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

Special Needs Trusts | Seeking to "NAELA on" More Choices For Disabled Americans

by John Darer CLU ChFC MSSC RSP CLTC

The National Association of Elder Law Attorneys ("NAELA") is working to get Congress to amend  and improve U.S.C., § 1396p(d)(4)(A) with a goal to have amendment completed prior to the end of 2013.

The first amendment, if passed, would authorize disabled individuals under the age of 65 to create a Special Needs Trust  ("SNT").  Currently, a Special Needs Trust can be created only by a court or the trust beneficiary's parent, grandparent or guardian. The current regulations do not clearly address a scenario where a physically disabled individual is mentally competent, not involved in a lawsuit, and without parents or grandparents that are alive, capable and/or willing to serve.

The second amendment, if passed, would permit military retirees to assign their pensions to a Special Needs Trust where such assignments are not currently authorized

 Helping Americans who suffer from profound disabilities sustained in the service of their country is an honorable goal.

Both amendments would be positive developments, designed to give disabled Americans more choices and control over their own destiny.

Image source: Paul Jantz/Dreamstime.com

Are Structured Settlements Subject to Federal Estate Tax?

by John Darer® CLU ChFC MSSC RSP CLTC

One often reads the advertising claims that structured settlement payments are "tax free". Such statements are misleading.

The TRUTH

1. To the extent a structured settlement payment represents payment of damages for personal physical injury or physical sickness, or payment for a worker sompensation claim, they are received by  the tax payer INCOME tax free. The relevant sections of the Internal Revenue Code are IRC 104(a)(1) and 104(a)(2)

2. Technically an estate is subject to tax, not a structured settlement.

3. At the death of the annuitant IF, and only if, there are any guaranteed certain payments remaining to be paid in the future, the present value of such payments is included in the decedent's estate along with other items such as the value of bank accounts, stocks etc. On a very basic level, if the total of such items exceeds the exempt amount then an estate tax would be due.  Exemptions apply on both a state and federal level.

4. There are techniques available to reduce or mitigate estate tax.

For more information about estate planning and your settlement,  please contact structured settlement expert John Darer at  888-325-8640

 

4structures.com, LLC Voted "One of Best" in Connecticut For 3rd Year In A Row

The Connecticut Legal Community has voted 4structures.com, LLC one of the best in a survey conducted by the Connecticut Law Tribune for the 3rd straight year. The annual survey polled readers of the ALM Media publication about structured settlement vendors as well as a variety of different categories. Both the primary and secondary market companies were grouped together in the same category of the survey. 4structures was the top primary market company and the second overall in the category.

Connecticut Health Insurers Seeking Immediate Increases in Premiums of 20% Plus

by John Darer® CLU ChFC CSSC RSP

Connecticut Heath Insurers have thrown gas on the fire by seeking immediate 20% increases in rates, according to a September 15, 2010 report in the Hartford Courant. Rising medical costs and federal health report laws were cited reasons.

Whether the State of Connecticut Insurance Department approves the increases in full, or in part. the increases could play a part in the value of  personal injury cases where there is liability and includes a significant medical component. 

There are a variety of ways to deal with future medicals in personal injury cases. Regardless of the approach used it is critical to address the issue to mitigate erosion of settlement proceeds.

When considering the funding of a medical policy as part of the settlement solution,  calculating the cost of such solution one must recognize the cost of medical insurance increases. Based on what we know now, a 3% fixed increase would not be adequate. Moreover, be aware that these are just increases in premiums and do not reflect the deductibles, co-pays and co-insurance that may apply. Those must be factored in as well. An additional wrinkle is that most structured annuity issuers will cap contractually based increases to 5% or 6%.  One must account for the gap and determine how it is to be funded.

The Connecticut story follows my recent post concerning historical premium increase in New York City for the past decade.

Medical Insurance Inflation: Factoring Into a Settlement Solution  August 29, 2010