Structured settlement expert John Darer® connects the dots for readers with structured settlement news, information and expert opinion, including settlement planning issues/ ideas for settlement management, incisive Structured Settlement Watchdog® reports 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 settlement blog, Now in 18th Year! Check back daily for something new.
First, make sure that you are speaking to a true structured settlement broker, expert or consultant and not a factoring company or cash flow company representative masquerading under any of these terms.
Most state insurance departments in the United States have consumer protection regulations which require actuaries at insurance companies to certify that each liability has an asset to match it on an annual basis. Therefore, the insurance companies issuing structured settlement annuities must be careful in rate setting to assure that they have a balance of assets to meet their obligations. Should it take on too much premium and the corresponding liability, without assets to match, an insurance company could find itself in hot water with the regulators.
What are the types of structured settlement quotes?
Book rates are the published rates of the structured settlement annuity issuer. The "book" refers to the fact that in the pre-computer era, rates literally came from a rate book or rate sheet. Today most companies make such rates are available for download online to its appointed agents/brokers so that your structured settlement broker, expert, consultant or settlement planner should have in his/her office or installed on his/her note book computer. Book rates change periodically. Generally book rates are good for a certain number of days
Daily rates, as you might assume, are generally good "for the day of quote only". Given that bond markets fluctuate daily there may be bonds out there on a particular day that will permit the annuity issuer to issue a more aggressive rate. In part because of the asset/liability matching requirement most annuity issuers require daily rate pricing on very large cases (definition of "very large" varies by company). Note that some structured settlement annuity issuers will hold daily rate pricing for 24 hours.
Rated age pricing applies to book rates or daily rates. A rated age affects the cost of any life contingent structured settlement annuity benefit. Rated ages are opinions based on medical information concerning the annuitant that causes the underwriter to believe that the plaintiff or annuitant has a shorter than normal life expectancy. Based on this opinion the annuity issuer is wiling to issue the annuity at a lower cost/higher yield an absorb the mortality risk. A rated age can either reduce of the cost of providing a known life contingent benefit or it can boost the yield per claim dollar if buying a life contingent benefit and the contribution is known. Rated ages vary by annuity issuer and the effect of the rated age on the pricing of the annuity will vary by company and even by the type of benefit desired. If you are seeking a benefit that is for a certain period of years or is a guaranteed lump sum payment then the rated age has no effect on the cost of the structured settlement.
Different structured settlement annuity issuers specialize in different types of cash flows. Some may be better short term. Some may be better long term. Some may specialize in lump sums. Others may be more competitive at older ages or with deferred start dates. It seems complex but a good structured settlement broker, expert, or consultant should be skilled at weaving the best plan/offer together for you or your client. Such plan/offer may involve one or more structured settlement annuity issuers.
Most structured settlement brokers today have the ability to send you structured settlement quotes via email for speed, ease of storage and re-transmission (to clients or other advisers) and reduce your paper clutter.
One thing to note is that a quote to "sell your structured settlement annuity payments rights" is NOT a "structured settlement quote". To clear up the confusion (created by factoring company Internet advertising) it is a "factoring quote".
“Is a structured settlement annuity taxable? And is the initial amount that I get from the settlement taxable?”, asks a settlement planning firm.
Here is their response:
"If the origin of the claim is based on a personal physical injury, Section 104[a][2] of the Internal Revenue Code states that the initial principal amount on the settlement that the client receives is not taxable. It is tax-exempt at the state, local, and federal levels. however, if the client decides to invest their settlement funds, then the interest that grows from the investment is taxable. One way to avoid this is to establish a structured settlement annuity for the client to receive their settlement funds. All of the interests (sic) that grow inside of the structured annuity will also be tax-exempt. Payments received from a structured settlement annuity do not need to be reported on any tax return form (1040) or any tax document. Both the principal amount and interests (sic) in the annuity are completely tax exempt".
Here's the thing...
The Internal Revenue Code is Federal tax code. While there may be state and local tax laws that are modeled after federal tax law, those are the dominion of the individual states or local governments and their respective departments of revenue.
IRC Section 104 (a)(2) permits a taxpayer to exclude from gross income "the amount of any damages (other than punitive damages) received (whether by suit or agreement and whether as lump sums or as periodic payments)on account of personal injuries or physical sickness" Source: Internal Revenue Service irs.gov
The key take away is that it is the damages that are tax exempt. With a properly established structured settlement, that starts with an obligation to make future periodic payments as damages on account of personal physical injury, where the obligation is generally assigned by way of a qualified assignment, and then funded with a structured settlement annuity or structured settlement annuities as a qualified funding asset, each of the future payments is tax exempt.
