by John Darer CLU ChFC MSSC RSP CLTC
The Single Claimant QSF horse has been dead for half a decade. It made a lot of people very successful while it lasted and it's presence was one factor that helped bring the structured settlement industry closer together, in my opinion.
Most significantly, unlike the decade from 2000-2009, no structured settlement annuity providers currently accept Single Claimant QSFs. Pat Hindert, in his review of a recent article by San Francisco tax attorney Robert Wood observes on his blog, "they have effectively shut down this strategic personal injury settlement planning opportunity for a wide scope of actual and/or potential structured settlement cases". First of all "Get over it!"
Then it's time for a fact check. A number of structured settlement annuity issuers who did accept qualified assignments from single claimant QSFs left the market place, such as John Hancock and Aviva. Were "they" responsible for that corporate decision?
Adapt, improvise and overcome. Why continue to fight yesterday's wars in an industry that enjoys a greater degree of civility than it did 5 years ago and a far greater degree than it did 10-15 years ago?
Potential Abuse of Qualified Settlement Funds Observed by Leading Settlement Tax Authority
In closing I may as well saddle up old "Pepper" for a short "trail ride" and reminisce. Robert Wood observes the potential for abuse in qualified settlement funds. Wood "chucks" out this "acorn":
"QSFs allow plaintiffs and attorneys to defer the receipt of payments or the recognition of income until distribution. To some, that may seem to be an enticing proposition. Indeed, there is no antii-abuse rule in the statute or regulations, nor do there appear to be any rulings or cases that test the bounds of the concept. Thus, one might debate the potential risk that an aggressive plaintiff or aggressive counsel might use a QSF as an incorporated pocketbook. With no express time limit on the existence of a QSF, a plaintiff or his attorney might use a QSF to defer paying tax on a recovery indefinitely, letting the money sit in the QSF to earn interest and dividends, then doling it out when needed"
Indeed, in QSF Symposium 2012-2, Hindert appeared to advocate the following as an advantage of QSFs. QSF's were touted as part of the "settlement planning standard"
"Plaintiffs can conduct their settlement planning with a sum certain, using their own advisers, free from the pressures of litigation, with unlimited time to analyze and address tax, investment and government benefit issues"
I questioned Hindert on October 3, 2012 with Do Qualified Settlement Funds Offer "Unlimited" Time to Address Investments?. Never got a response.
The "trail ride" is over. Goodnight "Pepper".
Image 1: Wikipedia
Images 2 and 3 : Dreamstime
Robert Wood article from Tax Notes June 23, 2014
Postscript: The qualified assignment company for Independent Life Insurance Company, which entered the market in 2018 will take assignments on Single Claimant QSFs.