Structured Settlement IPA is A Necessity When Selling Structured Settlement

by John Darer® CLU ChFC MSSC RSP CLTC

Is independent professional advice REALLY on the table in Maryland as special interest groups huddle to discuss possible reforms to the Maryland Structured Settlement Protection statutes?

Maryland's structured settlement market has received unwanted attention after it emerged in April 2015, that Freddie Gray (yes THAT Freddie Gray), was in the process of selling his Allstate structured settlement to Peachtree,  just days before his death sparked the recent Baltimore riots.  Issues related to the legal action that gave rise to the structured settlement have been speculation for a possible theory of defense to those accused of causing his death.

Then a lawsuit with serious allegations against Derwood, MD lawyer Charles E. Smith, Jr. and CES Law Group, an irritating pock mark on the effectiveness of the State of Maryland's Structured Settlement Protection Statute.  Smith is being sued for legal malpractice arising out of his providing a questionable structured settlement IPA to Maryalice Rose, who is said to be a functional illiterate with cognitive deficits.  [ Read my June 27, 2015 post on Maryalice Rose v Charles E. Smith Jr et al ]

Some settlement purchasers argue that structured settlement IPAs, which cost between $500-$1,500, are an unfair tax on the seller and is something that is not encountered in other financial transactions such as opening a bank account, liquidating a bank account, buying a life insurance policy or buying or selling stocks, bonds or real estate. Proponents also see no need for court approval for the same reasons.  The flaw in their argument is that those industries are heavily regulated and  failure to adhere to the law could result in your losing your license, or in some cases some time in jail.  As you read this there is no license required  to work in the structured settlement secondary market AND there is no regulator in any state! Moreover, in many cases the structure is all these people have!

What is needed in Maryland and other states, in my opinion, is the following:

• Mandatory court appearances for sellers
• Filing only in jurisdiction where seller resides.
• Must show proof of having resided in state for 6 months  (acceptable proof standard e.g. electric bills,  auto registration, where children go to school}
• Certified information about prior transfers to accompany petition to transfer submitted for court approval.
• Mandatory independent professional advice [already in place, leave it alone]
• Standards for independent professional advice

And another thing, the cost of independent professional advice is a rough dollar equivalent of the kick backs and swag offered by settlement purchasers. For instance, what is the going rate for a free IPAD?

Here's what Master Funky Chicken, an online rapper with apparent keen interest in structured settlements, has to say in his Independent Professional Adviser Rap