Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews

Why Structured Settlements for "Older People"? To Allay The Greatest Fear

by John Darer ® CLU ChFC MSSC CeFT RSP CLTC

Delicate Balance of Income and Expenses

Nearly 50% of older Americans depend on Social Security for at least 50%-89.9% of their income, according to Retirement Income Journal which cites the April 29, 2014  AARP and the U.S.Census Bureau and draws from a statistical sample of over 42,000.  Moreover, 23.6% rely on Social Security for 90-99.9% of their income and 14.3% rely on Social Security for 100% of their income.

Fear of Running Out is Greatest Fear | FORO 

A decade ago a MetLife Employee benefits study found that 48% of employees rank "outliving their savings" or Fear of Running Out (FORO) as their greatest retirement fear. A January 30,2008 -February 2,2008 Gallup poll revealed that such concerns are not limited to "older people". The Gallup poll also revealed that over 40% of 18-29 year olds  and 53% of 30-64 year olds having these concerns.

Why Structured Settlements?  Because Certain Sells®

Structured settlements provide safety, security and contractual guarantees that are attractive as stable income solutions for people of all ages.  Most people would like a "job" they can never be "fired" from, and income they can count on.

For more information on structured settlements for seniors and retirees, please click here

There are other options for those seeking stable income solutions who do not qualify for structured settlements

Give me a call to chat about them if you'd like.  Toll-free 888-325-8640

Last updated February 4, 2024

Because Certain Sells® is a registered trademark of 4structures.com, LLC  (USPTO Reg.6237309)

 

 

Is a Structured Settlement a Lawsuit Award?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

A structured settlement is NOT an award.  A settlement is a compromise

A settlement is a negotiated compromise

A structured settlement may be part of the compromise. There has to be a "meeting of the minds". There has to be an agreement.  The settlement agreement is a contract which may bar plaintiff from from seeking further compensation for their injury.

What is a Contract?

A contract is an agreement between parties, creating mutual obligations that are enforceable by law.

The basic elements required for the agreement to be a legally enforceable contract are:

1. mutual agreement, expressed by a valid offer and acceptance;
2. adequate consideration;
3. capacity and legality.

Source: Legal Information Institute, Cornell Law School, Ithaca New York

Why an Award is different from a Settlement in a Workers Compensation Case

"An award, on the other hand, is granted to you by the workers’ compensation court. This may include medical benefits or other types of workers’ compensation awards based on the specifics of your injury. For example, a judge can order — or an insurance company can admit for — temporary and permanent disability benefits. This isn’t a settlement. You don’t have to sign away any rights to get these benefits".  Source: Eley Law Firm Denver Colorado

Why an Award is Different from a Settlement in a Personal Injury Case

A personal injury award is the amount of money owed to a plaintiff, as decided by a judge or jury. Source: Yosha Law Firm South Bend, Indiana

Why an Award is Different from a Settlement in a Wrongful Death case?

"Trial verdict awards in wrongful death cases refer to the compensation that the plaintiff (the surviving family members or dependents) receives if the case goes to trial. The compensation is awarded by a jury or a judge, depending on the jurisdiction"  Source: McKay Law Sulphur Springs and Dallas Texas

What is an Award in the Legal Dictionary?

A judicial decision after consideration; a judicial sentence.

Don't Some Settlements Require Court Approval?

Yes, some settlements do require a judge's approval. This is often the case when the settlement involves a minor, or a person under disability, or when a receiver is involved who has not been given authority to settle litigation without subsequent court approval. The court will review the settlement to ensure it is in the best interest of the estate, minor(s) or the person(s) under disability. That however, does not make them an award. What the judge is reviewing is the settlement compromise that has been negotiated between the parties to the settlement.

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What Happens if You Die and Never Reviewed or Changed Beneficiary in 37 Years?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Why It's Important to Name and Review Beneficiaries? 

I've previously reviewed the important topic of beneficiary designations extensively in two blogs on the 4structures.com Settlement News Network blog.

Structured Settlement Beneficiary | Why It's Important (4structures.com)

Structured Settlement Beneficiary Designations (4structures.com)

This is also relevant and important to life insurance, bank accounts, investment accounts and retirement accounts and overall estate planning. "Setting it and forgetting it" could have unintended consequences.  Check out the Rolison case that has been heavily litigated in the Western District of Pennsylvania and a had published decision in April 2024.  See The Procter & Gamble U.S. Bus. Servs. Co. v. Estate of Rolison, Civil Action 3:17-CV-00762 | Casetext Search + Citator

Losinger is Winner as Former Partner of Dead Proctor & Gamble Employee Inherits $1M Plus 37 Years After Split

In 1987, Jeffery Rolison filed a handwritten form naming his then partner, Margaret M. Sjostedt  (now Margaret Losinger) the sole beneficiary of his P&G retirement account. Rolison never changed it between 1987 and his death in 2015.  Rolison and Marget broke up in 1988. Margret is set to inherit that $1 million retirement account (over Rollison's estate) as Rolison never updated the beneficiary designation and Margaret was still listed as the beneficiary when he died.

