Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews

How Can They Sell Treasury Funded Structured Settlements Without License?

by John Darer ® CLU ChFC MSSC RSP CLTC

No FINRA license is required to sell Treasury Funded Structured Settlements. The Midwest Trust program is not a sale of a security or investment that would be subject to direct SEC regulation,  says its promoters. Trust companies are regulated by a number of entities and are permitted to pay referral fees for business in accordance with those banking regulations. As long as the structured settlement broker or settlement planner uses the materials provided by the trust company and adheres to their business practices in providing approved proposals/illustrations, then no securities license would be required.

If a structured settlement broker or settlement planner were to discuss with the settling parties individual investments such as mutual funds, variable annuities, variable life, stocks, bonds (and other regulated investments) and make recommendations as to performance, then those activities would require a securities license under FINRA.

United States Treasury Obligations Are a Permitted Qualified Funding Asset Under IRC 130(d)

Obligations of the United States Treasury are a permissible "qualified funding asset" under Internal Revenue Code Section 130(d).  If a Treasury Funded Structured Settlement is used to fund damages that qualify as physical injury, physical sickness, wrongful death or workers compensation (falling within the guidelines of IRC 104(a)(1) or IRC 104(a)(2), the resulting payments are income tax free.

Treasury Funded Structured Settlements may also be used for tax deferral in employment cases, structured attorney fees, divorce cases, D&O liability, and other legal matters where damages are taxable, through the Midwest Trust program, using a non qualified assignment.

 

The AIG Bailout Is Over. Say A Prayer for the Victims of Structured Settlement Cash Now Vultures

by John Darer® CLU ChFC MSSC RSP CLTC

Jim Millstein, the Treasury’s former chief restructuring officer, partly summed up the 2008 bailout best when he stated December 10, 2012 "“No taxpayer should be pleased that the government had to rescue this company, but all taxpayers should be pleased with today’s announcement, ending the largest of the government’s financial industry bail-outs with a profit to the Treasury Department,” [Source: Insurance Journal/Reuters]

The United States government will have made a total profit of $22.7 billion from the bailout of AIG.

Following its sale of the remaining stake in American International Group Inc. which will fetch $7.6 billion, the government will have made a total profit of $22.7 billion from the bailout of AIG. In total the US government gave AIG up to $182 billion in support.

When one looks back on the certain sub-species of opportunists from the structured settlement secondary market who preyed "in your face" and exacerbated contemporaneous fears of the structured settlement annuitants of American General Life and other AIG subsidiaries, possibly to their detriment, I would like to believe that the leadership of the National Association of Settlement Purchasers as well as the companies in question who are not members of NASP, has taken account of themselves.

 

 

Certain structured settlement factoring companies aggressively pecked away, ripping the flesh from the financial security of AIG structured settlement annuitants like scavenging vultures, while things were bloody at the parent company in the Fall of 2008 and its aftermath.

The parent company's wounds have healed.

With respect to AIG structured settlements, time has shown that the only financial losers were those who sold their structured settlement payment rights for pennies on the dollar, having succumbed to fear mongering vulture-like behavior of certain structured settlement factoring companies.

Photo: Wikipedia

 

 

Eine Zwei Drei Scheisse | Einstein Structured Settlement Roadkill

by Structured Settlement Watchdog®

In its epic failure in purporting to teach you "how many people receive a structured settlement each and every day", Einstein Structured Settlements admonishes us to "remember now not every state has a lottery.".  Then they say  " For example Las Vegas, Nevada the gambling capital of the world does not have a lottery..." 

Source: Einstein Structured Settlements website December 10, 2012 11:37PM PST  (www.einsteinstructuredsettlements(dot) com

Fun Facts

• Las Vegas in neither a state nor the capital of the State of Nevada. Carson City is the capital of Nevada
• Gambling was legalized in Nevada in 1931
• There were 16,067 slots in Nevada in 1960. In 1999 Nevada had 205,726 slot machines, one for every 10 residents.
• In Death Valley, the Kangaroo Rat can live its entire life without drinking a drop of liquid.

Source: 50states.com

The self-proclaimed  "genius"  never answers its own question. Instead it states "the structured settlement industry is rather different as there are over 550,000 cases (as per our documented survey and study which we keep confidential) that are interested in selling their settlement...".      