Once again, I'm scratching my head at the output of the settlement purchasing company that is currently believed to be the only member of the National
Name, Confirm, Repeat as Necessary
Association of Settlement Purchasers with a related entity that has agency relationships with structured settlement annuity issuers and brokers structured settlement annuities in the primary market.
In the process of soliciting people to sell their structured settlement payments the New York company states in a blog:
"A loved one left you their future structured settlement payments in their will,and you’re wondering what you can do with it. Maybe you have a business opportunity, or you are interested in purchasing a house. You might be facing an emergency and looking at your options to cover that sudden expense. So, can you sell this asset? The short answer is yes. If you inherited a structured settlement, that means you now have the rights to it, and to the future payments. And in situations where you have a financial need, you most likely qualify to sell some or all of the future payments from the inheritance for a lump sum in cash" Source: CrowFly website
While it's certainly possible that someone could name a beneficiary of structured settlement payments in their will, it is certainly not the norm and probably not advantageous to do so:
Naming a beneficiary with the structured settlement annuity issuer is easy and simple. You fill out a beneficiary designation form and you file it with the insurer, checking to confirm that your wishes have been recorded. Your signature may need to be notarized.
You can name and change primary and contingent beneficiaries and their respective shares/percentages at any time, as long as such changes are in writing and in the proper format accepted by the insurance company that issues the structured settlement annuity.
Naming a beneficiary with the structured settlement annuity issuer means that the proceeds will begin to flow directly to your beneficiaries without delays and costs associated with probating an estate. It's the matter of completing a claim form and providing a copy of the death certificate.
Death proceeds that pass through the probate estate are subject to executor/executrix fees (if there is a will), administrator/administratrix fees (if there is no will)
Death proceeds that pass through the probate are subject to claims of creditors of the Estate.
Where might you find future structured settlement payments going into an Estate?
If you fail to name a beneficiary for your structured settlement, or the beneficiary you name is not living at the time of your death, and you have not named a contingent beneficiary, payments will default to your Estate.
If the payments are going to a trust, such as Special Needs Trust or Supplemental Needs Trust, your structured settlement has a full commutation provision at death and there is an abundance of cash that exceeds the Medicaid payoff, payment will be distributed subject to terms of the trust.
A number of structured settlement annuity issuers, including Berkshire Hathaway Life Insurnace Company of Nebraska, First Berkshire Hathaway Life Insurance Company and Independent Life Insurance Company will allow a beneficiary designation that allows a partial commutation based on a notice of shortfall in the trust assets to satisfy amounts owed to Medicaid and/or Estate taxes. The balance would go to named beneficiary or beneficiaries, or the Estate (if no beneficiary has been named, or if a beneficiary has named, but no contingent beneficiary has been named at the time of the annuitant's death).
If you are selling (or have sold) part of a lump sum structured settlement payment to a settlement purchaser such as CrowFly, and the annuity issuer will not split annuity payments, payments will be subject to a payment servicing arrangement. It's really important that anyone entering into a structured settlement factoring transaction where payments are being serviced and where the seller is only doing a partial sale, to name and confirm in writing both a primary and contingent beneficiary.
4structures.com LLC has a number of resources about the wisdom of naming beneficiaries on structured settlements
At the end of a mediation, the mediator conveys a settlement offer from the Insurer or insurer's representative on behalf of its insured, the Defendant, with a fixed dollar amount that supposedly requires, for no rhyme or reason, that a nominal amount be structured "any way the plaintiff wants it". Let's say that number is $100,000. Neither the insurer, nor the insurer's representative, has conveyed any specific structured settlement proposals or illustrations as part of its offer and no specific periodic payments were ever discussed.
Questions
Can an offer that simply requires the Plaintiff to structure a fixed amount of money "any way that he/she or they want it" be enforced?
If so, how would you enforce the structured settlement when the terms of the structured settlement are not specified?