THE PROCTER & GAMBLE U.S. BUSINESS SERVICES COMPANY, as Plan Administrator and on Behalf of THE PROCTER & GAMBLE PROFIT SHARING TRUST AND EMPLOYEE STOCK OWNERSHIP PLAN and THE PROCTER & GAMBLE SAVINGS PLAN Plaintiff,
v. ESTATE OF JEFFREY ROLISON, Deceased, MARGARET M. LOSINGER, and MARY LOU MURRAY Defendants.
IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIANo. 3:17-CV-00762
(JUDGE CAPUTO)

"Rolison Knew That He Needed to Check and Change Beneficiary Numerous Times But Simply Failed to Do So"-Court

"There no record evidence in this case that supports the Estate's position that Rolison failed to change his beneficiary status because of any misrepresentation or omission on P&G's part. Instead, again, the record reflects that P&G warned Rolison to check and change his beneficiary designation numerous times between 1987 and 2015 and that “Rolison knew that he needed to take affirmative steps to change his previous beneficiary status,” but that he “simply failed to do so.” - Court

 

 

Structured Settlement Annuity Placements Back to Back Best Months in History

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Top 4 Life Insurance Companies by Structured Settlement Annuity Premium for August 2024

1. MetLife | Metropolitan Tower Life Insurance Company/Metropolitan Life Insurance Company

2. Pacific Life | Pacific Life Insurance Company/Pacific Life & Annuity Company (New York cases)

3. USAA | USAA Life Insurance Company  (all states except New York)

4. Prudential | The Prudential Insurance Company of America  (all states)

MetLife August production was double that of the next company according to indications by a reliable industry source who compiles such data.

Industrywide Structured settlement annuity premium to fund structured settlement payment obligations has increased at a 7.5% clip in both July and August 2024

Industrywide structured settlement annuity premium for 2024 now sits in excess of $6 billion (as of August 31, 2024), with 4 months to go.

The return to $6B was aspirational waypoint for many years following a decline in interest rates triggered by the 2008-2009 financial crisis. While the way point was reached again 2018 and sustained in 2019, the Covid-19 pandemic intervened. Improving interest rates as the economy reopened, combined with an abundance of backlogged cases were an immediate stimulus. 

Structured Settlement Industry On Track for $9B After Stellar First Half of 2024 - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews (typepad.com)

Metropolitan Life Structured Settlements After Burner Lit After Explosion in Sales (4structures.com) May 2024

Structured Settlements and Periodic Payment Judgments Release 72 - Independent Life

Structured Settlement Industry Production Soars Above $6B | 2018 Was Highest in a Decade - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews (typepad.com)

 

 

Structured Settlement Annuity Issuers Among 2024 Ward's 50 Top Performing Life Insurance Companies

by John Darer CLU ChFC MSSC CeFT RSP CLTC

A number of current and former structured settlement annuity issuers have made the 2024 Ward's 50® of Top Performing Life Insurers:

• Aetna Life Insurance Company*
• Athene Annuity & LIfe Insurance Company (formerly Presidential Life Insurance Company see below)
• Corebridge Financial (through American General Life Insurance Company, United States Life Insurance Company in the City of New York and Variable Annuity Life Insurance Company*)
• American Family Life Insurance Company*
• John Hancock Life Insurance Company*
• Metropolitan Life Insurance Company
• Mutual of Omaha
• The Prudential Insurance Company of America

* former structured settlement annuity issuer

The companies listed above rank as the top performing life-health companies based on annual analysis of the insurance industry. They each have passed all safety and consistency screens and have achieved superior performance over the five years analyzed (2019-2023)

Who is Ward?

