Structured settlements expert John Darer reviews the latest structured settlements news, information and provides expert opinion and commentary, including settlement planning issues/ ideas for settlement management, incisive Structured Settlement Watchdog® commentary that may be helpful to lawyers, plaintiffs, claims adjusters, judges, the news media, sellers, buyers of structured settlement payment rights and interested others, The style is spicy, informative, irreverent and effective. The most prolific structured settlements blog, Now in 19th Year! Check back daily for something new.
New York City/New Jersey/Connecticut area structured settlement annuitants can have a much easier "commute" is available to with a structured settlement commutation rider, but you've got to get your commutation rider BEFORE you "start your journey!"
What is a Structured Settlement Commutation Rider?
With a Structured Settlement Commutation Rider You Won't Be Packed Like Sardines on the IRT
A commutation rider is a structured settlement option, that serves to automatically commute all or a portion of future guaranteed or certain payments to a lump sum upon the death of the annuitant.
For the purpose of this post guaranteed or certain is intended to mean payments that will be made whether or not the annuitant survives the entire payment schedule.
A structured settlement commutation rider is useful where the structured settlement is of high quantum on a minor, or perhaps where the structured settlement is payable into a Special Needs Trust [in some jurisdictions (e.g. those in the immediate vicinity of New York City) a death commutation rider may even be mandatory under local rules, in order to receive Medicaid approval] where liquidity is needed to pay estate taxes, or in circumstances where it can be anticipated that beneficiaries would not benefit from an income tax free cash flow.
Structured settlement commutation riders upon death have been available since 1995, when Allstate Life Insurance Company obtained a Private Letter Ruling 9812027 from the Internal Revenue Service.
While there is no charge to include a death commutation rider, it must be embedded in the settlement agreement and qualified assignment at the time the structured settlement is finalized. The rationale for this is simple and is explained Private Letter Ruling 9812027. The commutation occurs through events outside the payee’s control. The payee has no ability to affect whether a commutation might occur, and the commutation was made to the payee’s beneficiaries, not to the payee.
While the method of calculation of the commuted amount payable varies by company generally there are two components:
Method used to commute the future payments to present value
Percentage of the present value that is then payable in a lump sum
Method
Using the annuitant's date of death as a measuring point the annuity issuer may discount the future payments using a published index (if the date of death is weekend or holiday typically the next business day will be used).
Some annuity issuers will base the present value on the cost of a structured settlement annuity (based on rates in effect on the date of death) that would be sufficient to pay the remaining guaranteed or certain payments.
Should you name a beneficiary, or just leave guaranteed structured annuity payments, or life insurance proceeds, to your estate? Registered Settlement Planner and Chartered Financial Consultant John Darer from Stamford, Connecticut frames the issue in this video.
A respected industry colleague , who is not a tax attorney, remarked that Revenue Ruling 79-220 supports a structured settlement directly to the heirs of a decedent for pre-death pain & suffering and other elements of damages associated with the decedent's claims, as opposed to direct actions of survivors like wrongful death claims.
Let's look at the the express language of Revenue Ruling 79-220
Revenue Ruling 79-220, 1979-2 C.B. 74.
An insurance company purchased and retained exclusive ownership in a single premium annuity contract to fund monthly payments agreed to in the settlement of a damage suit. The issue was whether the exclusion from gross income under IRC §104(a)(2) applied to the full amount of monthly payments received in the settlement or only to the discounted present value of such payments. Payments were to be the same amount each month, guaranteed for the lifetime of the plaintiff or 20 years, whichever was longer. The IRS said the recipient may exclude the full amount of the payments from gross income under section 104(a)(2) of the Code, and that payments made to the estate after the recipient’s death are also fully excludable from taxable income.
Comments
Let's make clear what we are discussing are structures set up AFTER the deceased plaintiff's death. This article is not referring to cases that are settled with a structure before the person dies and the payment stream from the structure is paid to the named beneficiaries on record with the structured annuity issuer.
Revenue Ruling 79-220 refers to a buy and hold transaction when most of the transactions today are made via qualified assignment (corporate ownership of annuities is unfavorable tax wise, unless there is a IRC 130(c) exclusion)
The issue related to structuring pre-death pain & suffering and claims of the decedent relates to qualified assignments and the express language of IRC 130(c) which only permits damages excludable under IRC 104(a)(1) and 104(a)(2) to be assigned.
Revenue Ruling 79-220 clearly states that "payments made to an estate after the recipient's death are fully excludable from taxable income".
Revenue Ruling 79-220 DOES NOT state that payments made to an heir via an estate are fully excludable under IRC 104(a)(2). They may not be income taxable, BUT do such distributions come under a different tax code section that is not included in IRC 130(c)?
An heir is defined as a " person who inherits some or all of the estate of a recently deceased person. The legal successor is usually selected because he or she is related to the deceased by a direct bloodline or has been designated in a will or by a legal authority.
The unwind exclusion in every qualified assignment permits the assignee to jettison the obligation and the annuity if IRC 130(c) is not satisfied. This could cause a massive taxable event to the a United States tax paying Defendant or insurer.
