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April 22, 2010

For "Blevins Sake", Get It Right on Structured Settlements!

by Structured Settlement Watchdog®

This blog post continues our series about an affiliate website of Settlement Professionals, Inc. that continues to contain major inaccuracies about structured settlements and, in my opinion, presents a mediocre display of knowledge that should be fundamental to the settlement profession or anyone who is giving financial advice.

It's National Financial Literacy month and therefore its totally appropriate that those who hold themselves out as settlement professionals be held to the highest standards when it comes to the fundamental knowledge of the profession.

SPI  "Some fifteen years ago Internal Revenue Service created an opportunity for people like yourself, who are about to settle your personal injury lawsuit, to have a portion of the money you receive invested to produce tax free periodic payments".

Comments

1.   The statute in question was created in 1982 by Congress which would put the age of the text that Kathleen Blevins obviously "cut and pasted" circa 1997.  The copyright on the page says 2009...Oops, "you bad!"

Postcript: In 2016 the Blevin's copyright was changed to 2016, but Blevin's numbers STILL don't add up. Instead of 15 years Blevins now has 25 years.  2016 minus 25 years is 1991.  That was the year of the demise of First Executive and The Farm's " Groovy Train" was an alternative rock hit, but it definitely wasn't a year that the IRS (or Congress) created an opportunity as described. 

 Laughingchimp

2.   For the record:

  • In the United States, the Congress passes tax laws and requires taxpayers to comply.
  • The taxpayer’s role is to understand and meet his or her tax obligations.
  • The IRS role is to help the large majority of compliant taxpayers with the tax law, while ensuring that the minority who are unwilling to comply pay their fair share.  Source: IRS website

    3.   A minor point, but I'm going to pile it on because it's just bad English...When you say "people",  THEY are not about to settle YOUR personal injury law suit...they are about to settle THEIRS!

  • SPI  "The interest that is earned is never taxed by the IRS because it is viewed as compensation for the injuries that you have suffered. If, however, you receive all of the money from your settlement as one lump sum in cash, and then you later invest it yourself, or with the help of someone else, the interest that you may earn can be taxed at the same rate as income that you earn from your job"

  • Comments:

    1. The IRS does not levy taxes, the United States government does. See Wikipedia Income Tax in the United States
    2. Structured settlement payments are income tax free provided the payments represent damages excludable under IRC 104(a)(1)-workers compensation or 104(a)(2)-personal injury or sickness
    3. Blevins inexplicably fails to recognize that investment returns on settlement proceeds invested in mutual funds, stocks real estate may, depending on length of time held, be charcterized as long term capital gains. Long term gains are taxed at a rate that is likely LESS THAN "the rate applied to the income you earn from your job".

    SPI- "A structured settlement ensures that you will never lose your money, you will earn high interest rates, and never pay taxes on the interest that is earned.

    Comment:  A structured settlement is a secure place to place settlement funds. An annuity funded structured settlement is as good as the insurer behind it.  While almost 200 banks have failed in the last 2 years, to the best of this author's knowledge, no structured annuity issuer has been taken over by any state insuarace department. A structured settlement which uses United States Treasury obligations as a qualified funding asset has even greater security. That being said, Blevin's statement is inccurate, Blevins herslef later states on the same page "there are a wide array of companies specializing in handling structured settlements accounts, varying in safety, risk, and return.

    SPI-"The interest you may earn is taxed in the same way your income from your job is treated".

    Comment: See above , regarding capital gains. Depends on what you invest in.

    SPI- Can a stockbroker or my bank obtain a structured settlement for me?
    "No. A structured settlement can only be set up by an appointed structured settlement consultant. Only he or she is appointed by the life insurance companies to access what are called "settlement annuities" to make the future payments to you".

    Comment:  Considering that SPI' has a relationship with Robert W. Baird and there are other high profile relationships between the industry and Wall Street, way to keep up on current events!

    Howler 


    I'm not making this stuff up readers!  I'm just passionate about financial literacy and wish more in the profession would take it seriously.

