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

CA Settlement Planner's Scary Declaration Supporting Convoluted QSF and "In Force Annuities" Pitch

by John Darer CLU ChFC MSSC CeFT RSP CLTC

A deep dive into just how settlement planners have marketed other people's structured settlement payments as investments, to trial lawyers, their injured clients, conservators, trustees and the Courts, has revealed some pretty scary stuff that should have given judges, lawyers, investors , conservators and guardians ad litem, in my opinion.

California Settlement Planner Declared to the Court that Investing in " In Force" Annuities Would Not Change the Funding Asset

Some settlement planners pitch alternative investments to structured settlements but attempt to characterize them as annuities, perhaps because it is a term familiar to people and the all important judge who must approve a minor's or incompetent's settlement. However this is highly misleading, false and apes the language used by certain factoring industry predators to peddle such investments. 

An internet search uncovered a California settlement planner's Declaration in Support of Petition for Authority to Purchase In-Force Annuities to the Superior Court of the State of California was submitted by a San Francisco law firm representing the Conservator of a disabled person, declared, under penalty of perjury,  that "the best alternative I found was not to change the funding asset, but to purchase that asset at a significant discount in the form of '"in-force" annuities". Make no mistake, what the settlement planner declared to the court as annuities are not annuities. 

The California settlement planner included a fairly in depth analysis that purports to show, under penalty of perjury, that purportedly "not changing the funding asset" will save money over using a newly issued structured settlement annuities. 

Compared to a structured settlement, is "not changing the funding asset" a true statement?

It is notable and significant to observe that the California settlement planner chose to caption the word "in-force" and not annuities in the under penalty of perjury declaration. You will see why that is significant as you read further. The settlement planner repeats this emphasis throughout the settlement planner's under penalty of perjury declaration submitted to the California Superior Court.

The California settlement planner went on to declare, under penalty of perjury:

"In-force" annuities are the byproduct of a structured settlement factoring transaction which is the court ordered transfer of existing future structured settlement payments ( or, more accurately, rights to receive the future periodic structured settlement payments) to a purchaser (or investor). These transactions occur when people who currently receive structured settlement payments find themselves in a position of hardship. The hardship reasons are varied, but include unforeseen medical expenses, the need for improved housing or transportation, and education expenses. The seller must lack viable alternatives to meet these financial needs before a transfer will be authorized by a court.

So the settlement planner undermined the inaccuracy of his under penalty of perjury declaration with the aforementioned follow up statement.   There is a change in the funding asset!  Let's examine why.

Factored Structured Settlement Payments  (Acquired or Assigned Structured Settlement Payment Rights) Are Not Annuities

The California settlement planner was at the time of his declaration, and still is at time of posting, a licensed insurance agent in the State of California.  Per California Insurance Code 10509.913 (a) “Annuity” means an annuity that is an insurance product under California law that is individually solicited, regardless of whether or not the product is classified as an individual or group annuity. This definition has been in effect since 2011, preceding the date of the California settlement planner's declaration under penalty of perjury.

Factored structured settlement payment streams are not annuities or insurance products.  If you invest in one of these financial  instruments, you are not buying an insurance product, you are buying the rights to someone else's structured settlement payments. It's possible that you are out on a limb of an extended branch of a multi-transaction, transaction chain. Regardless of the step, they are often misleadingly marketed to the public as annuities by factoring companies, tertiary market companies and certain settlement planners. On April 6, 2019, the National Association of Insurance Commissioners finalized its Statutory Issue Paper No. 160 which expressly provides that acquired structured settlement income streams are neither annuities or insurance products. 

[ Source: NAIC Statutory Issue Paper No. 160 p6 Section 6, footnote which states clearly  " This guidance is specific to acquired structured settlement income streams (legal right to receive future payments from a structured settlement) and does not capture accounting and reporting guidance for the acquisition of any insurance product (e.g., life settlement, annuities, etc." ]

Upon information and belief, the California settlement planner often sourced factored structured settlement payment streams from Oregon based  Somerset.  In November 2016, as part of its announcement suspending sales of the structured settlement derivatives, Somerset said on its website secondarymarketannuties.com:

"When you purchase an SMA that is a Factored Structured Settlement, (FSS) you are purchasing the rights to receive payments from a structured settlement that are funded by an annuity rather than the annuity itself. The entity that issues the annuity (and therefore responsible to make such payments) is usually a highly-rated insurance company. It is important to understand that while the payments are funded by annuities, FSS’s are not annuities"  [emphasis added].  

