by John Darer CLU ChFC CSSC RSP
In you are reviewing structured settlement documents you may see one or more of the following:
- This Defendant, or its Insurer or that Defendant or its Insurer may assign
- The Defendant, the Insurer or the Assignee may purchase an annuity
- The Plaintiff may change the beneficiary of his or her periodic payments by notifying the Defendant, Insurer or Assignee, in writing...
I disdainfully refer to these clauses as "Tom, Dick Or Harry ". If subject to a settlement agreement with such a clause (or clauses) and down the road a plaintiff wants to change their beneficiary, who the heck
does he/she/it contact, Tom, Dick, or Harry? To add to the uncertainty, if an annuitant has sold some of their payments down the road, "he/she/it, or the guardian *(if applicable), etc etc, may have to contact the "Ben Dover" factoring company, or if "Ben Dover" uses a third party servicing company, does he/she or it Ben's cousin Jerry", or both Ben and Jerry?! Where does it frickin' end?
Some act as if these clauses are necessary as if "to avoid altering the space time continuum". The purported purpose of these clauses was to create "tension" that puts the direction of the investment of the present value in doubt, or out of the plaintiff's hands, for tax purposes. The reality today is that the planning associated with structured settlements is increasingly specialized and many plaintiffs have structured settlement experts. Moreover, the laws of some states like New York require that potential structured settlement annuitants to be advised by the Defendant (or its legal representative) to seek independent professional advice about the structured settlement, there is arm's length negotiation about the terms and in the end there is little in doubt. It fact it has been that way for years so why does this continue to be necessary in some circles?
As I explained to one of my industry colleagues earlier today, we are long term industry professionals who ARE familiar with jargon. Not many annuitants are. Lawyers and adjusters may not completely be either. So let's try to make things just a little more clear shall we, for the betterment of our industry and its core product?
The National Structured Settlements Trade Association (NSSTA) periodically puts out model documentation. This author opines that it's time for an update.