So how many people receive a structured settlement "each and every day? That's what I want to know.

Another ELNY "Difficult to Recreate in Today's Environment" Says Victims' Attorney

by John Darer® CLU ChFC MSSC RSP CLTC

Edward Stone, the attorney representing a number of ELNY shortfall victims in the appeal of the ELNY liquidation and co-counsel in the class action against New York Superintendent of Financial Services Benjamin M. Lawsky and others, tweeted:

"ELNY part deux? Difficult to recreate in today's environment" in a web chat on December 5, 2012.  (emphasis added)

The entire webchat sponsored by Life Health Pro can be found on Twitter,  hashtag #prowebchat,  or here. Also  follow Attorney Stone on Twitter @Elny_Stone

Greenwich CT Attorney Edward Stone also emphasizes in another tweet "Do your homework.  Don't put all of your eggs in one basket.  Diversify holdings across carriers.  Be mindful of cap limits" 

Edward Stone's tweets are particularly relevant since they come just 4 days after my December 1, 2012 post entitled "Executive Life Insurance Company of New York | Touching a Touchy Subject" with the same issue raised in my podcast from June 2012.

I will continue my commentary on this in a separate blog post.

 

 

 

 

Why Does "Little SYSS" Dis The Elderly and Disabled While Bashing Competitors?

by Structured Settlement Watchdog®

If you have a structured settlement and your "breath is going bad, your gait unsteady and your memory failing", you're all but a cliche, with more in common with JG Wentworth, Peachtree and Imperial Structured Settlements. At least that's the take away from a post by a structured settlement factoring principal. SYSS' Nicholas Jackson likens its aforementioned competitors to home bound disabled individuals who "venture out on occasion with their canes" and "looking down a very short road to 24/7 care"  

It is Ironic for a company like SYSS to engage in this particular metaphorical derision, considering many of the pool of its potential customers are receiving structured settlement payments because they or a loved one suffered a disabling physical injury or physical sickness, and may very well be suffering from one or more of those afflictions! 

When he gets around to reading this post, I trust that Mr. Jackson will look around and also make personal note further irony in his own world and rethink the strategy of using the metaphor.

The irony doesn't end there. In a paragraph entitled "Honesty is the best policy" Jackson remarks "We don’t have a stable of lawyers at the ready to defend us in courts across the land, because we don’t need them", just after he states that "they’ve  (JGW Peachtree and Imperial) ripped off the deaf, the ha

"One Monkey Don't Stop No Show"

lt (?), the lame and the blind in Kansas,  Pennsylvania, North Dakota, South Dakota, New Jersey, New York, Missouri and Maine, to name but a few".

While using the 1982 advertising slogan " Is it Live or Is It Memorex?" Jackson mocks his competitors'  salespeople as "trained chimps"  yet shows a distinct lack of awareness for the immortal adage of the late great Mabel Louise Smith  "one monkey don't stop no show".

Fortunately members of the National Structured Settlement Trade Association (NSSTA) , which helps to establish structured settlements and provide settlement planning services for injury victims, are supporters of the American Association of People With Disabilities (AAPD). Neither SYSS, nor the competitors it is bashing with the elderly and disabled infliction metaphor are members of NSSTA or AAPD.

 

Berkshire Hathaway Structured Settlements Acquires Symetra Structured Settlement Sales Team

by John Darer® CLU ChFC MSSC RSP CLTC

Berkshire Hathaway Group (BHG) underscored its commitment to the structured settlement marketplace by acquiring the Symetra structured settlements sales team effective in early January 2013. Mal Deener, Steve Mangini, Doug Johnson and Patrick McNulty have been providing sales support for both Berkshire Hathaway and Symetra since Berskshire Hathaway re-entered the structured settlement marketplace in May 2011. They will continue to support both companies through a transition period in order to provide an orderly wind down of Symetra’s structured settlement business before ultimately moving to support Berkshire Hathaway exclusively.  Symetra previously announced that the company will not accept new structured settlement business effective December 14, 2012.

John Arendt, Vice President at Berkshire Hathaway, said, “Symetra has been a great partner for Berkshire Hathaway, and we are pleased to be presented with the opportunity to take the next step in our continuing commitment to the structured settlements marketplace. We hope to add these four outstanding professionals to our staff in the near future.”