Elements of a Structured Settlement (assume personal injury case for this example)
Promise to Make Periodic Payments as Partial Consideration for a Release of all Claims
Qualified Assignment, Substitution of Obligors, pursuant to IRC 130. Defendant or its Insurer pays money to Assignment Company which then
Purchases Annuity Contract as Qualified Funding Asset from which payments may be made directly to the Plaintiff, Plaintiff's trust, or Medicare Set Aside account.
The Nature of Settlement Negotiations
The nature of negotiations means that the Defendant or insurer is free to make a settlement offer in any manner they wish, to which the plaintiff is free to accept or reject and/or counter. The Plaintiff can demand anything they want in any form they want, to which the Defendant or insurer can accept, reject and/or counter.
A thoughtful, detailed and transparent offer that shows that an effort has been made to understand the plaintiff's situation is an effort to address actual needs is an engaging path on which to build. Vague offers, such as an unspecified structure with simply a requirement to allocate a certain sum of money could lead to credibility problems, in my humble opinion. There are better ways of "getting to yes"
If the plaintiff has really short-term needs, those needs, if structured, might even produce a negative rate of return in the current environment. Not only is that bad for the plaintiff now, but if the plaintiff were to subsequently seek to sell structured settlement payment rights in the secondary market to address the short-term needs and a judge approves, it would exacerbate the negative return due to pennies on the dollar erosion from factoring payments. Not very good for them and not very good PR for the stakeholders.
While the plaintiff can certainly structure it out for a longer period of time to create a positive return, it may not be "any way he/she/they) want"
Then there is the issue of the casualty company approved list of annuity issuers. If "any way he/she/they want" has restrictions that should be disclosed up front
Structured settlement payments should not be late, "for their very important date", with you.
If payments are sent by mail, the annuity issuer will usually mail the payments to your address of record 5-10 days prior to the due date. It is important and a requirement of most settlement agreements that the structured settlement payee is responsible for notifying the annuity issuer or qualified assignment company of any change of address. If your structured settlement was set up when you were a child and you've moved, be sure to confirm that the annuity issuer or assignee has your current mailing address.
If payments are made by direct deposit, which is the preferred and most reliable method of receiving your structured settlement payments, your payments are made directly into your bank account on record on the date payments are due. The funds should be available on the date of deposit, depending on your bank's polices.
If you have previously sold some of your structured settlement payments and your payments are being serviced (subject to a servicing agreement) then you may need to contact the servicing company to make such changes. If you have multiple structured settlement annuities review the paperwork associated with your structured settlement transfer carefully. It is possible that you sold payments from one annuity and not the other so more than one of the above options may apply.
4structures.com LLC has released an introductory video to iStructure, the first uncapped index linked structured settlement annuity, an option for plaintiffs and attorneys with an intermediate or long-term time horizon.
Independent Insurance Group, LLC ("Independent Group") announced December 15, 2021 that its life and annuity subsidiary, Independent Life Insurance Company ("Independent Life") is introducing iStructure, the first uncapped index-linked structured settlement annuity. iStructure, which provides the opportunity for growth in payout amounts with the same flexibility and tax benefits of traditional structured settlements.
The annuity will be linked to the Franklin BofA World Index™, powered by the quantitative insights of Franklin Templeton and Bank of America, with the objective of capturing long-term growth by systematically investing in a volatility-controlled equity index of companies around the world with the potential for high profitability."
"With iStructure, our clients will receive higher future payments when the index returns are positive but will not lose anything when the index returns are negative," said James Atkins, FSA, MAAA, Chief Executive Officer of Independent Life. "We are excited to give our clients the opportunity to put more money in their pockets, with a combination of uncapped potential plus downside protection via minimum guaranteed payments."
"In designing this customized index for Independent Life, we used our proprietary equity factor research that points to the efficacy in selecting stocks that promote quality, value and momentum," said Doug Sue, Vice President and Senior Client Portfolio Manager at Franklin Templeton Investment Solutions. "As we believe strongly in the value of taking a diversified approach to equity investing, we are leveraging an investment universe that encompasses both U.S. and international securities."
"We are delighted to partner with Franklin Templeton on this innovative and creative index," said Gabriel Lettieri, Director at Bank of America. "Bank of America's proprietary intraday risk management strategy was deployed inside the index with the goal of achieving consistent returns plus attractive upside potential."
iStructure can be used for a variety of situations including personal injury cases, structured attorney fees, structured installment sales and taxable settlements. The benefits for clients include tax-free and tax-efficient income, the potential for increasing income, customizable payment options, market-downside protection, and protection against inflation.
