Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary

Nitaninny Lyin

At 314AM  EST on Friday November 3, 2006, almost 2 hours ago, I was suddenly awakened by the phone from a foul mouthed punk calling from King of Prussia Pennsyvlania who wanted to sell his (rights to) structured settlement annuity payments from First Colony Life. No offense meant to anyone from Penn State, but for the purpose of this story I will dub him "Nitaninny Lion".

In my "shocked out of deep rem" haze I can recall that he purported to have rights to receive $346,000 in future payments over 18 years in exchange for which JG Wentworth was offering $82,000. Apparently JG Wentworth has quoters available in the middle of the night for wee hour desperados. Moreover he alleged that JG Wentworth promised him the money in 4-6 weeks.

Apparently he had already ruled out a non competitve bid from Peachtree Settlement Funding.  The guy said he wanted to start a restaurant and although he was 22 he felt that his education at Penn State University was sufficient to take on the risk of running a restaurant.   He claimed to be receiving a discount rate of 14% plus some tack on fees-which would of course bring the effective discount rate to above 14%. which he didn't realize in his inpatience. He could've probably done better.

2 minutes later "Nitaninny Lion" calls back (at this point "Nitaninny Lyin") claiming to be James Wilkerson from Florida, with one of the worst attempts at aping a deep South Georgia accent. This time he says he got a quote from Patriot Funding for $32,000 in exchange for $288,000 in future payments, he was 28 years old, he described some annuity payments-this time from Pacific Life, but said the contract was with his ex-wife. He hangs up once he realizes he's been made (I look at caller ID).

Now "Nitaninny Lion" may have had a legitimate need to sell those payments and he may have been qualified to run a restaurant but until he develops a sense of maturity in the business world he's destined to fall flat on his face. It's a pity, but perhaps that's what he deserves.

Who Can You Trust? What a Nightmare!

Nelly sold a structured settlement to JG Wentworth in the year 2000 and 2001. At the time she did not have a bank account to put the money into. One of her friends (or so her friend said) had put it in her account "until Nelly could open up one of her own". When Nelly did her "friend" said that she had put the money elsewhere and Nelly asked her repeatedly to give Nelly her money that was owed to her. Read the full story posted on 9/11/2006 on Lexis Nexis and the following email threads by following this link

While these transactions occurred prior to the enacting of the state Structured Settlement Protection Acts, this is illustrative of the sleazy dealings that can happen when money comes between people. Seek independent professional advice up front and get things in writing!

Sudden Wealth Syndrome Addressed on Today Show

by John Darer

According to a recent article by MSNBC entitled "The Dark Side of Financial Windfalls", "financial experts and recipients of unexpected sums of money say it’s common for such newfound wealth to feel more like a burden than a blessing — especially if the windfall came as a result of a loved one's death."

Some windfall recipients, a category which includes, among other things, those receiving proceeds from  insurance claims or lawsuits , "impulsively quit their jobs or leave their spouses even though they haven’t come into enough money to make them independently wealthy. Others spend the money far too quickly without planning adequately for the future — or for the taxes they don’t realize they owe."

When it comes to legal claims and law suits there are often critical time sensitive decisions that must be made. Working with a competent settlement professional or settlement adviser, for those with legal claims or lawsuits, is a good way to get your arms around the issues. Attorneys for plaintiffs should also consult a settlement professional to help with the closing process.  A Registered Settlement Planner can provide valuable input, experience based knowledge and other services to help all parties, particularly the settlement recipients and their attorneys.

Another aspect of financial windfalls mentioned in the MSNBC article and something I have observed over the years is that some "experience a paralyzing fear of doing something wrong with the money — and, as a consequence, they waste" time, even "years doing nothing at all. And most experience a change in relationships with family members and others they have loved and counted on for years." Experienced settlement professionals may be able to help such individuals by drawing on their experiences with others. 

Some structured settlement payment recipients are targeted by certain predatory factoring companies seeking to induce them to sell their structured settlement payment rights. While there seem to be legitimate places for such transactions (for example the testimonial examples recently posted by Rhonda Bentzen on her weblog), misleading expectations created by the misleading advertising  and high pressure sales tactics by some of Bentzen's competitors are encouraging a needless step to the same dark side cited in MSNBC's article. Such individuals should contact a financial professional who will take the time to help them evaluate the transaction and other alternatives that may be available.

Johannesburg Amsterdam

by John Darer

On Monday afternoon I received a call from someone inquiring about JG Wentworth with a sense of urgency. Apparently the man found my number after reading one of my JG Wentworth blasts on Structured Settlements 4Real. Rest assured if you read this blog you stand assured that we have nothing to do with JG Wentworth. However I was curious about the caller and probed a little further. He said he needed some help with a settlement. I asked if he had a lawyer advising him and he said no but he needed to file something in probate Court and set up a bank account to receive an inheritance. I probed further and he related that it was from overseas. Eyebrows raised when I asked "where from?" and he replied "Johannesburg, Amsterdam!"  I asked him if he even knew "the deceased relative" and he said no, "but the letter was from the "Federal Bank of the United Kingdom"" Are you laughing or crying yet?