Ward Group, which is part of Aon, analyzes the financial performance of nearly 700 life-health insurance companies domiciled in the United States and identifies the top performers  See Ward Benchmarking About Us (aon.com)

According to its website, Ward has stated that the primary safety and consistency tests include:

• Safety and Consistency Tests  — Each company must pass primary safety and consistency tests, including:
  • Surplus and premiums of at least $50 million for each of the five years analyzed
  • Net income in at least four of the last five years
  • Compound annual growth in premiums between -10% and 40%

• Performance Measurements  — Ward reviews the financial stability of all companies to ensure that they have the potential to grow while maintaining strong financial figures. Companies that pass the safety and consistency tests are measured and scored on the following elements:
  • Five Year Average Return on Average Equity
  • Five Year Average Return on Average Assets
  • Five Year Average Return on Total Revenue
  • Five Year Growth in Revenue
  • Five Year Growth in Surplus

Use of Ratings in the Structured Settlement Evaluation as a Plaintiff, Defendant, Settlement Planner or Legal Counsel.

While a portion can surely be chalked up to methodology, it is notable that some big insurance companies that issue structured settlement annuities, rated A+ and A++ A.M. Best or those top rated by Weiss did not make the 2024 Ward's list. See Structured Settlement Companies | Top Structured Settlement Companies 2024 (4structures.com).

Athene Annuity & Life Insurance Company (formerly known as Presidential Life) is a provider of fixed annuities, life insurance, and accident & health insurance products. They operate primarily in New York State. Their financial strength ratings are impressive, with A.M. Best rating them A+, S&P rating them A+, Fitch rating them A+, and Moody’s rating them A1

I placed my first structured settlement annuity ever, with Presidential Life Insurance Company in 1989 on a Bronx New York medical malpractice case. I'm forever grateful for the initial advice and guidance of the late Jay Kaplove, then Executive VP and General Counsel of Presidential which inspired me to enter the structured settlement market in the following years. 

Do Structured Settlement Payments Have to Be Equal Payments?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Whether Structured Settlement Payments Have to be Equal (or Substantially Equal) Depends on the Nature of Claim and the Settlement Planning Solution being used

The substantially equal payment requirement applies in situations where:

- There is a non-qualified assignment where a periodic payment obligation is assigned to a U.S. domestic assignment company.
- An immediate annuity is utilized as the funding asset.

What are Non Qualified Structured Settlements and Non Qualified Assignments for Tax Deferral (4structures.com)

IRC Section 72(u) was added as part of the Tax Reform Act of 1986.

• An annuity contract owned by a non-natural person is not considered an annuity contract for tax purposes  IRC §72(u)(1)(A)
• The income on the contract for any taxable year of the policyholder shall be treated as ordinary income received or accrued by the owner during such taxable year   IRC 72(u)(1)(B) and also cited in a presenation to the United States Senate Committee on Finance May 24, 2016 JCX 45-16 (May 20, 2016) "By contrast to the treatment of life insurance contracts, if a deferred annuity contract is held by a corporation or by any other person that is not a natural person, the income on the contract is treated as income accrued by the contract owner and is subject to current taxation. The contract is not treated as an annuity contract".

IRC 72(u)(4) Notable Exceptions to Ownership of Annuity by Non Natural Person

This subsection shall not apply to any annuity contract which—

(A) is acquired by the estate of a decedent by reason of the death of the decedent,

(B) is held under a plan described in section 401(a) or 403(a), under a program described in section 403(b), or under an individual retirement plan,

 

(C) is a qualified funding asset (as defined in IRC 130(d), but without regard to whether there is a qualified assignment),  What is a Qualified Assignment? (4structures.com)

 

(D) is purchased by an employer upon the termination of a plan described in section 401(a) or 403(a) and is held by the employer until all amounts under such contract are distributed to the employee for whom such contract was purchased or the employee's beneficiary, or

 

(E) is an immediate annuity.

IRC 72(u)(4) (C) and (E) are germane to structured settlements

A qualified funding asset means any annuity contract issued by a company licensed to do business as an insurance company under the laws of any State, or any obligation of the United States  Subject to IRC 130(d).

1. such annuity contract or obligation is used by the assignee to fund periodic payments under any qualified assignment. 
2. the periods of the payments under the annuity contract or obligation are reasonably related to the periodic payments under the qualified assignment, and the amount of any such payment under the contract or obligation does not exceed the periodic payment to which it relates,
3. such annuity contract or obligation is designated by the taxpayer (in such manner as the Secretary shall by regulations prescribe) as being taken into account under this section with respect to such qualified assignment, and
4. such annuity contract or obligation is purchased by the taxpayer not more than 60 days before the date of the qualified assignment and not later than 60 days after the date of such assignment.

Types of Structured Settlement Payments | Structured Settlement Payment Options (4structures.com)

What is an Immediate Annuity under IRC 72(u)(4)(E)?