ABOUT INDEPENDENT GROUP
Founded by insurance industry experts, Independent Group is a forward-thinking enterprise whose complementary product and service companies improve outcomes for all structured settlement stakeholders. Independent Life, its underwriting division, is dedicated to providing structured settlement solutions, including annuities, to serve the needs of injured parties, their families and advocates. With its unique profile and ambitious vision for the structured settlement industry, Independent Life has attracted world-class partners: LKCM Headwater Investments, KKR's Kilter Finance and Hannover Re USA support Independent Life's growth initiatives. For more on what makes Independent Life different, visit www.independent.life.
ABOUT FRANKLIN TEMPLETON
Franklin Resources, Inc. [NYSE:BEN] is a global investment management organization with subsidiaries operating as Franklin Templeton and serving clients in over 165 countries. Franklin Templeton's mission is to help clients achieve better outcomes through investment management expertise, wealth management and technology solutions. Through its specialist investment managers, the company brings extensive capabilities in equity, fixed income, multi-asset solutions and alternatives. With offices in more than 30 countries and approximately 1,300 investment professionals, the California-based company has over 70 years of investment experience and over $1.5 trillion in assets under management as of October 31, 2021. For more information, please visit franklinresources.com.
ABOUT FRANKLIN BoA World Index™ The Franklin BofA World Index™ (the "Index") has been created and is owned by BofA Securities, Inc. and its affiliates (collectively, "BofAS") based in part on an index licensed to BofAS from Franklin Templeton Companies, LLC ("Franklin") (collectively with BofAS, the "Licensors"). Any product referencing the Index is not sponsored, operated, endorsed, sold or promoted by the Licensors. Licensors' indices and related information, the name of the Licensors, and related trademarks, may not be copied, used, or distributed without their prior written approval. LICENSORS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE INDEX, ANY RELATED INFORMATION, THE TRADEMARKS, OR THE PRODUCT(S) (INCLUDING WITHOUT LIMITATION, THEIR QUALITY, ACCURACY, SUITABILITY AND/OR COMPLETENESS).
There are risks relating to the Index discussed herein. Please request a copy of the applicable Index rulebook for risk disclosure.
The Department of Justice published its most recent list of Annuity Brokers on December 2, 2021.
Section 11015(b) of the 21st Century Department of Justice Appropriations Authorization Act provides that “[i]n any structured settlement that is not negotiated exclusively through the Civil Division of the Department of Justice, the United States Attorney (or his designee) involved in any settlement negotiations shall have the exclusive authority to select an annuity broker from the list of such brokers established by the Attorney General, provided that all documents related to any settlement comply with Department of Justice requirements.”
The appearance of an annuity broker’s name on the list does not signify that the annuity broker actually meets the minimum qualifications or is otherwise competent to provide structured settlement brokerage services to the United States. Title 28 C.F.R. § 50.24 provides the following disclaimers:
(c) Disclaimers.
(1) The inclusion of an annuity broker on the list signifies only that the individual declared under penalty of perjury that he or she meets the minimum qualifications required by the Attorney General for providing annuity brokerage services in connection with structured settlements entered into by the United States. Because the decision to include an individual annuity broker on the list is based solely and exclusively on the Declaration submitted by the annuity broker, the appearance of an annuity broker’s name on the list does not signify that the annuity broker actually meets those minimum qualifications or is otherwise competent to provide structured settlement brokerage services to the United States. No preferential consideration will be given to an annuity broker appearing on the list except to the extent that United States Attorneys utilize the list pursuant to section 11015(b) of Public Law 107–273.
(2) By submitting a Declaration to the Department of Justice, the individual annuity broker agrees that the Declaration and the list each may be made public in its entirety, and the annuity broker expressly consents to such release and disclosure of the Declaration and list.
Accordingly, any broker being considered for selection should be required to verify at the time of selection that he or she meets the minimum qualifications set forth in 28 C.F.R. §50.24(a) and is otherwise competent to provide structured settlement brokerage services to the United States.
A structured settlement annuity is insurance product that (1) can provide multiple payment streams, as well as (2) different types of structured settlement payments, in a single annuity contract that can be customized to a person's needs.
A structured settlement annuity is often (but not exclusively) used as a "qualified funding asset", as the latter term is defined by IRC 130(d).
What is a Qualified funding Asset?