New York General Obligations Law 5-1702(e) Structured Settlement Protections Being Ignored?

by John Darer® CLU ChFC MSSC RSP CLTC

New York State General Obligations Law 5-1702 places a burden on defense lawyers, defendants, in house lawyers for defendants and insurance adjusters based out of New York, having New York adjudicated cases to make certain written disclosures when a structured settlement is negotiated.

New York General Obligations Law Section 5-1702-Structured Settlement Protection Act

In negotiating a structured settlement of claims brought by or on behalf of a claimant who is domiciled in this state, the defendant or defendant’s legal representative shall disclose in writing to the claimant or the claimant’s legal representative all of the following information that is not otherwise specified in the structured settlement agreement...

5-1702 (e) a statement that the claimant is advised to obtain independent professional advice relating to the legal, tax and financial implications of the settlement, including any adverse consequences and
that the defendant or defendant’s legal representative may not refer any advisor, attorney or firm
for such purpose  (emphasis added)

On cases of a highly sensitive nature it is important for Defendants and Defense counsel and mediators not to lose sight of New York General Obligations Law 5-1702 and to avoid the conditioning of money on exclusively using the defense retained structured settlement consultant. While I am not aware of specific cases where a defense lawyer or defendant has been punished for not complying with this New York law, I'm sure that nobody wants to be a volunteer.

Since it is both a recognized and prudent practice today for both parties to have settlement consultants, why put yourself or your client in harm's way?  One suggestion is to have the plaintiff settlement consultant agree to be bound under a confidentiality agreement.

Why Won't Travelers Structure Attorney Fees? Missed Opportunities For Both Sides

by John Darer® CLU ChFC MSSC RSP CLTC

Travelers Insurance Company is a major supporter of structured settlements but Travelers will not participate in structured attorney fees as a long standing corporate policy. Plaintiff lawyers who have cases heading towards settlement involving Travelers insureds should not count on the ability to structure their legal fees those cases [ see my May 5, 2011 post Travelers Insurance Doesn't Structure Attorney Fees, So Plan Accordingly].

But what of other companies? Having seen and heard of a few instances in recent times where other carriers have elected not to participate in structured attorney fees I decided to investigate if this is a growing trend or random isolated instances. On the two recent cases one involved a stand-alone structured attorney fee. In the other structures were contemplated for both the minor plaintiff and the attorney.

In the case where the minor plaintiff structured as well, the defense did not have a structured settlement broker at a 2011 mediation.  The broker that was eventually assigned in 2012 did not show up when rated ages were requested on the minor plaintiff by the plaintiff's expert in the year or more preceding the settlement when the case clearly warranted a rated age.  Nor did he or she show up when the rated ages were renewed in 2012. I say that not to chastise the unnamed industry colleague (who I greatly respect), but to remind ALL structured settlement stakeholders of the value of having representation early in the game.

The other case was a stand alone case. The plaintiff was not structuring. The plaintiff attorney is a straight shooter and not a jerk by any stretch of the imagination.

Why would an insurer, defendant, run-off company, or TPA adjusting on behalf of them not want to structure attorney fees?

A. They Didn't Offer It

Comments

While acknowledging that the defense controls the offer and setting aside blanket policy like Travelers,

• A claims adjuster or defense attorney shouldn't be faulted for not having a corner on all the good financial ideas. But that doesn't mean it does not make sense for it to be part of case resolution if there is no additional cost  and the risk is eliminated.
• A claims adjuster or defense attorney shouldn't be faulted for any misperception on any individual case,  that the plaintiff or plaintiff attorney might not be interested in a structured settlement because they haven't had the opportunity to spend time with the plaintiff or plaintiff attorney to discuss their financial plans. But that doesn't mean it does not make sense for it to be part of case resolution if there is no additional cost and the risk is eliminated.
• A plaintiff attorney should not be at fault for the case load demands of the claims adjuster of defense attorney that may have meant that a structure was not considered.

B. Toys Thrown Out of The Pram Response

Let's be frank about this, sometimes what is happening is (and you don't have to admit it) someone is casting

• A "Bafongul" to the plaintiff attorney for doing their job.
• A "Bafongul" to the plaintiff attorney because the plantiff attorney "was a jerk" in the eyes of the adjuster during a contentious litigation.