Immediately I know this guy is probably getting scammed and gently burst his bubble. This guy woke up Monday morning and thought he was going to live the "dream". Ironically the suckers "dream" chord being struck by the scammers is not unlike the "dream" chord strummed by factoring companies like JG Wentworth.

What is the point? 

• The bank doesn't exist
• Johannesberg and Amsterdam are from different continents.
• People receive bogus solicitations on the Internet
• People receive legitimate solicitations on the Internet
• People use the internet to find information
• It's important that good accurate non-confusing information resources are there for consumers
• Consumers need to be educated on how to better use the Internet as a resource. In particular they need to know how to check out and verify the legitimacy of a source of information.
• You can't assume common sense will prevail

 

 

 

Buyer Yields Expensive Fruit From Structured Settlement Tree

by Structured Settlement Watchdog

A structured settlement broker from one of major structured settlement brokerage firms (creation not destruction) tells this story about what occurred when he was in a New York state court waiting for his case to be called. Peachtree Settlement Funding is there with a client who was attempting to sell her structured settlement payment rights and was there seeking Court approval pursuant to Title 17 of the New York State General Obligations Law (i.e.  The New York Structured Settlement Protection Act or SSPA).

My "fly on the wall" happens to hear the terms of the "deal"  on the table for the Court's approval. Apparently the seller of the structured settlement payment rights was going to sell two lump sums totallng $130,000 to Peachetree for $30,000! Now that's what I call fresh squeezed!

Instead of the Society of Settlement Planners perhaps Peachtree should consider the "Sour Citrus Society". Bleeccccch!

Big Dissipation Risk with Lottery Winners, Settlement Payment Recipients, Sellers of Structured Settlement Payment Rights

by John Darer CLU ChFC CSSC

I'll admit that I bought 2 lottery tickets for the $365MM Powerball, unfortunately not from a certain lucky store in Lincoln Nebraska. While the media's saliva is dripping like a hungry mutt watching mama cook dinner, while it awaits the coming out of the mysterious winner, I thought some of the following information might be worth digesting.

70% of those who become "suddenly wealthy" squander it within a few short years, according to the National Endowment for Financial Education.  Moreover, about 1/3 of lottery winners eventually declare bankruptcy according to the Certified Financial Planners Board of Standards. What is absolutely astounding is the sheer amounts needlessly lost forever. And it didn't have to be!

Lottery winners, people who inherit large sums of money and plaintiffs in law suit settlements, or structured settlement payment recipients thinking of transferring structured settlement payment rights, pay careful attention to these statistics lest you end up one of them.

Proper planning and proper advice from qualified advisors can save you from making a fatal mistake with your money. Learn from the mistakes of others. One former lottery winner quoted on AOL News today stated " I won the American Dream but I lost it. It was a very hard fall, It's called Rock bottom". She won millions and now lives in a trailer (not by choice)by gambling and inability to say "no" to the hand out requests of friends and family.

Structured settlements and trusts with spendthrift provisions (sometimes referred to as "Settlement Preservation Trusts" or Recovery Management Trusts) individually or in combination can be helpful to protect  plaintiffs in personal injury law suits. Even plaintiffs in labor and other types of disputes can benefit from a non-qualified structured settlement called  a non-qualified assignment.

Alot of lottery winners opt for cash in lieu of an annuity. Some winners may want to rethink that (this new winner...can't he/she live on the $6.5MM-1st installment- for a while?) or at least consider creating some vehicles for spendthrift protection if they do take all cash.

If you, someone you represent as an attorney,  or a loved one, is thinking of selling structured settlement payment rights or has been approached by a structured settlement transfer company wanting to buy your structured settlement payment rights for a deep discount. Think carefully and take heed of these statistics. If you guess wrong it's a decision that you cannot go back on.

Structured Settlement Factoring Companies Flaws Highlighted in Los Angeles Daily Journal

by Structured Settlement Watchdog

Today's headlines read "Critics Find Flaws in Firms That Buy Client's Annuities" and "Ethical Issues Cloud Buying of Settlements". These headlines appear in an article, written by Gabe Friedman on the front pages 1-2 of the Verdicts and Settlements Section of the Los Angeles Daily Journal, a publication for lawyers in the Los Angeles area.

The lead part of the story is about Eddie Solivan a 22-year-old unemployed New Yorker (hope you're reading George Pataki, Hilary Clinton, Chuck Schumer, Eliot Spitzer & Company) who tried to sell his $62,000 structured settlement annuity payment rights for less $8,000 (or 13% of its present value), so he could pay the $600 in fines on his driver's license.  As cited in the article, in an opinion delivered last summer the trial court stopped the egregious sale of Mr. Solivan's payments to Peachtree settlement Funding, whose Vice-President of Structured Settlements Deborha Benaim is listed at time of publication as a member of the Society of Settlement Planners (SSP), a national nonprofit educational and public policy association of professional structured settlement producers and others who assist injured claimants in the settlement process.  At the time of publication, the SSP also counts other factoring companies and buyers of structured settlement payment rights among its members and patrons.