For purposes of IRC 130(d), the term “qualified funding asset" means any annuity contract issued by a company licensed to do business as an insurance company under the laws of any State, or any obligation of the United States, if—
(1) such annuity contract or obligation is used by the assignee to fund periodic payments under any qualified assignment,
(2) the periods of the payments under the annuity contract or obligation are reasonably related to the periodic payments under the qualified assignment, and the amount of any such payment under the contract or obligation does not exceed the periodic payment to which it relates,
(3) such annuity contract or obligation is designated by the taxpayer (in such manner as the Secretary shall by regulations prescribe) as being taken into account under this section with respect to such qualified assignment, and
(4) such annuity contract or obligation is purchased by the taxpayer not more than 60 days before the date of the qualified assignment and not later than 60 days after the date of such assignment.
It should be noted that the term "structured settlement annuity" does not appear in IRC 130(d).
Examples of Where a Structured Settlement Annuity Would Not Be Used as a Qualified Funding Asset
A structured settlement annuity can be used in cases involving taxable damages. A non-qualified assignment is used in such cases (or parts of cases) involving such damages.
Examples of What is NOT a Structured Settlement Annuity
Acquired structured settlement payment rights (the rights to someone else's structured settlement). See the National Association of Insurance Commissioners' statutory issue paper No. 160, issued April 6, 2019. Plaintiffs, Counsel, Guardians Ad Litem, Probate and Surrogate judges and investors, should be leery of any attempt by a settlement planner or financial adviser to pass off the direct or indirect acquisition of factored structured settlement payment streams as a structured settlement annuity. Such unregulated products carry higher risks than structured settlement annuities and may not have the same statutory protections.
A retail single premium immediate annuity is an annuity, but it is not a structured settlement annuity
A retail single premium deferred annuity is an annuity, but it is not a structured settlement annuity
A retail deferred index annuity is an annuity, but it is not a structured settlement annuity
A retail fixed index annuity is an annuity, but it is not a structured settlement annuity
None of these becomes a structured settlement annuity just because it is owned by an independent assignment company.
What Do Structured Settlement Annuity Issuers Say?
A quick survey of insurance companies underwriting structured settlement annuities shows that about half of them specifically identify with structured settlements. Not a single one would sell a structured settlement annuity to an independent assignment company.
1. Prudential Insurance Company of America
Single Premium Structured Settlement Annuity Certificate
2. Pacific Life Insurance Company/ Pacific Life and Annuity Company
Single Premium Settlement Annuity
3. USAA Life Insurance Company
Single Premium Immediate Annuity (For Use as a Funding Asset in Structured Settlement Assignments)
4. New York Life Insurance Company
Lists Plan as Structured Settlement on contract
Others do not.
Would any structured settlement annuity issuer sell a structured settlement annuity to an independent assignment company?
None of the structured settlement annuity issuers that we canvassed for this post on November 2, 2021 would sell a structured settlement annuity to an independent assignment company.
Assignment Fees
Qualified Assignment fees will not be over $750 for a true structured settlement annuity
You may find some independent assignment companies charging higher fees, perhaps even asset based qualified assignment fees that are a significant multiples of what the insurance company subsidiary qualified assignment companies charge.
There are two types of assignments that may be used when a structured settlement is established, a qualified assignment and a non-qualified assignment
An assignment, whether qualified or non-qualified, is the second step in most structured settlements. It is the step that occurs after the parties have agreed on a schedule of future periodic payments. While structured settlements are generally supported by Defendants and Insurers who want to do the right thing, few Defendants or insurers will be receptive to a long tail contingent liability for the duration a structured settlement.
A novation is an agreement made between two contracting parties to allow for the substitution of a new party for an existing one.The assignment is a substitution of obligors from the Defendant, Insurance Company or Qualified Settlement Fund to the assignment company. The assignment company receives a certain amount of cash for taking on the assignment of future periodic payment obligations, deducts its assignment fee and then buys the funding instrument. In a qualified assignment these are called qualified funding assets and are mostly structured settlement annuities, but also could be United States Treasury obligations. Market based structured settlements are generally done by way of a non qualified assignment.
What are typical assignment fees with structured settlements?
Qualified Assignment fees from assignment companies related to structured settlement annuity issuers range from $0-750
Non qualified assignment fees typically range from $500-$1,400, with higher fees for independent assignment companies, not affiliated with insurance companies.