Comments

• Ivan Pavlov's research on conditioning "salivation and digestion" did not involve lawyers.
• The idiom  " You can catch more flies with honey than with vinegar" applies when you are likely to be seeing the same attorney on other cases. And of course, in the immortal words of the late Vicki Sue Robinson, you can "turn the beat around" too.
  

 C. Perception of Risk in Structuring Attorney Fees

Transactional Risk Fear that if he transaction is not done right it could come back to bite them

Credit Risk Fear that in the unlikely event of an insolvency, that the insurer might have to pay some portuon of the obligation again (the ELNY fallout) after the file has been closed and in excess of the policy limit.

Comments

• If the transaction is not done right it could come back to bite. But that's why both sides should retain their own credentialed structured settlement expert.
• The ELNY case is a one off. Buy and holds have not been "de rigueur" since the Periodic Payment Settlement Act of 1982, when a novation using a qualified assignment became available.Other vehicles that support structured attorney fees include the use of reinsurance and non qualified assignments. Structured attorney fees may also be funded using Treasury Funded Structured Settlements
  

D. Lack of Familiarity with the Structured Attorney Fee Transaction

It is easy to understand that when unfamiliar with something, the safe route is to not do it. But are you missing an opportunity?

Conclusion

1. We encourage claims adjusters and lawyers to be armed with a "full deck of cards" when at the negotiating table. Structuring legal fees can help provide lawyers with a secure and stable tax-deferred income for a period of time, or for life.  Payments can be used to smooth out law firm cash flows, serve as a supplement to qualified retirement plans, which limit contributions. There is a value to this.
2. Plaintiff lawyers should already be working with a structured settlement expert in advance of a mediation and/or settlement negotiations and be mindful to address structured fees as part of the mediation statement.

 

 

 

 

 

 

Executive Life of New York | Touching a Touchy Subject

by John Darer® CLU ChFC MSSC RSP CLTC

An unnamed ELNY shortfall victim has posted a lengthy comment on Pat Hindert's blog on November 28, 2012. The unnamed individual is one of the 18 represented by Edward Stone whose Class Action law suit recently got rolling against Benjamin Lawsky, MetLife and Credit Suisse. The Class Action and other materials set forth the case against those individuals or entities.

One thing I found very interesting is this excerpt

"Why should we blame our original attorneys? Back in the day these were backed up and backed up, they thought there were doing right by us. The blame goes to the Superintendent for hiring firms that had no idea how to do the job they were paid for, by squandering monies that belonged to us. I could once again, go on and on, but why? No one wants to hear how we are affected by this loss"

Readers, I have no dog in the fight. I thankfully never placed any ELNY or Executive Life structured settlement or life insurance products, because I saw red flags that should have been obvious to anyone who read or watched the news, including lawyers, financial advisers, victims and if applicable, guardians or parents of those who were minors at the time the structured settlements were created.

That's not to say I am not sympathetic to any of the shortfall victims. I am very sympathetic.  I spent hours upon hours speaking and communicating with ELNY victims in 2011 (and writing about them) way before the shortfall notices went out and the mainstream press got involved.  But I am a bit cynical of the notion that blame is not to be shared (see my 2012  video on the ELNY victim "all eggs in one basket" question below).

What does "backed up and backed up" mean?  I'd like the answer to that question. To me it suggests someone who WAS aware of the limits of statutory protection at the time of sale. Has there been a shortfall of statutory protection?  No, there hasn't. It would be far more credible, in my opinion, for ELNY victims not to use the ELNY litigation process to bash all annuities, insurance products and the insurance industry,  many of whose participants (that ELNY victims or their representatives shunned, ostensibly for a higher return),  have been in existence for over 150 years and paying their annuitants (including those with structured settlements set up when ELNY was actively writing!)

I want to hear the stories about how this woman is affected by the loss. I want to interview her fairly  and respectfully and give her the opportunity to air her story on Legal Broadcast Network. If the woman in question is brave enough to speak to me (and her lawyer permits) please contact me directly. If you wish to remain anonymous on the air, we can accommodate but we will have to at least verify that you are indeed an ELNY victim. Any other ELNY victim who wishes to speak on the air can feel free to contact me as well. So far there has been nobody who has been brave enough. What a pity.