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November 17, 2009

Impact of An Annuity Servicer's Bankruptcy on Annuitant? Structured Settlement Buyer?

by John Darer CLU ChFC CSSC RSP

In Bruce Akerly's paper "The Impact of An Annuity Servicer's Bankruptcy On The Rights Of The Annuitant and The Structured Settlement Purchaser"  (Download Nasp-conf-seminar-paper-on servicing-bankruptcy-Bruce Akerly),  Akerly addresses and expands on the issues raised  in the following blog Structured Settlements 4Real posts (attached in Appendix B to the paper):

Structured Settlement and Factoring Camps Go "Ostrich" on Structured Settlement Servicing!  October 6, 2009

Bankruptcy of Structured Settlement Servicing Company  October 10, 2009

and discussed in the 3 videos contained in the blog post immediately preceding this one.

In my opinion, those settlement planners who insist that a discussion of factoring is part of the settlement planning process have a duty to cover the servicing issue with the plaintiffs and the attorneys they are advising. How about having them try a copy of Bruce Akerly's paper on for size? 

Friends_trying_clothes_md_clr

Are they more or less likely to consider a structured settlement?  Are they more or likely to enter into a structured settlement factoring transaction?  Just for "S"s and "G"s, compare the financial strength and size of Metropolitan Life with any factoring company or servicing company of your choosing.

For the decision makers at the three annuity issuing life insurance companies (referred to, but not named by Andrew Cravenho in this post). Is it time to consider a better solution?  At the very least this author opines that the annuity issuers should provide full disclosure to their agents and brokers about whether not they will dice or split payments if the structured settlement is subsequently partially factored.

Poigant quotes from Bruce Akerly's paper (p21)-comments in parentheses

  • "The only loss suffered would be short delay in receipt of payment occasioned by bankruptcy"  (short is relative to someone who depends on the income)
  • " An annuitant may require the assistance of counsel"   (At what cost?)
  • " Again all payments should either have been paid to the annuitant in the interim or will be held pending agreement of the parties and/or order and direction of the court".  (how long is THAT going to take; and see comment to first quote)

Note: Underlines for emphasis

Posted at 02:09 PM in Factoring Company Servicing Bankruptcy, Factoring Industry Servicing Commentary and Discussion, Factoring vs Commutation, National Association of Settlement Purchasers (NASP) |

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Guide to Structured Settlements 2022

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  • How Do Structured Settlements Work? How Structured Settlements Work | Structured Settlement Diagram
    How structured settlements work, including 4structures.com LLC's super helpful structured settlement flow chart/diagram showing how structured settlements fit in with other settlement planning solutions.
  • Rated Ages and Structured Settlement Cost
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  • Structured Settlement Annuity Companies 2022
    Which life insurance companies issue structured settlement annuities going into 2022? 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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