by John Darer CLU ChFC MSSC CeFT RSP CLTC
A Settlement Is Not an Award
You cannot be awarded a structured settlement. You cannot be awarded a settlement. It's either a settlement or an award. That's why it's called a settlement. It's very basic stuff. Yet a senior NSSTA member has been sucked into the "awarded a structured settlement vortex" and even blogged about it before piling into Thanksgiving turkey with this "stuffing":
"With a structured settlement, customized to match the long “arc” of life—with provisions for medical expenses, college tuitions, home payments, and so
much more—precious settlement awards are protected, even enhanced. Unlike a perishable, taxable lump sum, structures are designed to last"
Of course you cannot be awarded a settlement. A structured settlement is not an award. That's why it's called a settlement.
How about the NSSTA member ease up on its attempt wax poetic about Euclidian geometry and stop providing a misplaced source of validation for the same misinformation about structured settlements spilled on consumers by the structured settlement secondary market?
But the even more important lesson is this:
Life is Not an Arc
Transitions are an iterative process not a linear process. While life may throw you a couple of curve balls, life itself is neither linear nor a smooth curve like an arc.
Aly Juma says it simply "Life is not linear. It doesn’t always makes sense and expecting a logical progression is folly, especially in the world we live in today. We don’t have a set of directions or a secret map that tells us what to do or where to go. Our paths are winding and filled with forks". Life Is Not Linear: How To Discover Your Path Aly Juma 2019
Said Susan Bradley, founder of the Financial Transitionist Institute, a division of the Sudden Money Institute in a 2018 interview in London, where she was speaking at the Science of Retirement Conference, "In our culture we like to know what we’re doing. If we have a challenge, we like to meet the challenge, deal with it and move on. But with these major life events there’s a break in normal patterns, and all the newness that comes with it changes relationships, it changes self-perception, and it changes the way we see our future. All of that together influences our money and personal decisions.
So something besides the old linear, technical model needed to be created, something that interacted and integrated with the technical. It’s not just money and it’s not just human; it’s the combination, and that’s really the magic of transition planning.
So I say this, as someone who is one of only two Certified Financial Transitionsists (CeFT) in the structured settlement industry, if you are representing insurers today and you're going in with a linear, or an "arc-typical" approach you're missing something significant.
Lastly, reverting to the technical, assuming we use the only definition of structured settkenent in the Internal Revenue Code, at IRC 5891 (c)(1), since when is the categorical assertion "taxable lump sum", "for injured individuals" in a legal settlement where you are making provisions for medical expenses...and so much more true?