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October 16, 2021

Avoid Shady Structured Settlement Swaps if U Have a Structured Settlement from the 1980s/1990s

by John Darer CLU ChFC MSSC CeFT RSP CLTC

If you have a structured settlement that was established in the 1980s or 1990s, or you set one up as the guardian for your children, protect yourself and/or your loved ones from secondary market charlatans peddling structured settlement swaps. 

What are Structured Settlement Swaps?

Some structured settlement payment buyers are encouraging structured settlement swaps.  Structured settlement swaps are a term to describe a two step shady sale pitch to first hustle people to sell their long term structured settlement payments for pennies on the dollar and then suggesting that the poor annuitant use their fractionated "wealth" to, among other things, structured settlement receivables (factored structured settlement payments from other people who've also sold their structured settlement payments for pennies on the dollar).

Structured settlement swaps
Structured Settlement Swaps? Never mind the bollocks. Pennies on the dollar sucks.

Don't fall for the questionable structured settlement swaps strategy!

Keep these points in mind if you encounter a structured settlement factoring intermediary, financial adviser or "settlement planner" coming at you with a "structured settlement swaps" approach.

1. Misdirection concerning the rate of return of your structured settlement

The structured settlement payment buyers may try to unsettle people with long term structured settlements established in the 1980s or 1990s, by speaking of low interest rates.  In my opinion it's a misdirection scam. Here's why.

The rate of return on your structured settlement is the Internal Rate of Return using the cost when the structured settlement was established.

If you have a structured settlement established in the 1980s from a large highly rated insurer,  you are getting a safe rate of return on on the original investment that may be better than the average rate of return in the S&P500 for the last 20 years. On September 5, 1987 the 30 year Treasury was paying a 9.96% yield. On September 3, 1990 it was 8.92%. Much is made of recent stock market returns. However the sales pitch may not take into account tolerance (or lack of tolerance) for the inherent volatility due to real human emotion that comes with investing in volatile markets. Consider the following statistics compiled by JP Morgan Asset Management March 6, 2024:

01/01/2004-12/29/2023   9.7%

Missed 10 best days            5.5%

Missed 20 best days            2.8%

Missed 30 best days            0.7%

Missed 40 best days           -1.2%

Missed 50 best days           -2.8%

Updated

Also see Structured Settlement Rate of Return Compared to Alternative Investments (4structures.com)

2. Swapping a Stable Value 1980s/1990s Tax-Free Structured Settlement for Taxable Factored Structured Settlement Receivables Doesn't Make Sense

If you are receiving payments from a structured settlement that arose from a personal physical injury or wrongful death, the periodic payments are income tax free. While the sale of structured settlement payment rights would not be taxable, interest on the proceeds from a factored structured settlement investment would be taxable.

3. Structured settlements are straight forward. Structued Settlement Receivables Are Not. The wrong vendor can be financially lethal

Despite often being falsely marketed as annuities...

  • There have been legal cases where investors in structured settlmeent receivables have lost all their money in such investments. See 
  • At the time of the original publication, there were ongoing legal cases in Pennsylvania, Maryland, New York, Virginia and Arizona where the money of investors in factored structured settlement payment rights may have been in jeopardy and investors may have incurred legal expenses that have eroded the value of their investment with no end in sight.
  • Be wary of exotic investments such as purported advances of athlete contracts or an agent's receivables or receivables of another celebrity packaged as structured settlements or annuities.

John Darer reviews the caveats of investing in structured settlement receivables in the following video that may be helpful to readers.

In conclusion, you would be wise to heed a warning of sorts from the 1980s  "Never Mind The Bollocks!"

Last updated May 5, 2024

 

Posted at 12:05 PM in Albany New York Structured Settlements, Attorney Responsibility to Clients in Settlement Planning Process, Bowling Green Kentucky Structured Settlements, Bridgeport Structured Settlements, Bronx New York Structured Settlements, Brooklyn New York Structured Settlements, Buffalo New York Structured Settlements, Connecticut Settlement Planning, Conshohocken Structured Settlements, Detroit Michigan Structured Settlements, Hartford CT Structured Settlements, Maryland Structured Settlements, Missouri Structured Settlements, NC Structured Settlements, New Jersey Structured Settlements, New Orleans Louisiana Structured Settlements, New York State Trial Lawyers Association, New York Structured Settlements, Newburgh Structured Settlements, NH structured settlements, NJ Structured Settlements, North Carolina Structured Settlements, NYC Structured Settlements, Oklahoma Structured Settlements, Palm Beach Structured Settlements, Rhode Island Structured Settlements, Rochester Structured Settlements, Sacramento Structured Settlements, San Francisco Structured Settlements, Santa Monica Structured Settlements, Sarasota Structured Settlements, St. Louis Structured Settlements, Structured Settlement Payment Rights, Structured Settlement Watchdog®, Structured Settlements Florida, Structured Settlements in Florida, Structured Settlements in Fresno County, Structured Settlements in Georgia, Structured Settlements in Illinois, Structured Settlements in Ithaca New York area, Structured Settlements in Michigan, Structured Settlements in Nassau County, NY, Syracuse Structured Settlements, Tulsa Structured Settlements, TX structured settlements, VA Structured Settlements, Washington Structured Settlements, West Virginia Structured Settlements, White Plains Structured Settlements, WV Structured Settlements |