Without a Private Letter Ruling [or change/clarification to IRC 130(c)] are both Defendants/ Insurers and even plaintiffs leaving themselves exposed?
Do cases involving large amounts of pre-death pain and suffering come up every day? Perhaps not, but judging from one New York lawyer's blog they come up often enough to require vigilance.
The New York Injury Cases Blog, written by Plaintiff lawyer John M . Hochfelder of White Plains, New York is a good resource for news on pain & suffering.
Hochfelder speaks of a $3,500,000 verdict was upheld on appeal in Rivera v. City of New York (2d Dept. 2011).
During the terrible final 4 3/4 hours of Anna Rivera's life, she suffered enormous physical pain and terror from:
unrelenting pain while gasping for air and struggling to survive;
extreme fright, anxiety and confusion at not being allowed the presence of and comfort from her parents
panic and fear from being physically restrained to the bed without the paralytic and sedatives
choking and gagging from the endotracheal tube while having to endure the invasive intubation procedures three times without anesthetics, sedatives and muscle relaxants
severe agitation from fighting and bucking against the endotracheal tub
Other cases cited by Hochfelder...
Reed v. City of New York (1st Dept. 2003) - $5,000,000 ($2,500,000 past - 6 years, $2,500,000 future - 30 years); 43 year old; brain damage with progressive tissue loss in lobes
Paek v. City of New York (1st Dept. 2006) - $4,300,000 ($1,300,000 past - 6 years, $3,000,000 future - 40 years); 36 year old; traumatic brain injury with severe cognitive dysfunction
Weldon v. Beal (2d Dept. 2000) - $5,000,000 ($2,000,000 past - 12 years, $3,000,000 future - 15 years); 26 year old; anoxic brain damage
Evans v. St. Mary's Hospital (2d Dept. 2003) - $1,800,000 ($800,000 past - 13 years, $1,000,000 future - 31 years); 28 year old; anoxic brain damage
Schaffer v. Batheja (2d Dept. 2010), about which Hochfelder wrote in detail, here. The court approved a pre-death pain and suffering award of $2,500,000 for a woman in a coma who was only sporadically aware of her condition (she'd lapsed into a coma due to medical malpractice) for the 4 1/2 years until she died.
One of the nation's Leading authorities on settlement tax law, Robert Wood of San Francisco's Wood & Porter, refers to the IRS application of "narrow and unforgiving reading of the scope of section 104" in his article " The Uncertain Effects of a General Release" (May, 2, 2011 Tax Notes) .
What makes anyone believe that they will be any less "narrow and unforgiving" on the subject of Section 130(c)?
The stakes are high for defendants and insurers, and even plaintiffs who could lose secured creditor status if an IRC 130(c) unwind were to go into effect.
Where is the tax support to justify an allocation to wrongful death ostensibly to accomodate the amount someone wants to structure, or the structure broker wants to sell, after the case has been pleaded for years on pain and suffering of the decedent in order to jack up the numbers?
is there any structured settlement broker or settlement planner that has enough errors and omissions to cover the taxes and penalties resulting from a mistake?
It would be a good thing for the life insurance companies issuing structured annuities and/or other stakeholders to obtain an IRS Private Letter Ruling or a fix to IRC 130(c) to be absolutely sure that payments made to an heir for the claims of an estate for damages paid to the estate for pre-death pain & suffering qualify under IRC 130(c).
Can you structure damages paid for pre-death pain and suffering or other elements of damages originating PRIOR to the decedent's death?
Can a decedent's heirs avoid these elements of damages by simply allocating 100% to wrongful death when the facts of the case show that litigation was commenced many years before a decedent's death and in which the decedent's pain and suffering was extensively pleaded in the years leading up to the decedent's death, day in the life videos were produced and used to support the case, mediation briefs documented the suffering, there were projections of loss of earnings etc.
Consider the following:
Auto accident case
Litigation commenced 5+ years before decedent died
Plaintiff was in excruciating pain for 5+ years before he died,
Plaintiff left 2 minor children
Litigation commenced shortly after the accident occurred and stretched an additional 2 years after his death. The case caption was amended to the "Estate of" after the decedent died.
Discussion
A. Decedent's pre-death pain & suffering must pass through his/her estate.
"Proceeds from causes of action originating before the decedent's death, such as pain & suffering, become part of the decedent's gross estate" Death and Damages Can Be Taxing-Jeremy Babener NYU Law, Trusts and Estates Journal (Penton Media) April 2011 citing Rev Rul 69-8 1969-1 CB 219 and IRS Technical Advisory Memo 98-11-006 (November 24, 1997) (award to plaintiff's trust included in plaintiff's estate upon his death; and Estate of Jeanne M. Houston v Commissioner of Internal Revenue Service TCM 182-362 (June 28, 1982) (claim of wrongful death of husband included in widow's estate upon her subsequent death)
B. All the property that a person owns is part of his or her estate. An estate can include clothes, jewelry, tools, cars, musical instruments, a house, land the house is built on, cash, bank accounts, retirement accounts, stocks, bonds, annuities and other items. The aforesaid damages are an additur to the taxable estate of the decedent. Applicable Estate and/or inheritance taxes (after any applicable estate tax deductions) and executor fees (administrator costs, if dies intestate) must be paid BEFOREthe remainder is divided among survivors and closing of the Estate.