The above case highlights the reasons why I believe that factoring companies do not belong in the settlement planning process and supplements the issues that I continue to publicize in the Structured Settlements 4Real blog.

Today 43 states have passed laws tightening restrictions on who can buy structured settlement payment rights, but is it enough? Allegedly there is some "rubber stamp" decision making by judges out there. The Los Angeles Daily Journal Article also quotes Judge Edward Wallin, a mediator and owner of JAMS, who recalls a matter in which a father cashed in his daughter' s annuity because he thought he could do better in the stock market (during the dot-com boom) and blew it all.

The Science of Damages in Personal Injury Cases

by G. Mark Morley

 

When a person is involved in a personal injury / wrongful death claim, it is important for them to keep in mind the fact that the goal of the settlement is to try and make whole what’s been damaged and/or removed from their lives (generally on a monetary level).

 

In the case of a personal injury, “but for” the accident, the injured party would have continued on their chosen occupation without the hindrance of the injury.  It is the difference between what they will find themselves in versus what they would have found themselves in that the damages are calculated.

 

In the field of economics, there’s a common term of art referred to as the “but-for” world, which states that, “but for” the accident, a person most likely would have followed a certain economic path.  Many “experts” do not take into consideration the proper parameters in determining how to properly arrive at this figure.  There have been established empirical data to assist, but are many times ignored.  A person’s age and occupation is first determined –their earnings are used as a base, along with their fringe benefits and household services and projected annually to retirement at unique inflationary paths.  Then, taxes and personal consumption is removed (again, annually), leaving a economic path unique to the individual.  Lastly, the present value of the future stream is determined, and THIS final figure represents the economic portion of the settlement.

 

This is a roundabout way of saying that, many times, this difference is greater than the defense finds and less than the plaintiff finds.  Hence, the tool of negotiations plays a deciding role in determining what is “fair compensation”.

 

But once the case has settled and decisions need to be made regarding how best to use this award, one needs to remember – what was lost was NOT the “lump sum” being received, but rather the interrupted stream of future earnings.  This award traditionally represents the “present value” of that lost stream.  Subsequently, that lump sum should be considered for investing to replicate the lost future payments.

 

Many claimants have never received an amount of money this size, and are notorious for squandering it.  It is sometimes difficult to look at a large amount and imagine it ever running out.  That’s what some people are hoping the claimant thinks, as that’s where they make their money – off the poor planning of awards.

 

It is important to understand these points regarding personal injury claims, as it is often overlooked during the lengthy process.

 

 

Instant Money For Your Settlement Brings Its Problems: Sure You Want All Cash For Your Settlement?

by John Darer® CLU ChFC MSSC RSP CLTC

Yet another sad dissipation story appears in today's New York Times. This story involves a Kentucky man who won the lottery in 2000. In less than 5 years his life and that of an ex-girlfriend, with whom he shared his winnings, is turned upside down and she is dead. We have all read factoring company ads stating that "its your money" so you should "sell your structured settlement" payment rights. The temptation to take all cash or to "sell your structured settlement" payment rights may seem right to you but be very very careful and always get qualified independent professional advice.

George Best Dies, Fortune & Fame meet Trauma & Tragedy in Sudden Money Tales

by John Darer® CLU ChFC MSSC RSP CLTC

George Best died yesterday in a London hospital after a long illness. Some Americans may not be familiar with him. Those that know me well know that I am a soccer (football ) fanatic.  Growing up in London, at the beginning of the 1970s, I was privileged to have witnessed first hand the sublime talent and wizardry of George Best, the Manchester United and Northern Ireland icon once referred to as the "best in the world" by the great Pele. For me, having seen George Best dribble past 4 defenders and then score from an impossible angle is a lasting childhood memory. My memory also unfortunately recalls that some of his most impressive performances came at the expense of my favorite soccer team, Chelsea. Best's popularity was such that he was once referred to as the "El Beatle".

George Best, who first achieved fame in his mid-teens, was famously quoted in 2000 as saying " I spent my money on booze, birds (women) and fast cars. The rest I just squandered".  This quote is the segue to the message of today's post.

Best's proclamation is a classic fortune and fame dissipation story. We're all subject to our own human frailties when money is involved. Recipients of law suit proceeds are no exception. Sometimes we need to be protected from ourselves. Giving a teenager or young adult access to large sums of sudden money is a recipe for disaster. Adults are not immune to this sudden money problems. Fully customizable structured settlement annuities and and other devices such as Settlement Preservation Trusts can be useful in providing such protection for law suit recipients. A spendthrift trust is one tool may be useful for non lawsuit recipients.