       

     

Posted at 01:34 AM in Cleaning Up "The Structured Settlement Neighborhood", Financial Literacy, Roseville Structured Settlements, Sacramento Structured Settlements, San Francisco Structured Settlements, Structured Settlement Information, Structured Settlement Tax Issues, Structured Settlement Watchdog®, Structured Settlements in California |

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Guide to Structured Settlements 2023

  • What is a Structured Settlement? What You Need to Know
    Structured settlements and what you need to know about them including a helpful introductory video featuring 2023 A.M. Best Client Recommended Structured Settlement Expert and Registered Settlement Planner John Darer® of 4structures.com® LLC
  • How Do Structured Settlements Work? How Structured Settlements Work
    How structured settlements work, including 4structures.com LLC's super helpful structured settlement flow chart/diagram showing how structured settlements fit in on the spectrum of settlement planning solutions.
  • Rated Ages and Structured Settlement Cost
    Rated Ages for Structured Settlement Annuities present advantages to all parties. Shift the mortality risk to a life insurance company whose business it it is to assess mortality risk to price its life insurance and annuities. Rated ages boost your structured settlement annuity benefit per premium dollar, or your yield on lifetime payments. Rated ages help to reduce the cost of funding a Medicare Set Aside arrangement where a Structured MSA, is being used { WCMSA LMSA or NFMSA].
  • Structured Settlement Annuity Companies 2023
    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.
  • Structured Settlement Annuity Company Customer Service Phone Numbers
    Receiving structured settlement payments from your own structured settlement or inherited structured settlement? You'll like this huge time saver. Click for a comprehensive list of customer service telephone numbers that includes both current AND former structured settlement annuity issuers and reinsurers. If you have simple bank or beneficiary changes, or if the insurance company that issued the structured annuity has merged, sold or spun off its block of structured annuity business (e.g. Aviva, Allstate, Transamerica, AEGON, GE Capital, Liberty, CNA, Confederation Life) or changed its name and you're trying to track them down, here you go! The list is regularly updated. Last updated January 23, 2023.
  • 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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    iStructure is an innovative game changing fixed index structured settlement annuity for plaintiffs or attorneys. with an intermediate to long term horizon

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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    with a stable readership that seeks credible structured settlement information and/or opinion about topical issues related to settlement planning, targeted to lawyers, injured persons and their family members, guardians, survivors, judges, magistrates, special masters, mediators, administrators, trust companies, insurance company executives and adjusters, financial advisers settlement professionals, financial professionals, insurance regulators, government leaders, federal and state law enforcement, buyers and sellers of structured settlement payment rights, the news media and other interested parties. 4structures.com LLC established the structured settlement blog in 2005 and for over 17 years it has been a leading source for critical commentary. The John Darer authored blog has been among the most prolific, regularly providing fresh structured settlement, settlement planning, litigation recovery management content and commentary. John Darer®, CLU ChFC MSSC CeFT® RSP CLTC, President of Stamford, CT based 4structures.com, LLC, is an experienced New York City area structured settlement expert, structured settlement broker, Certified Financial Transitionist, and Registered Settlement Planner. In his capacity as a investigative journalist and commentator, and professionally, John Darer passionately believes that shining the light on a business practice is both healthy and newsworthy. It is in the best interest of tort victims, their families and their legal advisers, that the settlement planning discussion involve those that are properly trained in the topic, properly informed on the topic and, with respect to structured settlements, properly licensed and/or appointed). It has significant instructional and deterrent value to other practitioners and firms as well as those who may be caught in the cross hairs. WHAT YOU GET here is the straight stuff with a touch of irreverence and humor. We hope you enjoy and find the content to be helpful. Subscribe to the structured settlement blog feed, or a specific category feed through your blog reader, or through the Feedburner icon on this page. Followers of JDDarer™ on Twitter may also receive select content. If you would like to speak with John he can be reached at (888)325-8640 Thank you for reading! Last updated October 10, 2022

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Structured Settlement Best Practices Corner

  • New York Insurance Advertising law requires the full name of the Insurer to be listed along with the city and state of the principal office. Stating that you represent these fine companies using Insurance company logos without the preceding information are also illegal
  • When it comes to settlement documents it is the ultimate responsibility of the lawyers or claims adjusters who receive input concerning the structured settlement aspects of the documents to actually read the entire document, exercise independent thought and advise their clients properly
  • Be aware that financial advisors use of testimonials is prohibited or restricted
  • Most states require that Testimonials represent the CURRENT opinion of the person who made the testimonial. Be prepared to back it up.
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  • A structured settlement offers guaranteed financial security to personal injury victims, wrongful death survivors and their families. A structured settlement involves a customized stream of payments, provides long-term stable tax-free income, for a period of years or a lifetime. Unlike other income annuities. a structured settlement annuity can have multiple payment streams to address multiple needs in a single contract.

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