by John Darer CLU ChFC MSSC CeFT RSP CLTC
The utility of AI as a credible structured settlement information resource for consumers has again come into question as a search for the advantages and disadvantages of structured settlements produced glaring inaccuracies and sourced information from non-experts and a secondary market source known for its shoddy research, as I've highlighted for years.
A Gentle Rebuttal
Stuart Gentle is a publisher at Onrec in the UK. Citing not a single structured settlement expert, Gentle has produced an absolute howler that purports to be about structured settlements and appears to be a backlink SEO effort for Cesar Ornelas law of El Paso Texas and Annuity.org. In the game of "information football", a stadium full of English football fans would rightly chant "you don't know what you're doing"
Stuart Gentle's Howlers on Disadvantages of Structured Settlements
1. "Structured settlements have several potential drawbacks. For one thing, the payments may be less than what the injured person could have received if they had accepted a lump sum payout"
a. Stuart Gentle makes the howler without any reference or support, failing to account for the tax advantages of structured settlements over a lump sum payout. Structured settlement provide a level of certainty that a lump sum doesn't. The thing that Americans worry about the most is money, or has to do with money.
2. "Another downside is that the payments may be taxable"
a. The majority of structured settlements involve damages that are not taxable, excluded under IRC 104(a)(1) workers comp and IRC 104(a)(2), for personal physical injury, physical sickness and wrongful death.
b. Structured settlements can be used to pay for taxable damages or non-taxed damages that don't qualify under IRC 104(a)(1) or IRC 104(a)(2). See
What are Non Qualified Structured Settlements and Non Qualified Assignments for Tax Deferral (4structures.com)
c. If damages are taxable Stuart Gentle's lump sum v structured reasoning is nonsense. If the damages are taxable, a lump sum means that there will be less to invest because the lump sum will be also be taxable. And if you're not going
Considering that one of the Onrec link beneficary is the Cesar Ornelas personal injury law firm in El Paso Texas, perhaps it deserves its money back, in my opinion.
3. Says Gentle... "Annuities fund structured settlements. An annuity is a contract between an individual and an insurance company. The individual agrees to make payments to the insurance company for a specified period, and in return, the insurance company agrees to make periodic payments to the individual".
If this were an English football match and Stuart Gentle were the referee or coach, tens of thousands of fans would be chanting in unison "you don't know what you're doing" Stuart Gentle does not know what he's writing about. Stuart Gentle clearly has no grasp of the fundamentals of structured settlements and how they are established.
4. Says Stuart Gentle "There are two main types of structured settlements: present value and future value. Present value settlements are paid out over a shorter period, typically five years or less. On the other hand, future value settlements are paid out over a longer period, often 20 years or more".
Present value and future value are finance terms not types of structured settlements.
See Types of Structured Settlement Payments | Your Structured Settlement Payment Options (4structures.com)