by John Darer CLU ChFC MSSC CeFT RSP CLTC
Frequent time delays in Surrogate's Court in Bronx, Kings, Queens, New York, Richmond (Staten Island) and other New York City counties are hurting the very people that the Surrogate Judge is supposed to protect when the plaintiffs want or need structured settlements.
The Surrogate's Court handles all probate and estate proceedings in the State of New York. All wills are probated in this court and all estates of people who die intestate (i.e. without a will) are handled in this court. Unclaimed property of the deceased without wills is handled by the Surrogate.
In the current system each New York county (62 of them!) has one surrogate judge. New York and Kings County have 2 each. Surrogate judges are elected by county vote for 10-year terms, except for the five boroughs of New York City where Surrogate judges are elected for 14-year terms. In some rural counties, surrogate judge duties are handled by the county court judge. Source: Wikipedia
The New York Surrogate Court Struggles
- Intolerable delays of six months to one year are not uncommon.
- Long delays wreak havoc for plaintiffs who want or need structured settlements and a Defendant or Insurer will not pre-fund a structure before Court approval is obtained
- A system already prone to delays is exacerbated if the Surrogate judge appoints a guardian ad litem without critical knowledge or experience in dealing with structured settlements and other settlement planning issues.
- Sometimes there is a guardian ad litem who does not appreciate that time is of the essence for his or her ward. On one matter we became aware of a guard ad litem being asssigned November 2010, not seeing his or her ward until March 2011 and not filing a report until June 2011. Guess what? The case is still pending! Fortunately the structure WAS pre-funded. Without pre-funding the minor's would have received considerably less.
- Then you have variables such as a combination that includes the Surrogate and a paying party whose insurer is in rehabilitation and subject to the New York Liquidation Bureau. The New York Liquidation Bureau procedure could add another 6-9 months from the "all documents in" date.
- By the time a petition makes it to the Surrogate's office, considerable discussions have been had among representatives of parties in litigation and likely between plaintiffs and their financial advisors concerning actual needs and overall financial matters. If a structured settlement is part of the mix then details and rationale for the structure and its design should be included or attached to the moving papers. If a Surrogate judge, or the judge's clerk is reviewing the method of distribution he or she will need actual numbers NOT speculation. That's why structured settlement lock-ins are important.
- A structured settlement lock-in preserves the benefits (and the rate associated with the cash flow) that the Surrogate judge is reviewing. A competent structured settlement broker will choose a reasonable lock-in anticipated funding date. Most structured annuity issuers have a period of time where no lock-in fees are charged. After the free period, lock-in fees are usually assessed, typically at a rate of about .002 times the premium per month. The free lock-in period varies by company.
- Some defendants and insurers will pre-fund structured settlements to eliminate negative interest rate risk and lock in fees. As a form of reassurance most structured annuity issuers will issue a letter to a Defendant or Insurer that states something to the effect that the annuity issuer will refund the premium if the Court does not approve the settlement. But the operative word is "some" and the Surrogate Judges must be mindful of the how work flow bottlenecks may be hurting their wards,.
- Guardians ad litem who are not familiar with structured settlements waste alot of time on the learning curve and cost their wards money. Ironically they earn a fee for that that is usually deducted from their ward's recovery. Once a case is settled, the parties should be able to conclude matters as soon as possible. The plaintiff has been waiting for years for the recovery for a loved one's death and to achieve closure on this aspect of their loss.
- Establish Fast Track Procedures for Structured Settlements
- Each Surrogate should flag petitions that include a structured settlement and assign to a dedicated individual or team. Ideally this is a well-trained person who is knowledgable about structured settlements and who is willing to learn more. There are alot of resources in our industry who can provide this knowledge. I have in mind someone with the characteristics of a Joe Antonelli, the Chief Clerk for New York County, who patiently handles many 50-A and 50-B judgment submissions.
- Guardians ad litem in the fast track program should be pre-screened for knowledge about structured settlements. Assignments to those who are not familiar with structures should be avoided for the sake of the Surrogate's wards. This will cut out "the learning curve ball".
- Guardians ad litem should be held to strict time guidelines that assure that the entire settlement approval process for cases passing through the Surrogate fast track can be accomplished in 90 days or less.