C. Personal physical injury damages and physical sickness damages are excludable from gross income subject to the terms oi IRC §104(a)(2)
D. Money received as an inheritance is excludable from income under IRC §102(a)
E. IRC §130 governs qualified assignments. IRC 130 is a work around the taxation of income from annuities owned by non natural persons (see IRC 72(u)). Without the work around the cost of structured settlement would likely increase as there would be no tax exclusion to the assignee. The tax exclusion is critical in the majority of structured settlements where Defendants and their insurers have no interest in owning the annuities, or having a contingent liability. on their books. We can easily point to non qualified assignment companies to prove our point. If the IRC 130 exclusion was not an issue for non natural persons then there would be no need for offshore domiciles such as Barbados and Ireland for non qualified assignment companies.
F. IRC §130(c) (2)(D) makes no provision for payments received as an inheritance under IRC §102(a). To wit
(A) such periodic payments are fixed and determinable as to amount and time of payment,
(B) such periodic payments cannot be accelerated, deferred, increased, or decreased by the recipient of such payments,
(C) the assignee’s obligation on account of the personal injuries or sickness is no greater than the obligation of the person who assigned the liability, and
(D) such periodic payments are excludable from the gross income of the recipient under paragraph (1) or (2) of section 104(a).
G. The legislative history of the 1996 amendment to Section 104(a)(2) provides explicitly: If an action has its origin in a physical injury or physical sickness, then all damages (other than punitive damages) that flow therefrom are treated as damages received on account of personal physical injuries or physical sickness whether or not the recipient of the damages is the injured party. For example, damages (other than punitive damages) received by an individual on account of a claim of loss of consortium due to the physical injury or physical sickness of such individual's spouse are excludable from gross income. H.R. Conf. Rep. No. 104-737, at 300 (1996), reprinted in 1996 U.S.C.C.A.N. 1474, 1793.
H. Private Letter Ruling 200121031, 5/29/2001, IRC Sec(s). 104..."Because there exists a direct link between the physical injury suffered and the damages recovered, Taxpayer may exclude from gross income any economic damages compensating for such injury..." Source: Little Meyers & Associates
*****
On May 4, 2011 I posed the following question to several recognized tax authorities on structured settlements:
"Can the portion of settlement allocation reflecting the pre-death pain & suffering damages be structured to heirs? My understanding is that IRC 102(a) covers inheritances, any damages flowing from PI are not income taxable, IRC 130(c) only provides for assignment of IRC 104(a)(1) and IRC 104(a)(2) What is bugging me is the severity and duration of the P&S being major part of the negotiation and prosecution of the case.
Your initial thoughts on whether or not this could be structured"
I think you are the only broker or life company in the business that pays attention to this issue. Damages suffered by the decedent before his death belong to the decedent and pass through his estate. Those are excluded from the heir’s income as inheritances, not damages for personal injury".
David M. Higgins
THE SETTLEMENT LAW GROUP 11355 West Olympic Boulevard, Suite 200 Los Angeles California 90064 Tel: 213-833-0202 Fax: 213-291-8300 Cell: 310-415-3344
B. After this clarification from me
"...apologies for not being more clear in the question, I am aware of the Estate tax issue, my question is whether or not the damages that must pass through the estate can be structured? Clearly an allocation to wrongful death is a solution. However the unusual aspect of this case is the degree and duration of P&S, which seems to make an allocation to all Wrongful death more difficult. The Surrogates Court must approve the allocation. My client is an insurer. The provisions in a standard QA that permit an unwind (of the assignment) if IRC 130 (c) (isn't satisfied) brings into focus where my concerns lie here".
To which the answer was...
"...If the damages must pass through the estate, that would mean the damages to the estate are free of income tax, but then the beneficiaries of the estate are receiving money from the estate. That may mean they are no longer (IRC Sec) 104 damages. (emphasis ours) This is a new and interesting issue, but I'd have to have someone hire me to be able to render an opinion."
Issues
1. While some may try to justify structuring such elements of damage under the "origin of claim" principle, there appear to be sufficient questions about whether structuring elements of damages that must pass through a decedent's estate is possible.
2. Defendants, their insurers and counsel should carefully review settlement allocations in cases with this peculiarity to assure that the allocation is reasonable given the facts of the case, raise the issue with opposing counsel in timely fashion and avoid participating in a structured settlements where the math on the damages doesn't work out. Remember there are unwind provisions in every qualified assignment if IRC 130(c) is not satisfied. The provision is there solely to protect the qualified assignment company in case some sneaky "S.O.B." tries to slip through a case in that does not qualify. You said you wanted a CLOSED file right? NOT THIS!
3. Plaintiff attorneys, be aware that defendants and insurers are under no obligation to pre-fund structured settlements. At their option, many do so as a convenience. Sometimes that works in your client's favor. If you have such a case it may be a good idea to propose a reasonable allocation that the defendants or insurers can live with and only structure the direct survivors actions.