For purposes of this subsection, the Code says the term "immediate annuity" means an annuity—

A. which is purchased with a single premium or annuity consideration,

B, the annuity starting date (as defined in subsection (c)(4)) of which commences no later than 1 year from the date of the purchase of the annuity, and

C. which provides for a series of substantially equal periodic payments (to be made not less frequently than annually) during the annuity period

So there you have it. That's where the equal payments (or subtantially equal payments) comes from.

Why Doesn't IRC 72(u) apply to annuities owned by a Qualified Assignment Company?

Because there is an express exception made in IRC 72(u)(3)(C) for an annuity that is a Qualified Funding Asset under IRC 130(d)

Non Qualified Assignment Solutions with Domestic Assignment Company Where IRC 72(u) Applies

• Corebridge subsidiaries American General Life Insurance Company and United States Life Insurance Company in the City of New York through their appointed brokers, where an annuity is used to fund an obligation to make periodic payments.  Note that the same product providers offers an alternative niche domestic solution using a funding agreement (in lieu of an annuity) as a work around for where a deferral is desired without going to an offshore assignment company.
• Metropolitan Tower Life Insurance Company (MetLife) 

Last updated August 8, 2024

 

 

 

 

Structured Settlement Article | "Expert Reviewed" Holey Moly in Forbes Advisor 2024

by Structured Settlement Watchdog

Forbes Advisor published inaccurate "Expert Reviewed" Holey Moly from a UCLA law professor, only months after publishing Jeremy Babener's excellent Forbes Advisor contribution about structured settlements. 

 A. Two Key Takeways Holey Moly

• A structured settlement means the plaintiff gets a series of payments over time rather than a single lump-sum payment.
• The defendant can purchase an annuity from an insurance company to pay the structured settlement

Commentary

• A structured settlement is a (1) negotiated, (2) customized stream of periodic payments, (3) paid as damages as part of the consideration (4) in exchange for a release of liability to resolve a claim, lawsuit, or dispute.
• A structured settlement is not an either/or binary.  
• A structured settlement may be funded with a structured settlement annuity [see IRC 130(d)]
• The majority of structured settlement annuities are purchased by qualified assignment companies. See Step 2 of Structured Settlement Flow Chart (Annuity) below.  Qualified assignmments have been the standard since President Ronald Reagan signed the bipartisan Periodic Payment Settlement Act into law in January 1983. For a deep dive on qualified assignments, see What is a Qualified Assignment? (4structures.com)
• Regardless of whether a structured settlement annuity is purchased, or if purchased by a self insured Defendant, a Defendant's or Respondent's liability insurer, or a qualified assignment company, where an annuity is purchased it is purchased from a life insurance company.  Under the laws of most states an annuity "is issued by a life insurance company in exchange for a premium" For example  California Code, Insurance Code - INS § 10509.913(a) | FindLaw, 

B. In discussion about Taxation and Pros of structured settlements Bieber and co. write:

1."the money from the settlement is tax-exempt, if the plaintiff invests the money from the settlement, interest earned could be taxed. However, the rules are different for plaintiffs who receive a structured settlement as an annuity. The principal and interest received are generally tax-exempt in this situation"  [see First Bullet Point for Commentary]

2."If a plaintiff receives compensation for physical personal injury, generally the settlelment is tax-exempt if the settlement is for:

• Physical injuries or sickness (except for medical expenses that were deducted on the plaintiff’s taxes)
• Mental anguish or emotional distress related to a physical injury or sickness (if not related, it is taxable)
• Discrimination that does not include lost wages
• Lost property value if the settlement is less than or equal to the basis of the property"  (see Third Bullet Point in Commentary below)

3."While the money from the settlement is tax-exempt, if the plaintiff invests the money from the settlement, interest earned could be taxed. However, the rules are different for plaintiffs who receive a structured settlement as an annuity. The principal and interest received are generally tax-exempt in this situation"

4. "Structured settlements provide a continuous stream of tax-free income. Payees will not need to worry about owing the IRS or their state any money from the settlement".

Commentary

• Whether a structured settlement is funded with an annuity has no independent bearing on the taxability of the settlement. Certain financially distressed hospitals in the New York City area have entered into agreements to pay over a short period of years with or without annuity funding.  
• The damages that settlement payments represent (as reflected in the settlement agreement executed by the parties, reflecting the intention of the parties) do have a bearing on taxation.
• Lost property value of the settlement is less than or equal to the basis of the property is listed as representative of tax exempt. I strongly suggest anyone exploring this type of structured settlement read this.  Construction Defect Structured Settlements (4structures.com)

Don't let your head explode. There's lots out there. Not all of it is accurate. I help you digest it

 

Survivor Payments | "All payments From a Structured Settlement Are Guaranteed" ?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Structured Settlement Survivor Payments

Seen on the Internet about Structured Settlements this week

A. "If no beneficiary was designated, the payments will become part of the recipient's estate and be distributed according to their will or state laws".

