Judging by today's output, Patrick Hindert apparently enjoys browsing dusty bookshelves and rifling through files seeking vintage 4 year old scholarly missives.
Hindert's last forage, only two years ago, brought us Adam Scales then 4 year old paper "Against Settlement Factoring? The Market in Tort Claims has Arrived , published in 2002. "One on topic hit wonder" Scales and his paper were "pimped" around by Hindert to various settlement industry and factoring industry trade associations in an apparent effort to mainstream the factoring industry. I think we all can see the effect of the energy that Hindert put into the factoring topic. Looking back readers, do you see that as an effort that brought a positive result or, was it the genus to certain "g-forces" holding the industry down?
New for 2008 it's Dick Risk's A Case for the Urgent Need to Clarify Tax Treatment for a Qualified Settlement Fund Created for a Single Claimant", published in 2004 in a Virginia law publication. Hindert's post is pure propaganda with the mission being to position 468B Qualified Settlement Funds as the single most important strategic issue for the structured settlement and settlement planning industries. It isn't.
What is a Qualified Settlement Fund?
In this case Hindert is simply opportunistic to use a paper written by John J. Campbell, a Denver Colorado certified elder lawyer and Medicare Set Aside Consultant to build his case in the hopes of giving Treasury another nudge on the single claimant issue. Campbell recommends QSFs as "particularly useful" to allow planning for plaintiff's SSI or Medicaid eligibility. OK. John J. Campbell may be well respected in his area of expertise, and is certainly free to opine, but nothing on his firm's website suggests that he has ever held himself out as a tax lawyer. If one were to rely on such advice, do John J. Campbell and Dick Risk have enough Errors and Omissions between them to cover the tax liability if things turn out to be not as they opine?
Both Campbell's and Risk's articles rehash the arguments on the "economic benefit doctrine" sent by the Skadden Arps law firm to Treasury on behalf of the Society of Settlement Planners in 2003 in an effort to get clarification. That request was still pending some 5 years later before dropping off the Treasury's priority list.
Dress it up as they will, it remains that a number of settlement professionals enjoy using 468B QSFs on single claimant cases because they can keep all of the commissions. Some settlement professionals, who I have unaffectionately dubbed "QSF jockeys", may not have a clear cut reason, or offer specious arguments for doing a single claimant 468B QSF. Laundry lists of alleged defendant misdeeds of long ago are thrust forward in an attempt to whip attorneys into a frenzy so that the settlement professional's income can be doubled**
Some alert plaintiff attorneys are now asking questions of these "QSF jockeys" to help their clients avoid potentially significant additional costs and limitations associated with them. While this author believes there are circumstances where a 468B qualified settlement fund may be appropriate in such cases, In determining whether the 468B QSF is the correct settlement tool for one's own client, one has to take into account these costs and the fact that the number of annuity issuers who will write a structured settlement emanating from a single claimant QSF is very small. The latter could change however, if there is a positive Treasury guidance.
When pressed for an answer any qualified adviser will tell you that while a 468B qualified settlement fund is a useful settlement tool, it is neither appropriate nor practical to use an IRC 468B Qualified Settlement Fund for every case of every size, single claimant or otherwise.
Hindert's article fizzles off point with a discussion of the procedural issues concerning Medicaid special needs trusts. Perhaps he'll stay on point in part 3.
**This author has in his possession a document authored by Patrick Hindert in which "show me the money" was listed at the top of the "unstated mission" of the particular organization.