settlement payment obligors at the time a structured settlement is created. The uniform qualified assignment documents were created by a collaborative within the National Structured Settlements Trade Association in the early days of the structured settlement industry to facilitate structured settlement transactions.Some women like men in uniform. Some people like qualified assignments "in uniform".

There were three types of "Uniform Qualified Assignment" Agreement:

1. Qualified Assignment  (QA)

A legal instrument executed by Defendant, Insurer or Qualified Settlement Fund Trustee and Qualified Assignment Company

Also referred to as a two party qualified assignment

2. Qualified Assignment and Release  (QAR)

A legal instrument executed by Defendant, Insurer or Qualified Settlement Fund Trustee, Qualified Assignment Company and Releasing Party

Also referred to as a three party qualified assignment

3. Qualified Assignment Release and Pledge  (QARP)

A legal intrument executed by Defendant, Insurer or Qualified Settlement Fund Trustee, Qualified Assignment Company and originally just the Claimant-Secured Party. Used where there is a desire to give the payee a security interest in the annuity contract.

Acceptance of Standardized documents Was Not "Uniform"

As with any model or standardized document its utility is a function of its adoption, first by the annuity issuers and then by the parties to the agreement. The uniform documents were accepted by some but not all of the structured annuity issuing life insurance companies, particularly on the Qualified Assignment Release and Pledge.  Not all companies offer the QARP Of the current structured annuity issuers, New York Life Insurance Company and Liberty Life Assurance Company of Boston do not. Of the companies that do most have their own documents.

Changes of any sort make the documents not uniform

A good example is where the original unform qualified assignment documents (believe it or not still being used by some brokers) only provide a discharge of obligation for mailing of a check when many people use electronic deposits today.

Another more complex example is where the original uniform qualified assignment release and pledge documents (and the second round of model documents) fail to recognize that the Claimant-Secured Party might be an individual or entity other than the Releasing Party (e.g where a trust is payee) and/or fails to consider what, if any, impact that exercising rights under the pledge as a secured party might have on eligibility for government benefits.

Watch my informational video on Qualified Assignments (below). In the video I take you step-by-step through a personal injury structured settlement transaction in a case that involves payment of damages for physical injury or physical sickness.