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

Structured Settlement Legislation in Florida | Be Part of the Discussion!

by John Darer CLU ChFC CSSC RSP CLTC

The structured settlement protection language in the Internal Revenue Code at IRC 5891 was borne out of the result of compromise. Members of both the primary and secondary market were engaged in those discussions which are an important part of structured settlement industry history

A Bill that has been filed in the state of Florida dealing with an amendment to the existing Structured Settlement Consumer Protection Act that has the structured settlmeent secondary market in "all hands on deck" mode. Some are fighting for their lives. Will any members of the primary market be at the table...not just the few that are involved in structured settlement originations? 

Below is a link to the page outlining Florida HB 1251:

 http://www.myfloridahouse.gov/Sections/Bills/billsdetail.aspx?BillId=52557&

On March 11, 2014, I interviewed attorney Eddie Stone of Edward Stone Law. Some of you may know him as the attorney who represents a number of ELNY victims. Eddie Stone is also a former general counsel of J.G. Wentworth who was involved in the early negotiations that led to IRC 5891. It was in this context that I framed the two part interview to get Eddie Stone's perspective on the structured settlement protection acts, then and now. We discuss the problems and vet possible solutions to the structured settlement secondary market's considerable problems.  I encourage readers to watch these videos in their entirety, learn about what is going on, learn what has been going on and share these with others in the industry. Be informed! Be part of the solution! Be engaged. Now is the time!

John Darer Eddie Stone March 11, 2014 interview part 1

 

John Darer Eddie Stone March 11,2014 interview Part 2

 

Before bill can become law, it must pass through three committees in the Florida House and two committees in the Florida Senate.

1. The first committee in the House is the Insurance & Banking Subcommittee, which meets on Wednesday, March 19, 2014.
2. The next committee is the Government Operations Appropriations Subcommittee.
3. The final committee the House is the Regulatory Affairs Committee. 

 

NY Structured Settlement Transfer Orders Falsified | Who's To Blame?

by John Darer CLU ChFC MSSC RSP CLTC

The story that a New York personal injury law firm had falsified court orders approving structured settlement transfers in as many as 100 cases - and possibly more, is just incredible.

Patrick Hindert cites Industry sources who have identified the responsible law firm as Paris & Chaikin , a NYC personal injury law firm,  whose former non-lawyer employee, allegedly  created the fraudulent, court-related documents. T

The primary transfer companies represented by Paris & Chaikin in these transactions were J.G. Wentworth, and its affiliate Peachtree Financial Solutions, as well as Stone Street Capital according to Hindert.

Who is to blame? 

Aside from the obvious, and this may seem a bit out of left field, I believe that certain members of the New York's judiciary must be questioned on this and greater judicial education may need to follow.

On September 20, 2010, I published a blog post where i described how then New York Governor David A. Patterson signed into law bills S3681/A6766,  which served to amend New York General Obligations Law § 5-1705, a portion of the New York Structured Settlement Protection Act Complete text of NY GOL 5-1705. The amendment was effective January 1, 2011 and included the following:

1. Approval of transfer shall be by a special proceeding brought on by an Order to Show Cause
2. At this hearing, the payee shall attend before the Court unless attendance is excused for good cause.

I understand that petitions in some of the matters in which transfer orders were falsified were actually filed with Courts in New York state.  For those where petitions were filed, why weren't there any hearings noticed or scheduled, or any follow up that would have triggered an investigation that would have stopped this "phoney baloney" stuff?

Not enforcing the law and not having in person hearing is a recipe for helpless victims to get royally screwed, in my opinion. Residents of New York State need the confidence that the judge is going to uphold the law. The law says "shall" NOT "may. Yet, several years after the law became effective, multiple sources have indicated that some judges are still taking decisions on the papers. And so, I ask the the New York judiciary, how can this be?

Legislatures in all 50 states need to do an even better job of protecting those with structured settlements by mandating in-person hearings with sellers of structured settlement payment rights and then making sure that the laws are enforced.

I have unfortunately become aware of situations where a person was approved "on the papers" where there is NO WAY that a judge would approve the transaction as being in the would-be seller's best interest and that of the seller's dependents. The structured settlement secondary market has shown a remarkable ability to find "the path of least resistance".  To wit "Sumter County Florida". 

Hindert indicated ongoing investigations of the fraudulent New York structured settlement transfers are being conducted by the New York State Courts and the New York County District Attorney's Office.