The statement needs further clarification.

Commentary

1. If the Payee dies without having designated a beneficiary to the annuity issuer prior to the Payee's death, AND there are any remaining period certain payments or guaranteeed lump sums, those payments will be paid, when due, to the Estate of the Payee. From there, payment will be distributed in accordance with the Payee's will, if there is one, or state intestacy laws if there is no will.  See intestacy | Wex | US Law | LII / Legal Information Institute (cornell.edu)

2. If a Commutation Rider is in place when the Payee dies, any remaining certain payments and guaranteed lump sums are commuted to a lump sum in accordance with the terms of the commutation rider.

3. If the Payee dies after there are no remaining period certain payments or guaranteed lump sums then payments will cease at the Payee's death.  

Structured Settlement Beneficiary | Why It's Important (4structures.com) May 8, 2024 update

Structured Settlement Beneficiary Designations (4structures.com) May 24, 2021

B. "All payments from a structured settlement are guaranteed"

Commentary

All payments from a structured settlement are contractually guaranteed in accordance with the terms of the contract. 

When a structured settlement is established there are multiple contracts

• A settlement agreement and release which establishes an obligation to pay periodic payments as damages in exchange for a release of claims.
• A qualified assignment, which is a subsitution of obligors from a Defendant or his/her/its insurer(s) to a qualified assignment company
• An annuity contract, which is purchased as a "qualified funding asset" by the qualified assignment company and is owned by the qualified assignment company.

How Do Structured Settlements Work | Structured Settlements Explained (4structures.com)

While the terms "guaranteed" and "certain" are often used synonymously by those holding an insurance license, including some settlement planners and structured settlement brokers and even lawyers, such use is inaccurate and can lead to misinterpretation and/or misunderstanding by Payees.

 

Structured Settlement Industry On Track for $9B After Stellar First Half of 2024

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Structured Settlement Industry production figures have been released and it's looking to be a record year, again!

• The total for June                         $   708   Million
• The total for 2^nd Q 2024                $2.220   Billion
• The total for 1^st Half of 2024         $4.485   Billion

A Structured Settlement Is All It's " Quacked Up" To Be | John Darer Reviews

by John Darer CLU ChFC MSSC CeFT RSP CLTC Structured Settlement Expert

Ways to Use Structured Settlements in Settlement Planning 2024 (4structures.com)

Comprehensive Settlement Planning Services for Injured Persons & Law Firms (4structures.com)

Settlement Experts and Services for Defendants, Lawyers and Claims Pros (4structures.com)

New York Structured Settlements Experts | Settlement Consulting (4structures.com)

Structured Settlement Experts, Settlement Planning Experts NY | CT| NJ | USA | London (4structures.com)

QARP and UCC Article 9 | Choice of Law Considerations in AL, AK, ND, NM, TX, WI, WY, DC

by John Darer CLU ChFC MSSC CeFT RSP CLTC

A Qualfied Assignment Release and Pledge Agreement (QARP) is a type of qualified assignment that gives a
structured settlement payee a security interest in the qualified funding asset pursuant to the Uniform Commercial Code (UCC). 

What is a Qualified Assignment? (4structures.com)

What is the Uniform Commerical Code?

The Uniform Commercial Code (UCC) is a standardized set of regulations for conducting business and financial transactions in any state in the USA as well as the District of Columbia and US Territories. The UCC governs a wide range of transactions, including the sale of goods, secured transactions, negotiable instruments, as well as others. It provides rules and guidelines for parties engaged in business dealings, ensuring consistency and predictability.

State-specific variations exist within the Uniform Commercial Code (UCC). While the UCC is standardized across states, each state may introduce slight modifications or adaptations to particular sections. Generally, these alterations are minor and do not substantially affect the UCC's overall uniformity.

How Does Article 9 of the UCC and Impact the Rights of a Structured Settlement Payee?

Article 9 of the UCC overrides any language in the QARP that would restrict the claimant's ability to assign the right to receive their payment.

This poses a problem for  the QARP because structured settlement annuities must restrict the claimant's ability to assign their payments, While many states have carved out an exception for structured settlement agreements, some have not and this may impact choice of law selection for the QARP with certain annuity issuers.

Seven States and DC That Have Not Expressly Exempted Structured Settlement Agreements from the UCC

Alabama

Alaska

New Mexico

North Dakota  

Texas

Wisconsin

Wyoming

District of Columbia

These 8 juridictions may not be permitted to be used for Choice of law on the QARP.