by John Darer CLU ChFC CSSC RSP CLTC
It has been announced that TFSS International Inc. (TFSS-I) is now Structured Assignments Inc. The change is effective immediately.
TFSS stands for Treasury Funded Structured Settlements and TFSS-I , now Structured Assignments, Inc. is the Barbados assignment company used in certain non-qualified assignment transactions to resolve legal claims and disputes.
It is rare that a Defendant or its insurer wants to retain the liability to make future structured settlement payments. Therefore most structured settlements are consummated using a qualified, or non-qualified assignment, where the future obligation to the plaintiff is transferred to a special purpose company that applies, purchases and holds the funding asset. A specific tax exclusion, under IRC 130, applies to qualified assignments, which enables special purpose companies (there typically a subsidiary of the issuer of annuity used as a qualified funding asset) to take on such obligations and hold annuity contracts on a tax favorable basis. Unless the structured settlement involves damages excludable under Internal Revenue Code sections 104(a) and 104(a)(2) the obligation cannot be assigned using a qualified assignment.
The tax treaty between Barbados and the United States gives favorable tax treatment to annuity ownership in Barbados and thus several non qualified assignment companies have been established there, beginning with BARCO Assignments, Ltd in the late 1990s. The BARCO program is currently the only annuity funded non qualified assignment program in the structured settlement market. Without the favorable tax treatment the transaction would be less cost effective because the assignment company might have to declare the premiums and implicit interest in the annuity contracts (or funding agreements as income.
You may find my June 27, 2011 post about why Barbados Rocks for Non Qualified Assignments to be helpful as well as non qualified assignment link above which includes a video podcast I did on the subject.
It's important to note that Structured Assignments, Inc. will accept a transfer of non litigation obligations such as structured installment sales, oil and gas lease bonuses. Furthermore the assignment company also participates in an enhanced structured attorney fee program that does not involve US government obligations or annuities.
The name change to Structured Assignments Inc. makes sense for marketing as it is descriptive, as opposed to TFSS-I which while less than a mouthful, does not resonate.
For more information about non qualified assignments, whether through the BARCO Assignments Ltd, or Structured Assignments Inc. facilities, or to discuss how non qualified assignments might apply as a solution to you or your client, please call me at 203-561-6560.