Secondary Market "Annuities" Misnomer is Mainstreamed By Law Professors

by John Darer CLU ChFC MSSC RSP CLTC

LifeHealthPro.com claims to be a "vital online destination for life & health insurance advisors, designed to provide them with the essential elements they need to run their practice and increase their bottom line including breaking news, market trends, practice tips and more".

LifeHeathPro is not doing the industry or consumers  any favors by permitting the publication of an article by William H. Byrnes Esq. and Robert Bloink, Esq. on January 30, 2014 that misrepresents what a "secondary market annuity" is to advisors not familiar with the instrument, not to mention those who are already misrepresenting "so-called "secondary market annuities" to the public and is otherwise deficient, leaving out material information.

Right out of the gate the Byrnes and Bloink get it dreadfully wrong in their "Primer on Secondary Market Annuities"

LifeHealth Pro: "Most secondary market annuities (also known as “factored” structured settlements) are annuities that were originally issued pursuant to structured settlements, meaning that the defendant in a lawsuit (often a personal injury suit) is found liable and, rather than pay damages to the plaintiff up front, reaches an agreement with the court so that the plaintiff receives the right to guaranteed annuity payments over time".

FACTS:

• "Secondary Market Annuities" ARE NOT annuities. They are structured settlement payment rights as defined at IRC 5891(c)(2), which are being misrepresented as annuities. It is quite remarkable that Robert Bloink, a professor of tax in the Graduate Program of international Tax and Financial Services at San Diego's Thomas Jefferson School of Law and served as senior attorney at the IRS Office of Chief Counsel missed this, despite demonstrating in the article that they have some knowledge of IRC 5891.
• Structured settlements are by definition "settlements", the result of a negotiated compromise or so-called "meeting of the minds"  [ Contracts 101 professors?] A defendant IS NOT found liable. In fact many settlement documents  expressly state that the Defendant is not admitting liability.
• Settlement agreements are between parties to a lawsuit not with the Court. Note that a minor's or infant's settlement, or wrongful death case may require judicial approval of the settlement.

LifeHealthPro

"The court approval process is necessary because, while the plaintiff has received the right to income under the annuity, the defendant technically owns the annuity contract. Through this process, the parties enter into an assignment agreement that is presented to the court, which will approve or deny the transfer based on whether it is in the transferring plaintiff’s best interests".

FACTS

• The Defendant "technically" (or actually) does not own the annuity contract, the qualified assignment company does, in most cases.
• The assignment agreement entered into as part of a structured settlement factoring transaction is not the same as a qualified assignment used at the time the structured settlement is created in the first place, to resolve a lawsuit or dispute.

QUESTION

Is a plaintiff still a "plaintiff", or a "payee" or "payment recipient", years after a legal case is settled and the action has been withdrawn or discontinued with prejudice?

LifeHealthPro

"A secondary market annuity is often able to provide the client with a higher-than-average interest rate because the selling plaintiff typically must sell his income rights at a discount. The interest paid out under the contract, however, is governed by the original contract terms, which may provide for a rate that is much higher than today’s market averages"

FACTS:

• The annuity that is purchased under the structured settlement remains in place with the same owner, usually the qualified assignment company.
• Some sellers only sell a portion of their structured settlement payment rights.
• The effective interest rate to the investor in structured settlement payment rights is as good as a calculation on a software program called T-Value and how much the originator can get away with and still achieve judicial approval of the structured settlement transfer.

CONCLUDING COMMENTS

The San Diego lawyers opine that "What once was a niche market is gaining traction with the ordinary investor, and it is time for all advisors to get up to speed". Maybe it's time for Byrnes and Bloink to get up to speed!

Byrnes and Bloink speak little of the risks of Mom and Pop "ordinary investors", investing in structured settlement payment rights:

• Questions of whether statutory protections apply to investors in structured settlement payment rights in the event of insolvency oif the obligor or annuity issuer.
• Exposure to fraud risk that does not exist when one buys a regulated insurance product.
• Risk that a deal could unwind if the structured settlement transfer was later deemed to have not complied with a structured settlement transfer act.  Could that leave and investor in structured settlement payment rights holding the bag?  Read up on the Cathy Brenston v Settlement Funding case in Illinois and my blog posts about forum shopping. That may be just the tip of the iceberg despite what "cheerleading" certain "secondary market annuity" players may give.
• Buying serviced paper means a reliance on a go-between instead of directly with the annuity issuer.
• Structured settlement payment rights acquired in the secondary market are highly illiquid, while most regular annuities have liquidity features. Even the original structured settlement recipient has more liquidity than an investor.

