by John Darer CLU ChFC CSSC RSP
Writer Louis Z. is typical of "factoring floggers" who feign credibility on the subject of structured settlements so they can sell (flog) something else. Like others he gets terminology and concepts wrong and in my opinion, clogs the information highway with erroneous information to the detriment of consumers.
In an Ezine article entitled "Understanding Qualified Structured Settlement Assignment and Funds" he states:
"There are two kinds of assignments in personal injury and workers comp cases. They are the qualified and the non qualified structured settlement assignment. A non qualified assignment is usually a periodic payment to the injured person but stays on the books at the responsible company. This non qualified assignment is not tax free and goes beyond the qualified structured settlement".
- There is no such thing as a non qualified structured settlement assignment. It is simply a non qualified assignment. In most of the cases in the structured settlement process, there is first an obligation created by virtue of the release of claims which includes periodic payments, there is an assignment of that obligations and then a structured annuity is purchased to fund that obligation.
- A non qualified assignment IS NOT a periodic payment. It is method of transferring periodic payment obligations that do not fall within the guidelines of a IRC 130 qualified assignment.
- Thus a non qualified assignment does not stay on the books "at the responsible company"-whatever THAT means.
- Whether there is a qualified assignment or non qualified assignment the obligation is transferred/assigned off the books of the defendant/insurer/assignor to the assignee.
- A non qualified assignment has no tax status, however....see number 6
- The damages associated with a non qualified assignment of periodic payments are taxable. Since there is no exclusion under IRC 130 to exempt the assignee of non qualified periodic payments, the assignee in such cases is typically located offshore. The two such assignees in the market are located in Barbados and take advantage of a favorable tax treaty between the United States and Barbados.
- What does " go beyond the structured settlement" supposed to mean?
As to qualified settlement funds, Louis Z. erroneously states
"A qualified structured settlement fund must meet three requirements. It must be approved by a government entity, applicable under state law, and it must be an eligible claim".
EZine is essentially a posting service. The website owner appears not to screen experts. Credibility is hit or miss, mostly the latter. I have found the articles of little use to anyone seeking credible information on structured settlements.