4. Are you being advised to use a single claimant 48B QSF and think a single claimant 468B QSF will solve your problem because the QSF trustee doesn't care about an unwind of the qualified assignment? Think again! If the unwind provisions are set in motion after an audit several years down the road, who is going to own the annuity and the obligation of the QSF, if the QSF no longer exists? Who is going to pay the attorney fees of your client to sort out the morass that you counseled them to accept?
5. Surrogate and Probate Judges should perform an extra careful review of submissions to make sure that an allocation is reasonable.
6. Should a fix to IRC 130 be sought that includes inheritances of this fashion under IRC 102(a)?
7. Lest anyone misinterpret me, I am not saying don't do structures on wrongful death cases.
8.. Some have suggested using a non qualified assignment but the idea needs further fleshing out.
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
What is present value and how does present value relate to a structured settlement?
The time value of money is how much money is worth if earning a given amount of interest over a given amount of time.
If you invest $100,000 into a 30 Year United States Treasury Bonds at 4.12% and hold them to maturity, in 30 years your portfolio is worth $335,756.77. As the website Girls Just Wanna Have Funds states: "Compound Interest Is Your Friend: Make Her Work For You!" The pot of gold at the end of the rainbow is its future value
If someone wants to buy your property and says they will give you " a big lump sum" of $335,756.77 in 30 years with no payments today, what is that future sum worth to you today? What is its present value?
The present value is a product of the discount rate used
If you receive $335,756.77 in 30 years and you assume a 4.12% discount rate, all things being equal to the above example for future value, then your present value is $100,000.00.
On the other hand if you had money in hand today and a comparable investment were available on which you could earn 6%, then if discount rate of say 6% were used then the present value would be lower. Conversely if a discount rate of lower than 4.12% were used the present value would be higher.
The above are examples of present value in relation to a lump sum to be received in the future, but you can also easily calculate the present value of an income stream. It might be useful for example, if you were comparing two contract offers for an athlete that included deferred bonuses paid in different amounts at different times.
Time value of money calculations have alot of application in the structured settlement and settlement planning arena.
A component to determining the economic value of damages
Valuing a life care plan.
Performing the analysis required for a CPLR 50A or CPLR 50B judgment in New York to determine interest and attorney fees and everything resulting therefrom, including the cost to fund the judgment.
Determining the value to assign to structured settlement payments remaining upon the annuitant's death for estate tax purposes
Determining the value to assign to structured settlement payments remaining upon the annuitant's death to determine the amount to be paid to a surviving payee under a commutation rider.
Comparing structured settlement quotes with different cash flows.
Determining the factoring discount for a structured settlement factoring transaction (i.e. you are selling structured settlement payment rights that you own, or buying them from someone else as an investor.
From time to time, consumers, financial writers and even judges inadvertently muddle future value with present value. We're here to help our clients and the judiciary better understand the numbers when time value of money comes into play.
Structured settlements, referring to periodic payments from the classic personal injury version, retain their income tax status when paid to a beneficiary.
Payments under the classic structured settlement are for payment of damages which are of the form excluded under IRC 104(a)(2) or IRC 104(a)(1) in the case of workers compensation payments.
Don't Worry You Can't Get IRD From Eating a Big Mac, Spicy Indian Food or a Chili Dog
Payments from such structured settlements are generally included in the taxable estate of the decedent.
If the present value of the unreceived payments (that will now be going to the beneficiary) together with other assets that form the decedent estate, exceed an exempt amount* an estate tax is due.
A complete discussion of the estate tax cannot be done justice in a short blog post, but generally the estate tax is due within 9 months of death. Furthermore there are estate or inheritance taxes on both the Federal and State levels. Through careful advance planning there are a number of technioques to mitigate the estate tax problem if it exists. For example, some people can effectively "prepay" the estate tax at a discount using life insurance and gift tax exemptions.
If we are talking structured settlements in the non classic sense, such as employment cases, structured attorney fees and other non qualified structured settlements used in taxable damage cases the same estate tax scenario applies. One must however be cognizant of the Income in Respect of Decedent issue (IRD).
IRD is not some new form of gastric reflux or the nickname for a numerical New York City subway line. One could say it's a form of "income reflux". Income In Respect of a Decedent is the name given t o all types of taxable income earned, but not received by the decedent by the time of his or her death. IRD is NOT taxed on the final return of the decedent, instead, it goes on the return of the person or entity receiving the income. Sometimes this is the surviving spouse, sometimes the estate, sometimes some other beneficiary. IRD retains the same tax nature after death as it would have had if the decedent had received the item of income while alive. There is no step-up in basis for IRD items.
*$5MM on a Federal level. Check the state levels in your state.
"Is there an income tax on inheritance of structured settlement payments?" came the Bing structured settlement question of the day.
The answer is "It depends".
While traditionally the word structured settlement applies to periodic payments for damages used to resolve a claim or lawsuit for personal physical injury or physical sickness, or workers compensation ("qualified structured settlements) , the keyword "structured settlement" in recent years has been applied, right or wrong, to the use of periodic payments for non qualified types of damages and for periodic payments in the secondary structured settlement market.
Let's look at the income taxation of each at death.