And another shout out to members of Congress, Attorneys General and state and federal regulators as part of my advocacy for regulation of the structured settlement secondary market. If law professors, can get it wrong when educating advisors, can you imagine the trickle down effect on American consumers and investors?

 

 

 

Factoring Bill to Cap Discount Rates Introduced in House of Representatives

by John Darer CLU ChFC CSSC RSP CLTC

High effective discount rates are the scourge of sellers of structured settlement payment rights who are forced to sell more of their structured settlement than they need to when there are no others options for raising money.  Everyone seems to make money along the food chain of the structured settlement secondary market at the expense of the seller when high discount rates are set. 

H.R. 3897 is a new bill which would  amend IRC 5891(b)(2) by adding the following transaction requirements:

1. The annual  discount  rate  of the consideration  for  the  transfer,  determined  by taking  into  account  charges,  fees, and  other  expenses, does not exceed the prime rate plus 5 percentage points.
2. The  aggregate  amount  of  charges,  fees, and  other  expenses payable by the  payee do not exceed 2  percent  of  the value of the consideration to the payee (net  of such  charges,  fees, and  other  expenses).
3. The payee is not liable for any penalty, and will not forfeit any amounts already paid or incurred, if the transfer does not satisfy the requirements of this paragraph.
4. The transferee has given written notice of the transferee’s name, address, and taxpayer identification number to the annuity issuer and the structured settlement obligor and has filed a copy of such notice with the State court or responsible administrative authority issuing the qualified order.
5. The transfer is fair and reasonable.
6. Not later than 5 days, and not earlier than 15 days, before the date on which the payee first incurs any obligations with respect to the transfer, the transferee provides to the payee a disclosure statement which sets forth in a clear and conspicuous manner the following: (I) The remaining amounts payable and payment dates under the structured settlement. (II) The aggregate of such amounts. (III) The discounted present value of the structured settlement payment rights determined by using a discount rate equal to the applicable Federal rate, compounded annually. (IV) A statement of the total consideration made in exchange for8 the structured settlement payment rights.(V) An itemized list of all charges, fees, and other expenses payable by the payee, or deductible from the gross amount otherwise payable to the payee, with respect to the transfer. (VI) The value of consideration to the payee net of the charges, fees, and other expenses described in subclause (V).(VII) The quotient (expressed as a percentage) of the amount of net consideration described in subclause (VI) divided by the discounted present value of the structured settlement

PRIME RATE is defined for the purposes of the proposed amendeed IRC 5891 as "the bank prime rate for the first day of the month in which the transfer agreement is executed, as published in the Federal Reserve Statistical Release on selected interest rates (daily or weekly), and commonly referred to as the H.15 release (or any successor publication)".

What does this mean to the bottom line?

If H.R. 3897 were to become law, the cap on discount rates based on the current prime of 3.25% would be 8.25%  (3.25% plus 5 ). The prime has been at 3.25% since 2009, so one must really consider how much sellers would potentially preserve more of their structured settlement assets while solving their immediate financial needs.  When Imperial Structured Settlements published its S-1 disclosure before going public it revealed discount rates in the high teens. That's an effective rate of double what it would be if the "prime plus 5" was effective back then. That meant an annuitant had to sell more than they needed to.

North Carolina has had a discount rate cap for several years. Rampant forum shopping has meant attempts to circumvent this law by setlement purchasers, an example of which I reported here.

When one considers just recently a Berkshire Hathaway annuitant was jacked for 20% on A++ A.M. Best and AA+ S&P rated paper it's not hard to see why such reform is necessary.

H.R. 3897 was  introduced by the following members of the House of Representatives

Matt Cartwright D-PA

Raul Grijalva D-AZ

Brian Higgins D-NY

Mike Honda D-CA

John Lewis D-GA

Barbara Lee D-CA

Jan Schakowsky D-IL

While the introducer's of this bill are all Democrats, this is truly a bi-partisan issue. Structured settlement annuitants, many of whom are disabled,  deserve the same financial protections afforded seniors, in my opinion.

 

NC Structured Settlement Annuitant Forum Shopped to FL by NASP Member

by Structured Settlement Watchdog

The structured settlement factoring forum shopping stories involving the Sunshine State continue to roll in and a prominent NASP member is implicated.

