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June 07, 2009

Financial Statistics That Shape The Lives Of Tort Victims and Ourselves

Stat 1

The S&P Case-Shiller index of home values has fallen to where it was in 2002.

Current national savings rate 5.7%, highest since February 1995.

Nearly 6% of fixed-rate mortgages to borrowers with good credit were in the foreclosure process according to the Mortgage Bankers Association and 12% of homeowners with a mortgage are behind on their payments or in foreclosure.

Stat Source: Bob Leclair's Finance and Markets Newsletter 6.6.2009

Stat 2

The compound annual return on the S & P 500 for the ten-year period ending in 2008 was -1.37%.

Stat Source: Bob Leclair's Finance and Markets Newsletter 6.6.2009

Comment: Sound like a place for risk averse (by mind or necessity) tort victims to keep their money? Somewhere across America someone may be saying "You invested MY money for 10 years in an S&P 500 mutual fund and all I got was this stinking amount less"?

Comment: It is interesting to observe that every day since they have been offered in January 2003 the daily yield on 10 Year Treasury Inflation Protection Securities (TIPS) has exceeded the above. Source: Federal Reserve Board H15 Release

Comment: Structured settlements (whether funded through annuities or TIPS held to maturity), deliver a steady boring stream of payments free of income taxes and volatility.  Ho Hum Ho Hum.

A fluke you say? 99 Fluke 23 inch

Let's go back in time to suggest that this IS NOT a fluke...

A study was done of Historical Rates of Return (1979-1995)

      

  T-BILL                 INCOME TAX FREE STRUCTURED
        RATE      MUNI     SETTLEMENT
YEAR (3 MTH) (AAA-GO) RATE

1979    10.07%    5.92%  7.26%
1980    11.43%    7.85%  9.16%
1981    14.03%   10.43% 10.16%
1982    10.61%   10.88% 11.54%
1983      8.61%   8.80%  10.28%
1984      9.52%   9.61%  11.70%
1985      7.47%   8.60%  10.56%
1986      5.97%   6.95%  7.78%
1987      5.78%   7.14%  8.62%
1988      6.67%   7.39%  8.94%
1989      8.11%   7.00%  8.65%
1990      7.50%   6.96%  8.55%
1991      5.38%   6.77%  7.96%
1992      3.43%   6.35%  7.26%
1993      3.00%   5.57%  6.19%
1994      4.29%   7.09%  7.62%
1995      5.64%   6.18%  6.61%

Average  7.50%  7.62%   8.76%

Standard
Deviation 2.88% 1.50% 1.59%

Source: "Structured Settlements and The Interest Rate Switch" by J. Thomas Romans and Frederick G Floss Journal of Forensics Economics , Vol. 12 1999 p57, who credit the Federal Reserve Bulletin and TSSC, St. Petersburg, FL for the information in the table.

Comment: Structured settlement annuity yield compared favorably with Treasuries and AAA General Obligation Municipals over the same time period.


Posted at 01:56 PM in Attorney Financial Planning, Attorney Responsibility to Clients in Settlement Planning Process, Financial History, Financial Literacy, Financial Planning, Saving Money, Settlement Planning, Structured Settlement Benefits, Structured Settlements |

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Guide to Structured Settlements 2023

  • What is a Structured Settlement? What You Need to Know
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    Which life insurance companies issue structured settlement annuities going into 2023? A list of current structured annuity issuers, the location of their home offices and their financial ratings from A.M. Best, Moodys, Fitch, Standard & Poors and/or other Tier1 NAIC ratings, with links to their websites and other useful information.
  • Treasury Funded Structured Settlements
    Treasury Funded Structured Settlements are a settlement option for the most conservative using the OTHER permissible qualified funding asset under IRC 130(d), United States Treasury Bonds in addition to, or instead of, structured settlement annuities. Treasury Funded Structured Settlements can also be used to fund installment sales, also known as structured sales and other non qualified structured settlements.
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    Use the Taxable Equivalent Yield chart to help compare the Internal Rate of Return (IRR) of a structured settlement to other alternative or complementary investments. Need help with the chart? Call 4structures.com® LLC at 888-325-8640
  • Structured Settlement Payments | Types of Structured Settlements
    Ways You Can Structure Your Settlement Payments. With a structured settlement you can have more than one type of payment in a single contract. Different types of structured settlement payments can be customized and combined to meet your needs on a stand-alone basis, or in conjunction with other financial products. Diversify your structured settlement, if you wish, by funding with more than one annuity issuer, with treasury funded structured settlements, index linked structured settlement payments and market based structured .
  • Structured Attorney Fees for Tax Deferral for Contingency Fees
    Structured attorney fees is a financial strategy that offers a unique way to defer taxes for lawyers and law firms. Lawyers CAN structure their legal fees even if the plaintiff doesn't structure their settlement. There are multiple ways to structure your attorney fees, such as the an index linked structured settlement where payments are adjusted based on upside changes in the S&P 500 with no downside and a cap of 5%. Trial Lawyers may also use a special deferred pay/deferred compensation arrangement, if market based returns returns are desired with no cap. Plan NOW for year end! Put structured attorney fee expert John Darer® on your settlement planning team.
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  • Structured Settlement Quote Lock-Ins | What You Need To Know
    What does a Structured Settlement Lock-In Mean? How do plaintiffs, defendants and insurers benefit from a structured settlement quote lock in when finalizing a settlement? How does the defendant/insurer/court benefit from using a structured settlement lock-in? Where to be careful when using structured settlement lock ins.
  • What Are Structured Settlement Annuities?
    Structured settlement annuities are annuities that can provide one or more customized annuity payment streams in a single contract. Read about structured settlement annuities here.
  • History of Structured Settlements
    Tracing the roots of structured settlements history from 1918, when Congress exempted damages for personal injury or sickness from income tax, to the establishment of structured settlements as a core personal injury settlement planning tool to the present day.
  • What Are Market Based Structured Settlements?
    Market based structured settlements are an alternative or supplementary structured settlement solution for the plaintiff, attorney or law firm that: 1. Can afford to take some market risk 2. Have discretionary settlement dollars. Claimants and attorneys alike may find that market-based structured settlements provide the opportunity to receive tax-free income, or tax-deferred income, while enjoying growth potential.
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Qualified Settlement Funds

  • What is a Qualified Settlement Fund?
    Qualified Settlement Funds | What You Need to Know
  • Firmwide Qualified Settlement Funds Debunked
    Firmwide qualified settlement funds have been heavily promoted to trial lawyers, but have been debunked in a detailed analysis in a July 2022 legal opinion a tax partner at the law firm of Faegre Drinker Biddle & Reath, LLP. Trial lawyers and firms who have established Firmwide QSFs or coinsidering establishing a Firmwide QSF should read the analysis as part of their evaluation.

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