A. Qualified structured settlements (primary market)*
Periodic payments for qualified structured settlements are income tax free subject to the exclusions found in the Internal Revenue Code at IRC 104(a)(1) and 104(a)(2). At death the payments retain their income tax free status to the named beneficiary. If the decedent's estate is sufficiently large however, the present value of any inherited payments (which are included in the estate) may result in estate or inheritance taxes taxes.
Periodic payments for non qualified structured settlements are taxable when received. Thus payments to beneficiaries would also be subject to income tax.
Income In Respect of a Decedent (IRD) is the name given to all types of taxable income earned, but not received by the decedent by the time of his or her death. IRD is NOT taxed on the final return of the decedent, instead, it goes on the return of the person or entity receiving the income. Sometimes this is the surviving spouse, sometimes the estate, sometimes some other beneficiary.
Structured attorney fees and other attorney deferral programs fall into this category regardless of whether they were set up via a qualified assignment or non qualified assignment.
C. Secondary Market Purchased Structured Settlement Payments*
Generally it is believed that payments that flow from structured settlement payment rights purchased in the secondary structured settlement market (factored structured settlement payment streams) are subject to income tax on interest earned over basis.
There are estate planning strategies that can mitigate the effect of income tax and estate taxes on the non qualified cases, where the taxable estate is likely to exceed state and/or federal estate tax exemptions. Please contact this author for more information.
permanently freeze the estate tax exemption at $3.5
million,
the estate tax rate at 45%, and
preserve the step up in basis
The bill passed by a vote
of 225-200, with no Republicans voting for it and 26 Democrats opposed. H.R.
4154 moved with statutory PAYGO however, exempted from the PAYGO requirement is an extension of 2009 rates for
the estate tax (what was passed).
Note: While structured settlement payments are income tax free, the present value of any structured settlement period certain or guaranteed lump sum payments remaining and due after an annuitant's death is included in the decedent's estate for purposes of calculating estate tax.
How often should one check one's website to check to see if what is being said is still current?
What if the facts presented on one's website were not correct in the first place?
Someone better tell Robert Risk at Structured Settlement Services that it's no longer 2001 or 2002.
The following text currently appears in the basics section of Structured Settlement Services website, ostensibly to educate the public on the essentials of estate tax consequences of structured settlements.
"Planning for Estate Taxes
The receipt of settlement proceeds, either by a lump sum or through periodic payments, when combined with the claimant's other assets, can create an estate in excess of $1,000,000 which would be subject to estate taxes at the death of the claimant. Estate tax rates range from 37 to 55 percent of amounts above $1,000,000, and payment generally is due in cash in nine months after the death. With proper planning, the impact of potential estate taxes can be minimized".
Some yo yo factoring blogger has also plagiarized the above cited text which we will prove to be incorrect and it shows up in Google search results
It is worth noting that the copyright notice for the Structured Settlement Services website says 2007-2009.
The following table sets forth the exemptions and the top estate tax rates for the last 12 years.
Year
Estate Tax Exemption
Top Estate Tax Rate
1997
$600,000
55%
1998
$625,000
55%
1999
$650,000
55%
2000
$675,000
55%
2001
$675,000
55%
2002
$1,000,000
50%
2003
$1,000,000
49%
2004
$1,500,000
48%
2005
$1,500,000
47%
2006
$2,000,000
46%
2007
$2,000,000
45%
2008
$2,000,000
45%
2009
$3,500,000
45%
The above demonstrates the importance of financial literacy among settlement planners and those that call themselves settlement planners but are annuity brokers. It's not just for your own readers! The profligate plagiarism among bloggers who simply grab the RSS feed without further comment spreads the misinformation.
Further comments
Estate taxes are due to go to $0 in 2010 and then revert to the 2001 level in 2011 absent an act of Congress.
Among the solutions for those with potential estate tax liquidity issues that elect structured settlements as part of their recovery are:
Include a death commutation rider as part of the structured settlement. A portion of remaining certain payments at death can be commuted to a lump sum at a contractual cost that is generally more favorable than what is available from cash now pushers.
Purchase life insurance through an irrevocable life insurance trust to provide liquidity to pay estate taxes. This strategy is dependent on the insurability of the primary structured settlement annuitant.
Assuming the primary annuitant is insurable consider a shorter certain period with a concomitant increase in the amount of life insurance in the ILIT. Life insurance death proceeds generally are free of income taxes. The shorter certain period on the structure can mitigate the estate tax exposure from the structured settlement on the overall estate. Life insurance proceeds may be payable in a lump sum as well as other payment options.
As a last resort, if all is lost from an advanced planning standpoint you can always seek out a cash now pusher.
What is a Structured Settlement? What You Need to Know Structured settlements and what you need to know about them including a helpful introductory video featuring 2023 A.M. Best Client Recommended Structured Settlement Expert and Registered Settlement Planner John Darer® of 4structures.com® LLC
How Do Structured Settlements Work? How Structured Settlements Work How structured settlements work, including 4structures.com LLC's super helpful structured settlement flow chart/diagram showing how structured settlements fit in on the spectrum of settlement planning solutions.