A 19 year old from North Carolina, who had lived in North Carolina since he was 4 years old  was apparently able to circumvent the North Carolina Structured Settlement Protection Act*, thanks to a prominent member of NASP in 2009. The annuitant was lured to Florida with expenses for his travels to Florida which were wired into an account of a Florida "friend relative*", perhaps so that it could not be traced to him,  the transaction was somehow approved in Broward County Florida,  despite the man only being in Florida for a total of "one to two weeks" . The address used on the transfer paperwork was his grandmother's address in Putnam County Florida , his grandmother who "he hadn't seen since he was 5 years old". The NASP member had the annuitant write a short paragraph about his reasons for selling, which were generally valid reasons. The annuitant DID NOT appear in court for questioning by the Broward County judge as that is not required in Florida.

The man had no bank account in Florida, no Florida driver's license and again had not seen his grandmother since he was age 5 and no intent to domicile in Florida! The man apparently had some second thoughts but had no money to get home rom the trip that lured him to Florida.so the factoring company apparently leaned on him after he had no money to get home to North Carolina.

The man has since been hounded by other factoring companies about his remaining payments, including one who offered him $5,000 and said he didn't need to go to Florida,  he could go to Georgia and South Carolina.

Ironically North Carolina resident said, during the time leading to the 2009 transfer, that he spoke to JG Wentworth and was told that its underwriting guidelines (at the time) precluded it doing structured settlement transfers with those under age 21.  

IRC 5891 relates to the imposition of a 40% excise tax where its requirements regarding structured settlements factoring are not followed.  One wonders what a comprehensive IRS audit of Florida structured settlement factoring transactions, by auditors who are properly trained in what to look  for, would reveal and how much revenue the United States Treasury would generate.

*The North Carolina Structured Settlement Protection Act has discount rate caps that are below the comfort zone of some companies that offer "cash now"

 **e.g. you call your Dad's best friend "Uncle Charlie", but he's not a blood relative

 

Illinois Supreme Court Tosses Brenston "Turkey" at Peachtree

by John Darer CLU ChFC CSSC RSP CLTC

On November 27, 2013, the Illinois Supreme Court denied the Petition to Review of Peachtree Settlement Funding in the Brenston case, a decision that may leave some structured settlement factoring companies and their investors with the turkey "trots".

It remains to be seen how the Brenston decision affects JGWPT which acquired Peachtree and only went public last month, as well as other stakeholders in the structured settlement secondary market. At time of posting the shares of JGWPT Holdings were up 2.96% on the day.

The decision filed August 26, 2013 in Settlement Funding, LLC (Peachtree Settlement Funding) v Cathy Brenston, 2013 IL App (4th) 120869, the subject matter of which involved THREE prior transfer orders  (June 28,2007;  March 31,2008 and April 10, 2008) approved by the Circuit Court of Sangamon County and a petition by the seller, MORE THAN TWO YEARS AFTER these the transfer orders to vacate the Orders on the basis of fraud by the purchaser and the assertion of a legal disability of incompetence,  the Illinois Appellate Court reversed a lower court decision denying the petition to vacate and ordered:

• that the lower court enter orders declaring the underlying transfers void ab initio  ("from the beginning"), overcoming opposition that Brenston's petiton was time-barred;
• that the trial court, pursuant to its inherent equitable power, conduct a hearing to restore Brenston to the economic position she held prior to the legally ineffective transfer of her annuity payments, less any funds advanced to her to avoid a windfall.

I understand that Peachtree has another case with an appeal filed in Peoria, another district of Illinois. If that decision is different than this Brenston decision that the higher court may need to get involved to resolve conflicts between the districts.

For more information read my August 29, 2013 post  Illinois Appeals Court Overturns Old Structured Settlement Transfer Orders

Image:  Dreamstime.com

A Settlement Purchaser With Sense Of Humor Walked into the Forum Shop

by Structured Settlement Watchdog

Settlement Purchaser With Sense Of Humor Walks into the Forum Shop

In another forum shopping case from the East Coast, the Structured Settlement Watchdog has learned of a deal in which a buyer would purchase distant structured settlement payments of $5891 per month.  My first reaction can be summed up by Austin Powers' "bête noir",  "Dr. Evil".

       

The irony is that IRC 5891 is the section of the Internal Revenue Code that deals with the federal rules on structured settlement factoring transactions and the 40% excise tax imposed on the settlement purchaser, that applies to the factoring discount if the rules are not followed.  Compliance with the applicable state structured settlement transfer act/structured settlement protection act is a prequisite to a qualified order.

Some believe that a strong enough case of structured settlement forum shopping, particularly if there is a demonstrable pattern and practice could, in some cases, invalidate an order and serve to "contribute to helping our nation's deficit".