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Guide to Structured Settlements 2024

  • What is a Structured Settlement? What You Need to Know
    Structured settlements and what you need to know about them including a helpful introductory video featuring A.M. Best Client Recommended Structured Settlement Expert and Registered Settlement Planner John Darer of 4structures.com LLC
  • How Do Structured Settlements Work? How Structured Settlements Work
    How structured settlements work, including 4structures.com LLC's super helpful structured settlement flow chart/diagram showing how structured settlements fit in on the spectrum of settlement planning solutions.
  • Rated Ages and Structured Settlement Cost
    Rated Ages for Structured Settlement Annuities present advantages to all parties. Shift the mortality risk to a life insurance company whose business it it is to assess mortality risk to price its life insurance and annuities. Rated ages boost your structured settlement annuity benefit per premium dollar, or your yield on lifetime payments. Rated ages help to reduce the cost of funding a Medicare Set Aside arrangement where a Structured MSA, is being used { WCMSA LMSA or NFMSA].
  • Top Structured Settlement Annuity Companies 2024
    Which life insurance companies issue structured settlement annuities in 2024? A list of current structured annuity issuers, the location of their home offices and their financial ratings from A.M. Best, Moodys, Fitch, Standard & Poors and/or other Tier1 NAIC ratings, with links to their websites and other useful information. Last updated June 14, 2024
  • Treasury Funded Structured Settlements
    Treasury Funded Structured Settlements are a settlement option for the most conservative using the OTHER permissible qualified funding asset under IRC 130(d), United States Treasury Bonds in addition to, or instead of, structured settlement annuities. Treasury Funded Structured Settlements can also be used to fund installment sales, also known as structured sales and other non qualified structured settlements.
  • Compare Structured Settlement IRR to Other Settlement Alternatives
    Use the Taxable Equivalent Yield chart to help compare the Internal Rate of Return (IRR) of a structured settlement to other alternative or complementary investments. Need help with the chart? Call 4structures.com® LLC at 888-325-8640
  • Structured Settlement Payments | Types of Structured Settlements 2024
    Ways You Can Structure Your Settlement Payments in 2024. With a structured settlement you can have more than one type of payment in a single contract. Different types of structured settlement payments can be customized and combined to meet your needs on a stand-alone basis, or in conjunction with other financial products. Diversify your structured settlement, if you wish, by funding with more than one annuity issuer, with treasury funded structured settlements, index linked structured settlement payments and market based structured .
  • Structured Attorney Fees for Tax Deferral for Attorney Contingency Fees
    Structured attorney fees is a financial strategy that offers a unique way to defer taxes for lawyers and law firms. Lawyers CAN structure their legal fees even if the plaintiff doesn't structure their settlement. There are multiple ways to structure your attorney fees, such as capped or uncapped index linked structured settlement annuities where payments are adjusted based on upside changes in the S&P 500 or another index, Trial Lawyers may also use a special deferred pay/deferred compensation arrangement, if market based returns returns are desired with no cap. Plan NOW for year end! Put structured attorney fee expert John Darer® on your settlement planning team in 2024.
  • Structured Settlement Annuity Company Customer Service Phone Numbers
    Receiving structured settlement payments from your own structured settlement or inherited structured settlement? You'll like this huge time saver. Click the title for a link to a comprehensive list of customer service telephone numbers that includes both current AND former structured settlement annuity issuers and reinsurers. If you have simple bank or beneficiary changes, or if the insurance company that issued the structured annuity has merged, sold or spun off its block of structured annuity business (e.g. Aviva, Allstate, Transamerica, AEGON, GE Capital, Liberty, CNA, Confederation Life), oran annuity issuer has changed its name and you're trying to track them down. Here you go! The list is regularly updated. Last updated May 20, 2024.
  • Structured Settlement Quote Lock-Ins | What You Need To Know
    What does a Structured Settlement Lock-In Mean? How do plaintiffs, defendants and insurers benefit from a structured settlement quote lock in when finalizing a settlement? How does the defendant/insurer/court benefit from using a structured settlement lock-in? Where to be careful when using structured settlement lock ins.
  • What Are Structured Settlement Annuities?
    Structured settlement annuities are annuities that can provide one or more customized annuity payment streams in a single contract. Read about structured settlement annuities here.
  • History of Structured Settlements
    Tracing the roots of structured settlements history from 1918, when Congress exempted damages for personal injury or sickness from income tax, to the establishment of structured settlements as a core personal injury settlement planning tool to the present day.
  • What Are Market Based Structured Settlements?
    Market based structured settlements are an alternative or supplementary structured settlement solution for the plaintiff, attorney or law firm that: 1. Can afford to take some market risk 2. Have discretionary settlement dollars. Claimants and attorneys alike may find that market-based structured settlements provide the opportunity to receive tax-free income, or tax-deferred income, while enjoying growth potential.
  • iStructure |Uncapped Fixed Index Structured Settlement Annuity
    iStructure is an innovative game changing fixed index structured settlement annuity for plaintiffs or attorneys. with an intermediate to long term horizon
  • Structured Settlements and Longevity Risk| What Are the Odds?
    Do your financial resources give you enough road, or will the road run out before you do? A structured settlement annuity helps mitigate the risk of outliving your savings, no matter how long you live. A structured settlement can include one or more customized payment streams and types.

