by John Darer CLU ChFC CSSC RSP CLTC
Not everyone appreciates what their trade association does for them or their industry, or where their dues go, so I wanted to share a recent instance where the National Structured Settlements Trade Association (NSSSTA) stepped in to help protect structured settlement annuitants.
Reliance Insurance Company was facing liquidation and the impact of this event on 3,000 or so Reliance owned structured settlement annuitants was in the balance. For more detailed background, please see Reliance Owned Structured Settlement Annuities, my March 27, 2013 blog post.
The Reliance Liquidator had concluded that transferring ownership of the annuity contracts to current payees under those contracts, with the simultaneous discharge of Reliance’s related structured settlement payment obligations:
- Would be in the “best interest” of the Reliance Estate and represents “the only viable option”; and
- Would not create any federal income tax liability for Reliance.
The motion by the Liquidator of Reliance Insurance Company to turn ownership of over 3,000 structured settlement annuities to the annuitants could have left the annuitants subject to taxation on annuity earnings, disqualified some of them for means-tested benefits and prompted claims that annuitants were misled when they were told that their settlement payments would be tax free
Through the efforts of Craig Ullman of Hogan Lovells,,NSSTA's outside counsel, and a select committee of the NSSTA's Board of Directors, the immediate threat was averted, and ownership of well over 90 percent of the annuities should be safeguarded.