Last September I excoriated Chris Padgett for misinforming the public that structured settlement were used by lottery winners. Today he "retains his form "on structuredsettlements-guide.com in the case of "if you don't do your research and seek the easy Google ad revenue for crappy structured settlement content, you are going to get "bit" by the "structured settlement watchdog".
In discussing disadvantages of structured settlements...
Pagdett: Structured Settlements are not Liquid Assets
Once your structured settlement agreement papers are signed, there is no way to change the agreement terms. If an unexpected expense arises, you will not be able to take extra money from your structured settlement to cover it. Furthermore, you cannot use your structured settlement as collateral for a loan.
As any number of "cash now" pushers will tell you, liquidity is available, albeit at a cost. Engage a settlement planner to walk you through your options (including addressing liquidity needs) BEFORE your case is settled.
Padgett: Small, but Potential Risk
There aren't many risks involved in structured settlements, but there is a potential that you can lose your structured settlement if the responsible party cannot pay or goes out of business. Annuities are generally used, and they protect against losses like those mentioned above. However, even annuities are susceptible to risk, if the insurance company used goes bankrupt.
74 bank failures in 2009 as of last week and no structured annuity issuers taken over by a state insurance department. What you DO have to be watch out for is selling a portion of your stuctured settlement payment rights to a cash now pusher and having a servicing agreement put in place. The "dirty little secret" is that a servicing agreement essentially means that the credit quality of the annuity issuer has been replaced by the credit quality of the cash now pusher.
Padgett: Potential Loss of Public Benefits
Padgett says "unless structured settlement proceeds are paid into qualified settlement funds, such as QSF trusts or custodial accounts, they can permanently disqualify recipients from receiving certain public benefits (Medicare and Medicaid). Be sure that your attorney knows this. A good attorney will set up a Medicare Set Aside or special needs trust, so that you are not in danger of losing your public benefits.
The first statement is embarrassingly false. I love when the "structured settlement illiterate" Padgett tells his readers " be sure that your attorney knows this". What exactly are we dealing with here?
The second sentence is more or less OK.
Fixed settlement annuities have fixed interest rates that can easily be calculated. There is no question about how much money you will make from your structured settlement proceeds due to interest. Therefore, the defense attorney can easily prove extra value will be added. This “overstatement of benefits” can lead to a smaller settlement for you.
This "yo-yo" makes no sense. Why do you need to calculate anything if it's fixed? If extra value is added what is the problem? How is value an overstatement? The fact that Padgett, on this exhibition, possesses the inability to articulate the subject or express himself properly is not your problem. This way to egress!
If you opt for fixed lifetime payments, your payments will not increase with inflation. This means, as time goes on, the proceeds from your settlement will have less and less purchasing power. You may find yourself struggling to make ends meat (sic), as a result of your eroding dollar value.
If, however, a structured settlement payment includes a COLA the payments will rise each year. Such increases, while fixed may be more or less than the inflation rate. See the Inflation Data stat on left of this blog for the current inflation rate. After that I just have to say DUH!