Qualified Settlement Funds

  • What is a Qualified Settlement Fund?
    Qualified Settlement Funds | What You Need to Know
  • Firmwide Qualified Settlement Funds Debunked
    Firmwide qualified settlement funds have been heavily promoted to trial lawyers, but have been debunked in a detailed analysis in a July 2022 legal opinion a tax partner at the law firm of Faegre Drinker Biddle & Reath, LLP. Trial lawyers and firms who have established Firmwide QSFs or coinsidering establishing a Firmwide QSF should read the analysis as part of their evaluation.

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    with a stable readership that seeks credible structured settlement information, John Darer Reviews, commentary and/or opinion about topical issues related to settlement planning, targeted to lawyers, injured persons and their family members, guardians, survivors, judges, magistrates, special masters, mediators, administrators, trust companies, insurance company executives and adjusters, financial advisers, settlement professionals, financial professionals, insurance regulators, government leaders, federal and state law enforcement, buyers and sellers of structured settlement payment rights, the news media and other interested parties. 4structures.com LLC established this structured settlement blog in 2005. John Darer ®, CLU ChFC MSSC CeFT® RSP CLTC, President of 4structures.com, located in Stamford, CT 06902. John Darer is an experienced New York City area structured settlement expert, structured settlement broker, Certified Financial Transitionist, and Registered Settlement Planner. He holds insurance licenses in 45 states, has 41 years financial services experience and 31 years in the structured settlements and settlement planning space. In his capacity as a investigative journalist and commentator, and professionally, John Darer passionately believes that shining the light on a business practice is both healthy and newsworthy. It is in the best interest of injury victims, their families and their legal advisers, that the settlement planning discussion involve those that are properly trained in the topic, properly informed on the topic and, with respect to structured settlements, properly licensed and/or appointed. It has significant instructional and deterrent value to other practitioners and firms as well as those who may be caught in the cross hairs. WHAT YOU GET here is the straight stuff with a touch of irreverence and humor. We hope you enjoy and find the content to be helpful. Subscribe to the structured settlement blog feed, or a specific category feed through your blog reader, or through the Subscribe button at the top left of this page. Followers of JDDarer™ on Twitter may also receive select content. If you would like to speak with John he can be reached at (888)325-8640 Thank you for reading! Last updated July 10, 2024

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Structured Settlement Best Practices Corner

  • New York Insurance Advertising law requires the full name of the Insurer to be listed along with the city and state of the principal office. Stating that you represent these fine companies using Insurance company logos without the preceding information are also illegal
  • When it comes to settlement documents it is the ultimate responsibility of the lawyers or claims adjusters who receive input concerning the structured settlement aspects of the documents to actually read the entire document, exercise independent thought and advise their clients properly
  • Be aware that financial advisors use of testimonials is prohibited or restricted
  • Most states require that Testimonials represent the CURRENT opinion of the person who made the testimonial. Be prepared to back it up.
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Why Take a Structured Settlement?

  • A structured settlement offers guaranteed financial security to personal injury victims, wrongful death survivors and their families. A structured settlement involves a customized stream of payments, provides long-term stable tax-free income, for a period of years or a lifetime. Unlike other income annuities. a structured settlement annuity can have multiple payment streams to address multiple needs in a single contract.

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