Rated Ages and Structured Settlement Cost Rated Ages for Structured Settlement Annuities present advantages to all parties. Shift the mortality risk to a life insurance company whose business it it is to assess mortality risk to price its life insurance and annuities. Rated ages boost your structured settlement annuity benefit per premium dollar, or your yield on lifetime payments. Rated ages help to reduce the cost of funding a Medicare Set Aside arrangement where a Structured MSA, is being used { WCMSA LMSA or NFMSA].
Structured Settlement Annuity Companies 2023 Which life insurance companies issue structured settlement annuities going into 2023? A list of current structured annuity issuers, the location of their home offices and their financial ratings from A.M. Best, Moodys, Fitch, Standard & Poors and/or other Tier1 NAIC ratings, with links to their websites and other useful information.
Treasury Funded Structured Settlements Treasury Funded Structured Settlements are a settlement option for the most conservative using the OTHER permissible qualified funding asset under IRC 130(d), United States Treasury Bonds in addition to, or instead of, structured settlement annuities. Treasury Funded Structured Settlements can also be used to fund installment sales, also known as structured sales and other non qualified structured settlements.
Compare Structured Settlement IRR to Other Settlement Alternatives Use the Taxable Equivalent Yield chart to help compare the Internal Rate of Return (IRR) of a structured settlement to other alternative or complementary investments. Need help with the chart? Call 4structures.com® LLC at 888-325-8640
Structured Settlement Payments | Types of Structured Settlements Ways You Can Structure Your Settlement Payments. With a structured settlement you can have more than one type of payment in a single contract. Different types of structured settlement payments can be customized and combined to meet your needs on a stand-alone basis, or in conjunction with other financial products. Diversify your structured settlement, if you wish, by funding with more than one annuity issuer, with treasury funded structured settlements, index linked structured settlement payments and market based structured .
Structured Attorney Fees for Tax Deferral for Contingency Fees Structured attorney fees is a financial strategy that offers a unique way to defer taxes for lawyers and law firms. Lawyers CAN structure their legal fees even if the plaintiff doesn't structure their settlement. There are multiple ways to structure your attorney fees, such as the an index linked structured settlement where payments are adjusted based on upside changes in the S&P 500 with no downside and a cap of 5%. Trial Lawyers may also use a special deferred pay/deferred compensation arrangement, if market based returns returns are desired with no cap. Plan NOW for year end! Put structured attorney fee expert John Darer® on your settlement planning team.
Structured Settlement Annuity Company Customer Service Phone Numbers Receiving structured settlement payments from your own structured settlement or inherited structured settlement? You'll like this huge time saver. Click the title for a link to a comprehensive list of customer service telephone numbers that includes both current AND former structured settlement annuity issuers and reinsurers. If you have simple bank or beneficiary changes, or if the insurance company that issued the structured annuity has merged, sold or spun off its block of structured annuity business (e.g. Aviva, Allstate, Transamerica, AEGON, GE Capital, Liberty, CNA, Confederation Life) or changed its name and you're trying to track them down, here you go! The list is regularly updated. Last updated September 14, 2023
Structured Settlement Quote Lock-Ins | What You Need To Know What does a Structured Settlement Lock-In Mean? How do plaintiffs, defendants and insurers benefit from a structured settlement quote lock in when finalizing a settlement? How does the defendant/insurer/court benefit from using a structured settlement lock-in? Where to be careful when using structured settlement lock ins.
What Are Structured Settlement Annuities? Structured settlement annuities are annuities that can provide one or more customized annuity payment streams in a single contract. Read about structured settlement annuities here.
History of Structured Settlements Tracing the roots of structured settlements history from 1918, when Congress exempted damages for personal injury or sickness from income tax, to the establishment of structured settlements as a core personal injury settlement planning tool to the present day.
What Are Market Based Structured Settlements? Market based structured settlements are an alternative or supplementary structured settlement solution for the plaintiff, attorney or law firm that:
1. Can afford to take some market risk
2. Have discretionary settlement dollars.
Claimants and attorneys alike may find that market-based structured settlements provide the opportunity to receive tax-free income, or tax-deferred income, while enjoying growth potential.
Firmwide Qualified Settlement Funds Debunked Firmwide qualified settlement funds have been heavily promoted to trial lawyers, but have been debunked in a detailed analysis in a July 2022 legal opinion a tax partner at the law firm of Faegre Drinker Biddle & Reath, LLP. Trial lawyers and firms who have established Firmwide QSFs or coinsidering establishing a Firmwide QSF should read the analysis as part of their evaluation.
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STRUCTURED SETTLEMENTS 4REAL® Blog Is a Popular Source of Structured Settlement News and Information, John Darer Reviews, Settlement Planning News and Financial Solutions for over 18 years,
with a stable readership that seeks credible structured settlement information, John Darer Reviews, commentary and/or opinion about topical issues related to settlement planning, targeted to lawyers, injured persons and their family members, guardians, survivors, judges, magistrates, special masters, mediators, administrators, trust companies, insurance company executives and adjusters, financial advisers, settlement professionals, financial professionals, insurance regulators, government leaders, federal and state law enforcement, buyers and sellers of structured settlement payment rights, the news media and other interested parties.