What consumers need to watch out for
Watch out for hidden excessive assignment fees
Asset based qualified and non qualified assignment fees can run upwards $10,000 on a $1,000,000 case. That's a pretty heavy cost to bear. It's way more than a normal assignment fee. The fees may not be disclosed and simply built in to the illustrated cost of the structure. What you, or your lawyers may encounter is obfuscation by multiple layers of complexity. That's not good.
Let's say for example that you worked with a settlement planner who recommends a MassMutual annuity for a asset. But unknown to the plaintiff or their attorney, MassMutual Life Insurance Company hasn't written structured settlement annuities for about fifteen years and they have no assignment company anymore. So a wily settlement planner may use an independent assignment company to take on the periodic payment obligation from the Defendant, Insurer or qualified settlement fund. The independent assignment company may charge an asset based assignment fee, The settlement planner makes a commission on the sale of the annuity and the client gets walloped with the outsize assignment fee. It gets even more squirrely if the settlement planner has a direct or indirect ownership interest in the assignment company. Like the chorus of the 2002 Grammy Award winner from Santana featuring Michelle Branch "a little bit a this, a little bit of that", but it ain't no "game of love" baby.
If you have a structured settlement that was established in the 1980s or 1990s,or you set one up as the guardian for your children, protect yourself and your loved ones from charlatans peddling structured settlement swaps.
Structured settlement swaps
Some structured settlement buyers are encouraging structured settlement swaps. Structured settlement swaps are a term to describe a two step shady sale pitch to first hustle people to sell their long term structured settlements for pennies on the dollar and then suggesting that the poor annuitant use their fractionated "wealth" to, among other things, factored structured settlement payments from other people who've also sold their structured settlement payments for pennies on the dollar.
Structured Settlement Swaps? Never mind the bollocks
Don't fall for this questionable strategy!
Keep these points in mind if you encounter a structured settlement factoring intermediary, financial adviser or "settlement planner" coming at you with this approach.
1. Misdirection concerning the rate of return of your structured settlement
The structured settlement payment buyers may try to unsettle people with long term structured settlements established in the 1980s or 1990s, by speaking of low interest rates. In my opinion it's a misdirection scam. Here's why.
The rate of return on your structured settlement is the Internal Rate of Return using the cost when the structured settlement was established.
If you have a structured settlement established in the 1980s from a large highly rated insurer, you are getting a safe rate of return on on the original investment that may be better than the average rate of return in the S&P500 for the last 15 years. On 5, 1987 the 30 year Treasury was paying a 9.96% yield. On September 3, 1990 it was 8.92%. Much is made of stock market returns for the last 3 years. However the sales pitch may not take into account tolerance or lack of tolerance for the inherent volatility due to real human emotion that comes with investing in volatile markets. Consider the following statistics compiled by Putnam investments:
12/31/05-12/31/20 9.88%
Missed 10 best days 4.31%
Missed 20 best days 0.88%
Missed 30 best days -1.68%
Missed 40 best days -4.26%
2. Swapping a Stable Value 1980s/1990s Tax-Free Structured Settlement for Taxable Factored Structured Settlement Payments Doesn't Make Sense
If you are receiving payments from a structured settlement that arose from a personal physical injury or wrongful death, the periodic payments are income tax free. While the sale of structured settlement payment rights would not be taxable, interest on the proceeds from a factored structured settlement investment would be taxable
3. Structured settlements are straight forward. Factored Structured Settlements Are Not. The wrong vendor can be financially lethal
Despite often being falsely marketed as annuities...
There have been legal cases where investors in factored structured settlement payments have lost all their money in such investments.
At the time of publication, there are ongoing legal cases in Pennsylvania, Maryland, New York, Virginia and Arizona where the money of investors in factored structured settlement payment rights may be in jeopardy and investors may have incurred legal expenses that have eroded the value of their investment with no end in sight.
Be wary of exotic investments such as purported advances of athlete contracts or agents of an or celebrity packaged as structured settlements or annuities.
In conclusion, you would be wise to heed a warning of sorts from the 1980s " Never Mind The Bollocks!"
"You have a structured settlement and need cash now!" says Chegg, an American education technology company based in Santa Clara, California. "Suppose you call J.G. Wentworth to sell your structured settlement, which is an annuity paying you $80,000 per year for the next 22 years. If the discount rate is 5%, what do you expect the annuity is worth if you sell it today?" asks Chegg.