Structured Settlement Cash Now Forum Shopping Investigation-1

by  John Darer CLU ChFC CSSC RSP CLTC

An structured settlement annuitant from the Syracuse New York area has engaged in 5 structured settlement transfers with the SAME settlement purchaser since  August 2011, with another currently pending.  Again, ALL transactions, according to our research, appear to have been with a single factoring company from South Florida that is a member of NASP.  That there were so many transfers (with their associated costs) consummated in such a short period of time is only one concern.

What is of more concern is that this appears to be a case of rampant forum shopping.  The 2011 transaction was approved in August 2011  in Madison County Supreme Court (New York).  The pending case as well as 4 prior transactions occurred in 2012 and 2013 in Sumter County Florida, with the 4 Florida transfers approved by Judge Michelle Morley.

 Here's where it gets interesting...

• The annuitant shows an address  in Morrisville, NY
• The annuitant owns property on Morrisville, NY according to public records
• The annuitant unfortunately suffered the loss of his father in August 2013 and the obituary which appeared in a Syracuse New York area newspaper refers to the decedent's son as being " from Morrisville"
• The annuitant's owns two Jeep Cherokees,  both registered with an address in Morrisville, New York
• The annuitant was sued in Madison County New York by a credit union in August 2012.
• The annuitant shows two addresses in Florida, the first from  January 2012 to March 2013. thesecond from January 2012 to May 2012.  Property records also show another individual associated wth the same two addresses. The annuitant however has no real estate property in the State of Florida, according to our source.

• A Florida drivers license was obtained January 25, 2012 and lo and behold, the first structured settlement transfer application in front of Judge Morley in Sumter County appears shortly after that February 4, 2012.

Excerpts from the Florida Structured Settlement Protection Act [ see  Fla. Stat. § 626.99296 (2005)  Definitions at (2) ]

(p) "Structured settlement payment rights" means rights to receive periodic
payments, including lump-sum payments under a structured settlement,
whether from the structured settlement obligor or the annuity issuer,
if:
                      

1. The payee or any other interested party is domiciled in this state;
               
2. The structured settlement agreement was approved by a court of this state; or
               
3. The settled claim was pending before the courts of this state when the parties entered into the structured settlement agreement.
             

(i) "Interested parties" means:
                          

1. The payee;
               
2. Any beneficiary irrevocably designated under the
   annuity contract to receive payments following the payee's death or, if
   such designated beneficiary is a minor, the designated beneficiary's
   parent or guardian;
               
3. The annuity issuer;
4. The structured settlement obligor; or
5. Any other party who has continuing rights or obligations under the structured settlement.

(3)  CONDITIONS TO TRANSFERS OF STRUCTURED SETTLEMENT PAYMENT RIGHTS AND STRUCTURED SETTLEMENT AGREEMENTS.             

 

6. The transfer agreement provides that if the payee is domiciled in this state, any disputes between the parties will be governed in accordance with the laws of this state and that the domicile state of the payee is the proper venue to bring any cause of action arising out of a breach of  the agreement; and

5)  WAIVER PROHIBITED; NO PENALTIES INCURRED.

                 

1. The provisions of this section may not be waived.
           
2. If a transfer of structured settlement payment rights
   fails to satisfy the conditions of subsection (3), the payee who
   proposed the transfer does not incur any penalty, forfeit any
   application fee or other payment, or otherwise incur any liability to
   the proposed transferee.

With all due respect to Sumter County Judge Michelle Morley, I have questions about how the same Florida judge approved so many transfers and their attendant costs to the same individual annuitant, within such a short time frame?       

The Destin, FL  law firm of Havens & Miller LLC provides a helpful summary checklist entitled Becoming a Floridian for Legal Purposes.  At the time the first transfer was filed in 2012, how much of this checkist could be checked off?  What level of scrutiny is placed by the judge on domicilliary issue?

I wonder if a review of public records would show that this is the case in other counties in Florida. 

To be continued...

Structured Settlement Factoring Frauds On The Florida Courts

by Structured Settlement Watchdog

A Florida based settlement buyer has apparently taken forum shopping to the extreme.

Does forum shopping invalidate a structured settlement transfer order and, if so, at what impact to the seller, buyer and investor and the United States Treasury seeking revenue? 

