by John Darer CLU ChFC MSSC RSP CLTC
I've learned that Treasury guidance concerning the issue of single claimant 468B Qualified Settlement Funds is imminent.
The assignment companies for two annuity issuing life companies, that overtly accept qualified assignments from a single claimant 468B, have said that they do NOT view the acceptance of a Single Claimant 468B case as a weapon to be used in the negotiation of a settlement.
Rightly or wrongly, it is unfortunate that their view is not shared by a small number of structured settlement brokers and settlement planners whose overly aggressive and excessive use of the settlement tool may lead to an imminent result from Treasury that they will not like. It may also result in further scrutiny by these annuity issuers to the point where they will no longer offer the option.
Last week I wrote about "the escrow gambit" strategy purportedly employed by one or more structured settlement brokers or settlement planners with their law firm clients. I've learned today that the scheme, involving one or more brokers andn settlement professionals, involves the suggestion to a law firm (or firms) that the money go into their escrow account in the form of a non- interest bearing account. The purported reason is that a non-interest bearing account will generate no interest and therefore will hide an essential fact from the IRS, essentially that the money is in an account of the agent of the plaintiff. The "actors" in "the escrow gambit" then get a Court to approve a QSF and have the money paid into it, or have the escrow account declared a QSF. When a loose lipped member of a leading plaintiff advisor was heard by two separate individuals as saying that the account number or routing number is changed, I began to have deep cause for worry.
I have a hard time with a strategy where a party on the one hand advertises to be the injured party's friend and on the other hand is doing something that so clearly puts the individual's interest above that of their client's. It is believed that some of the same folks are also taking fees on referrals of structured settlements to factoring companies. Whether buried or not, disclosed or not, those individuals and firms take money out of annuitants' mouths by adding to the cost of the deal.