4structures.com LLC established this structured settlement blog in 2005. John Darer ®, CLU ChFC MSSC CeFT® RSP CLTC, President of 4structures.com, located in Stamford, CT 06902. John Darer is an experienced New York City area structured settlement expert, structured settlement broker, Certified Financial Transitionist, and Registered Settlement Planner. He holds insurance licenses in 45 states, has 40 years financial services experience and more than 29 years in the structured settlements and settlement planning space.
In his capacity as a investigative journalist and commentator, and professionally, John Darer passionately believes that shining the light on a business practice is both healthy and newsworthy. It is in the best interest of injury victims, their families and their legal advisers, that the settlement planning discussion involve those that are properly trained in the topic, properly informed on the topic and, with respect to structured settlements, properly licensed and/or appointed. It has significant instructional and deterrent value to other practitioners and firms as well as those who may be caught in the cross hairs.
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Last updated December 4, 2023
New York City Structured Settlement Experts Bridge building settlement consultants who collaborate with clients using a humanistic process, providing creative and reliable advice and support for litigating parties and their lawyers with matters in Courts throughout the New York City metropolitan area
New York Structured Settlement Expert Whether you're at the crossroads of the world or the crossroads of your life, structured settlements provide stability for when life is at a crossroad. Call 888-325-8640
New York Settlement Planning Expert for NY Attorneys and Residents - YouTube New York settlement expert John Darer's comprehensive approach to Settlement Planning helps New York personal injury lawyers and their clients move through the financial transition resulting from a major life event. CPLR Articles 50A and 50B expertise for New York lawyers
New York Structured Settlement Expert Useful information and ideas about structured settlements, settlement planning and litigation recovery managements for New York residents, New York Lawyers and New York judges
New York General Obligations Law §5-1702 The New York Structured Settlement Protection Act imposes mandatory requirements on the defendant or the defendant's legal representative when a structured settlement is created (as part of the resolution of a case)
Structured Settlements v Structured Judgments Often confused by writers on the Internet, but there IS a difference between structured settlements and structured judgments under CPLR Articles 50A or 50B. Find out more...
Connecticut Structured Settlement Experts 4structures.com LLC is based in Stamford CT and Connectict works with clients all over CT, Greenwich, Stamford, Darien, New Canaan, New Haven, Hartford, West Hartford, West Haven, Torrington, Danbury, Wilton, Ridgefield, Norwalk, Midletown, New London, Westport, Oxford, Stratford, Old Greenwich, Stafford, Storrs, Groton
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"Thank you so much for giving us your time and leading us in the right path , Thank you, you are a God send , God bless you in all your works" -K April 11, 2017
"Once again, I can't tell you how appreciative I am for your help. In today's day and age, it is rare that you actually find people who are willing to go the extra mile..." -TC May 5, 2015
"I wanted to send you this email to say Happy New Year to you and your family. May God continue to bless you. I am grateful that I had the opportunity to meet you on the phone. I truly thank you for introducing me and my son, (redacted) to (lawyer). It is people like you that God put in the path of my son situation. Thanks a million times! {original on file] 1-2-2015
"John Darer has been nothing but honest,helpful,informative with options, & his
"time" was NEVER an issue!"-Andrew S 8/18/2012
" I wish there were more like you" JG 9-15-2014
In my opinion, John Darer is an excellent consumer advocate in the insurance industry. When I had no one else to turn to after running up against the stone walls of these giant insurance company, John Darer used hours of his own time to investigate my situation. Not only is this an invaluable service to me the consumer but it is also of great value to the insurance industry by providing them consumer feed-back. This allows the insurance companies to correct their faults and move toward greater transparency which improves the overall public image of the insurance industry as a whole" JW 9/4/2014
John, Keep fighting the fight. -NASP member 12-4-2013
John...Thank you for your professional advice-Brandon 11-13-2013
"...Thanks to Mr. Darer's blog and personal pointers I was able to obtain a fair price for the sale of client structured settlement. Therefore, if one has no choice, but to sell their settlement educate yourself first before selling start by reading John's blog" Mr P. 11/17/2012
"I always appreciate when he (John Darer) keeps us informed on regs and rules. No one does it better"- structured settlement industry colleague and reader RY 7/26/2012
"Amen - and continued thanks for your vigilance, John"- RL 8/18/2011
"Thanks for writing these great blogs on your site John! As an individual investor I have learned so much about the secondary market (for annuities, structured settlements, lottery payments, etc.) from your blogs and video series!!!" (6/5/2011)
I have found the intelligent and forthright information on your site a godsend. So much so I have tried in a small way to pass on my findings to others. Please keep up the good work and enhance your well deserved reputation as the authority on this subject- Mike 4/29/2011
John -
I can't thank you enough for bringing this to my attention. In my wildest dreams... PJ-May 12, 2011
John, I love reading your blog! Not only have I found very useful information there, but the comedy is much appreciated! Thanks for talking about "the big pink elephant in the living room" that everyone else ignores!