Forum shopping is an informal label given to the practice adopted by some plaintiffs to have their legal case heard in the court thought most likely to provide a favorable judgment. Some jurisdictions have, for example, become known as "plaintiff-friendly" and so have attracted litigation even when there is little or no connection between the legal issues and the jurisdiction in which they are to be litigated  [see Wikipedia on forum shopping]

After several unsuccessful attempts to get a judge to approve a structured settlement factoring transaction in the annutant's domicile state, a cash now pusher company representative and his manager purportedly instructed an annuitant to buy a one way ticket to Florida.

The representative picked the annuitant up at the airport and then went to a UPS Store to sign some documents in the presence of a notary that were represented to be similar to the documents signed in conjunction with the attempted transactions in the annuitant's home state that failed to get court approval under her state of domicile's structured settlement protection act.

The next stop was to the factoring representative's pal  " Sal" (name changed) who worked at a bank.  Sal had prepared a lease for the annuitant to sign.  A $500 "payment to "Sal" was required. An attempt was made to open an account at Sal's bank but the bank said no.

The factoring representative then took the annuitant to another bank and the factoring representative put $50 in an account in the annuitant's name to open it on her behalf and told the annuitant she would be paying him back.

The factoring representative then took the annuitant to the Florida Department of Motor Vehicles to get a State ID and was successful on the first attempt.

The factoring company made a "cash advance" to the annuitant to pay for the hotel and food and the return plane ticket to the annitant's home state.

A short time later the annuitant was given another advance to fly back to Florida for the completion of additional documents.  The factoring representative picked the annuitant up from the airport and later took the annuitant to a casino.

Additional steps were taken in an attempt to create the appearance, for the Florida Court that was hearing the structured settlement transfer petition that the annuitant was a resident of Florida. The only problem was the annuitant WAS NOT a resident of Florida nor did the annuitant have any intent to move to Florida.

And it doesn't end there folks! The factoring company purportedly offered a referral fee of several thousands of dollars to the annuitant if the annuitant could get the annuitant's daughter, also a non florida resident to do a deal with the factoring company, in Florida.

The questions are:

1. Whether or not these purported actions, which I understand may happen on more than just  a rare occasion, have an impact on the structured settlement factoring transactions that were consummated?
2. Do the purported actions of the settlement purchaser constititute a fraud on the Florida courts?
3. What efforts are judges and their clerks making to confirm that the annuitant is in fact Florida domiciled? Should they be looking for electric bills and car registrations, auto insurance cards and other forms of ID that demonstrate residence and require some passage of time?
4. Under Internal Revenue Code Section 5891, the settlement purchaser is subject to a 40% excise tax on the factoring discount if there isn't a qualified order.  If it is eventually determined that there has been a pattern of fraud on the courts in Florida, would that invalidate the Order? How much money could the IRS generate from the excise tax?
   
5. How many transactions are involved where this happens? 
6. Shouldn't the IRS send an audit team to South Florida?
   
7. How would an invalidated Court Order affect an investor who has put up money to purchase structured settlement payment rights?
8. Since fraud is typically not covered by errors and omissions insurance, where do investors seek recourse? At what cost?  
   

I spoke to an officer of the National Association of Settlement Purchasers about "forum shopping" in general, who informed me that forum shopping it is not something the association condones. Nervertheless the information I received about these purported actions involves a member of NASP. Moreover, the actvity may not be confined to a single company.

IRC 5891 and various state structured settlement protection acts are intended to give confidence to sellers and buyers of structured settlements. When a company of group of individuals abuse the law it undermines the industry's credibility with consumers and lawmakers in Washington and the various states and is harmful to the industry.

 

Images: Dreamstime.com

 

 

 

Structured Settlement Seller Has Regrets 11-15 Years Later

by John Darer CLU ChFC CSSC  RSP CLTC

A Firemen's Fund annuitant from New York,  who sold 25 years of structured settlement payment rights to JG Wentworth in several deals between 1998 and 2002 regrets that decision.

The monthly payments he sold represented his entire structured settlement. That was all he had. The annuitant contacted me and questioned if the deals were legal because no judge ever approved the transaction.

Unfortunately the Victims of Terrorism Tax Relief Act of 2001, which gave birth to IRC 5891, did not go into effect until January 2002.

Moreover the state implementation of structured settlement protection acts has been a gradual process. The state laws require judicial approval of structured settlement factoring transactions, also known as structured settlement transfers.

Such a call underscores the finality of a structured settlement factoring transactions.  Notwithstanding the Brenston appellate decision vs Settlement Funding (Peachtree) in Illinois  (if it stands),  if you enter into contracts in good faith, you can't undo the structured settlement sales many years down the road.