by John Darer® CLU ChFC MSSC RSP CLTC
Is it possible to get screwed by a bad structured settlement? Highly unlikely. Let's explore why.
Structured settlements come to be through a compromise between two or more parties who are represented by lawyers. Generally there is:
- A minimum of two lawyers
- A judge in cases involving minors or incompetents
- A guardian ad litem, the party the court deems responsible for an incapacitated, handicapped, or minor in court.
- Structured settlement consultants or settlement planners for both sides
- and of course, you!
A structured settlement annuity cannot be placed unless the following documents are signed:
- Settlement Agreement & Release (sometimes goes by other names)
- Qualified Assignment, Qualified Assignment and Release, Qualified Assignment Release and Pledge Agreement, Non Qualified Assignment agreement, or Reinsurance Agreement
- Infant Settlement Order, Infant Compromise Order, Surrogate Decree or Probate Decree, if the settlement is a wrongful death or involves a minor or incompetent
- Sufficient premium is paid by the Defendant or its insurance company.
You cannot buy a structured settlement on your own. You cannot walk into a store or buy a structured settlement annuity online. There is a lot of misinformation online generated by misinformed writers for the structured settlement secondary market, that suggests that you can. Usually, upon a closer look, the misinformation is about buying structured settlement payment rights which are not annuities.
Your lawyer's role in the post settlement process is to review, edit and ultimately approve settlement documents prior to advising you that it is okay to sign them.
You as the plaintiff have input during the negotiation of a structured settlement. Most importantly you have the power to say yes or no. If you say no, then there is no settlement. Recognize that the nature of a compromise means that the other side can say yes or no too.
So if you say you were screwed by a bad structured settlement how is that even possible?
- Some say you can get too much of a good thing ("overstructuring")
- Some say you can too little of a good thing (see "Grillo v Pettiete" where lawyers and guardian ad litem were sued and settlement for big money because there was no structured settlement)
- If you put all your eggs in one basket and there is an insolvency, such as what happened with Executive Life Insurance Company of New York (I never placed any of it but my extensive research shows that blame could be assigned all around)
Regardless of the choice, ultimately you can open up about your needs (or not), say yes or no, sign or not sign, with advice from your chosen legal and financial advisers (or to ignore their advice). For some, a Sudden Money® Advisor may be helpful.
Structured settlement annuities are placed by licensed insurance agents or brokers . Regardless of how creative the descriptive adjectives may be, the structured settlement broker, settlement planner, structured settlement consultants, structured settlement gurus, structured settlement experts, or structured settlement master blasters, they must hold a valid license in your state.
Unfortunately the words "structured settlement" has been deceptively used in advertising and social media by structured settlement buyers " to describe the purchase of structured settlement payment rights for which there is currently no licensing requirement or any higher regulatory authority. But sellers can only sell their payments if a judge approves the transaction as being their best interest. Some sellers have remorse, experiencing a later regret for selling their payments and try to assign blame away from themselves, including misplaced blame on the structured settlement that they agreed to in the first place and the sale of structured settlement payment rights that they also agreed to.
Structured settlements are a popular time tested way of providing stable guaranteed income to plaintiffs in claims or litigation that has received the long time support of Congress. Ideally people live off their income not their assets. Most people can see how a steady guaranteed stream of income can help them, whether to replace lost income or to supplement it.