Thank you again for your help via phone and blog! I really needed to hear what you had to say today! BM 11/23/2010
John—this (video published 11/2010) is a well done piece. I like the way you always stick to the facts-AM
What a wonderful blog you have! I have completely enjoyed reading some of your posts (4/16/2010)
Thank you so very much for discussing my concerns about Symetra, my annuity company. I am amazed that PI attorneys as well as a settlement broker in San Diego, could not answer the simplest questions I had regarding the Safeco/Symetra issue. Your blog/web site is most interesting and informative, and I am grateful you have take on the "watchdog" role!
Thank you so much again (3/25/10)
"Keep up the good work exposing abuses in our industry - our future depends on clients being properly advised."-CD
Just checked out your blog and loved it. Keep up the good and balanced work-DL
"...we have never met but I thoroughly enjoy your web site and blog - excellent material…-PB
"I enjoy your website and its content. Informative and well written"-JC
I heard a radio ad for the Peachtree Settlement Fund as I was driving into work this morning. (San Francisco Bay area.) I decided to check it out on the Internet and came upon your blog. Thank you very much. I do not have a “structured” settlement,
"All the others that I had emailed & have seen on the net were "cash now types" & have no concern of me & just are looking for my $$$. When I came across your site & blog I realized that u are an upstanding guy & are not like others. That's why I emailed"
This was Great. Right On Point-TS
"Other Than John Darer No One Seems To Be Doing Anything"-J
Thanks for your help and also for the good work you do on behalf of our industry-L
"Thank you for being the inspiration that you are and for being a strong advocate for integrity in our business"-KL
"I Commend You On Your Effort To Make a Difference!" -R
"He is a fabulous writer who has a great passion for the structured settlement industry. I commend him on the passion he invokes when he writes on his blog listed above. That type of commitment and passion is hard to find and is rare in this world" -AC
Structured Settlement Best Practices Corner
New York Insurance Advertising law requires the full name of the Insurer to be listed along with the city and state of the principal office. Stating that you represent these fine companies using Insurance company logos without the preceding information are also illegal
When it comes to settlement documents it is the ultimate responsibility of the lawyers or claims adjusters who receive input concerning the structured settlement aspects of the documents to actually read the entire document, exercise independent thought and advise their clients properly
Be aware that financial advisors use of testimonials is prohibited or restricted
Most states require that Testimonials represent the CURRENT opinion of the person who made the testimonial. Be prepared to back it up.
Number of States That Prohibit Payment of QSF expenses by licensed agents and brokers
All posts, including memes created by John Darer, Copyright 4structures.com, LLC 2023. All rights reserved. Ongoing filings have been made with the United States Copyright Office. Except for those videos in which John Darer appears, or any video advertisements or public service videos appearing on, this blog, no claim is made to videos, music or images in any mashup which are the property of their respective owners. Disclaimer: The use of any marks herein does not suggest any sponsorship, affiliation or relationship with owners of such marks. Any marks used in commentary herein are in the context of fair use to discuss the newsworthy topics presented herein.
Structured Settlement Watchdog® is a registered trademark of 4structures.com LLC.Reg. 4711312 All rights reserved.
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Comments and Trackback Policy
Comments and Trackback Policy
Comments to this blog are encouraged, welcome and add spice to the interactive nature of blogs. However, the unscrupulous practice by some to deliver comment spam, to connect all manner of unrelated products to structured settlements, detracts from user experience, is NOT tolerated by this author and thus necessitates the practice of comment screening.
Jay J. Sangerman, PLLC A New York and Florida based AV rated estate planning law practice with an emphasis in Supplemental Needs Trusts, which assists attorneys in efficient case settlement though the use of Supplemental Needs Trusts and Special Needs Trusts; and Elder Law
Day Pitney LLP - People - Keith Bradoc Gallant Brad's practice includes traditional trust and estate planning and administration, special needs and disabilities planning, planning for same-sex couples and their families, planning for incapacity, and all types of probate litigation.
Helpful Structured Settlement Information is Here!
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Researching Structured Settlements? It may be helpful to check (1) in Archived Blog Posts (above left); (2) use the Google search box (below); (1) visit the 4structures® website at https://www.4structures.com, (4) vist 4structures® Structured Settemlent Experts YouTube Channel by clicking https://www.youtube.com/user/4structures1, or (5) call settlement expert John Darer® at 888-325-8640, toll-free in the USA, 646-849-1588 in New York City, or 203-325-8640 in CT.
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The John Darer® authored Structured Settlements 4Real® blog is the most prolific structured settlement blogger with over 5,330 blog posts, and counting!
Why Take a Structured Settlement?
A structured settlement offers guaranteed financial security to personal injury victims, wrongful death survivors and their families. A structured settlement involves a customized stream of payments, provides long-term stable tax-free income, for a period of years or a lifetime. Unlike other income annuities. a structured settlement annuity can have multiple payment streams to address multiple needs in a single contract.
London Market Structured Settlements Experts Bridge building settlement consulting using a humanistic process, providing creative and reliable support for London Market Insurers, Lloyds Syndicates, Claims Professionals and Lawyers
New York Structured Settlement Experts Bridge building settlement consultants who collaborate with clients using a humanistic process, providing creative and reliable advice and support for litigating parties and their lawyers.
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