Chegg gives you 4 choices, neither of which is the correct answer in the real world
A. $1,053,040
B. $1,025,680
C. $1,760,000
D. $3,080,400.
Why is the Chegg structured settlement question a trick question?
A structured settlement is not an annuity.
A structured settlement is a form of settlement in which some part of the consideration for the release of liability is comprised of future periodic payments.
A structured settlement may be funded with an annuity, which is a contract issued by a life insurance company.
An annuity is a " qualified funding asset", which could neither be owned by any of the tens of thousands of students that Chegg poses the question to, nor any plaintiff who is receiving such structured settlement payments in the real world.
Neither J.G Wentworth, nor any company like J.G. Wentworth could ever buy a structured settlement annuity in the real world, unless it were a defendant self funding a settlement obligation to a plaintiff.
Price elasticity comes into play as well as does the cost of money, which varies vendor to vendor.
The question asks for worth, not present value. Worth may hinge on the amount of market competition encountered by J.G. Wentworth, because a prospective seller has shopped around. A Consumer Affairs review of JG Wentworth retrieved on September 21, 2021 claims their fees range from 9-15%
Therefore the purported "expert answer" offered by Chegg, is not correct.
Chegg's trick question on structured settlements. Their " expert" answer" is wrong on many levels
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 for 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 January 23, 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.
STRUCTURED SETTLEMENTS 4REAL® Blog Is a Popular Source of Structured Settlement News and Information, Settlement Planning News, Tax Deferral and Deferred Income Planning Solutions,
with a stable readership that seeks credible structured settlement information 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 the structured settlement blog in 2005 and for over 17 years it has been a leading source for critical commentary. The John Darer authored blog has been among the most prolific, regularly providing fresh structured settlement, settlement planning, litigation recovery management content and commentary. John Darer®, CLU ChFC MSSC CeFT® RSP CLTC, President of Stamford, CT based 4structures.com, LLC, is an experienced New York City area structured settlement expert, structured settlement broker, Certified Financial Transitionist, and Registered Settlement Planner.
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 tort 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.
WHAT YOU GET here is the straight stuff with a touch of irreverence and humor. We hope you enjoy and find the content to be helpful.
Subscribe to the structured settlement blog feed, or a specific category feed through your blog reader, or through the Feedburner icon on this page. Followers of JDDarer™ on Twitter may also receive select content.
If you would like to speak with John he can be reached at (888)325-8640
Thank you for reading!
Last updated October 10, 2022
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...
"Impressive Blog" -Counsel to Am Law 200 ranked International Law Firm July 22, 2020
"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 2022. 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.
John Darer® is a Registered Trademark of John Darer, Stamford CT. Reg. 4674907 All rights reserved
4structures® Reg. 4640532 and 4structures.com® Reg. 4640531 are Registered Trademarks of 4structures.com LLC. All rights reserved
Structured Settlements 4Real® is a Registered trademark of 4structures.com LLC Reg.4345946 All rights reserved.
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!
Learn more about structured settlements by reading structured settlement expert John Darer's blog
Researching Structured Settlements? Check (1) in Archived Blog Posts (above left); (2) use the Google search box (below); (3) visit the 4structures® website at https://www.4structures.com, (4) 4structures® YouTube Channel by clicking the above link, or (5) call settlement expert John Darer® at 888-325-8640, toll-free in the USA or 646-849-1588 in New York City
Subscribe to a Specific Category Feed for a subject you like or the Whole Blog
SUBSCRIBE to the dedicated RSS feed for the Structured.Settlements 4Real® blog category that interests you. For example, if you are just interested in reading about "New York Structured Settlements" you can follow that feed. Just click on the category title tag at the bottom of a post you like and then the little RSS symbol on the resulting page.You can also subscribe to the whole blog
The John Darer® authored Structured Settlements 4Real® blog is the most prolific structured settlement blogger with over 5,200 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.
FactCheck.org nonprofit "consumer advocate" for voters that Aims to reduce the level of deception and confusion in U.S. politics. They monitor the factual accuracy of what is said by major U.S. political players in the form of TV ads, debates, speeches, interviews and news releases.
NYC 9-11 Health The World Trade Center Health Registry is now the largest registry in U.S. history to track the health effects of a disaster. The federally funded program is information central for first responders and others with health issues from 9-11
Comments and Trackback Policy