The Life and Health Insurance Guaranty Association Model Act introduced in 2018, states unequivocally at Section 3 A (5)(c)  This Act shall not provide coverage to a person who acquires rights to receive payments through a structured settlement factoring transaction as defined in IRC 26 USC 5891(c)(3)(A), regardless of whether the transaction occurred before or after such section became effective. The drafting note to the 2018 amendments describes the rationale as follows:

The exclusion from coverage in Section 3A(5)(c) of any person who has purchased from an original structured settlement annuity payee his
or her rights to receive structured settlement annuity benefits and the exclusion of such benefits from covered benefits under Section 3B(2)(n) recognize that the protections afforded by guaranty associations are intended for insurance consumers, such as the original payees of structured settlement annuities. Guaranty association protection does not extend to sophisticated investors who acquire rights to receive structured settlement annuity benefits in the secondary market. These exclusions, however, do not apply to structured settlement annuity benefits that are transferred to children, present or former spouses or other dependents as part of domestic relations settlements or orders, or to other transferees (including donees) who acquire rights to receive structured settlement annuity benefits without providing any monetary consideration. Thus, Section 3A(5)(c) and Section 3B(2)(n) clarify that guaranty association coverage protects structured settlement annuity benefits to which the original payee and his or her family members retain the rights.

And wouldn't it get even more murky if you are acquiring a reassigned structured settlement payment rights down the transaction chain from the originating structured settlement factoring company to another investor, or from an assigned investor to other investors? 

Claim "The Only Way to Create a Tax Free Periodic Payment Obligation Funded by "In-force" Annuities is through a 468B Qualified Settlement Fund"

"The only feasible method to create a tax-free periodic payment obligation funded by "in-force" annuities is through the use of a 468B Qualified Settlement Fund (QSF)" declared the California settlement planner under penalty of perjury to the California Superior Court. 

(1) The Qualified Funding Asset Question

Critical to the establishment of a structured settlement is a promise to pay future periodic payments in exchange for a release. The future periodic payment obligation is then typically assigned to a qualified assignment company, subject to IRC 130(c) along with funding for the annuity and an assignment fee which are paid to the qualified assignment company. The assignment company takes on the obligations and buys a qualified funding asset, which as set forth in IRC 130(d) can be an annuity or obligations of the United States. Furthermore "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

It's seems obvious that a factored structured settlement is not an annuity or a United States Treasury Bond and as a consequence is not a qualified funding asset in the plain reading of IRC 130(d). When structured settlement payment rights are acquired it is only the rights that are transferred not the annuity itself.  But it may not seem obvious to the untrained, unwary or those not paying close enough attention if the salesperson is maintaining that it is an annuity, under penalty of perjury. The military have an acronym for it, "SNAFU"

(2) The Qualified Settlement Fund "Shtick"

A qualified settlement fund has been referred to by sales people and others as a "tax-free way station", " a place to "'park' money", by the septic term, " a temporary holding tank", and on a structured settlement annuity company blog  "a safe harbor for claimants with unlimited time to resolve their own issues before any form of distribution".  

I raise this because in the settlement planner's declaration, that he stated to the California Superior Court that " in order to locate (and purchase) the best " in force" annuities in the most efficient manner possible", he "would recommend that the QSF Administrator be authorized to purchase "in force" annuities...". 

The settlement planner's declaration amplified, recommended to the Court that " in order to locate (and purchase) the best " in force" annuities in the most efficient manner possible", he "would recommend that the QSF Administrator be authorized to purchase "in force" annuities that meet certain criteria:

A.  The annuities are issued from a life company with a A or better rating from A.M. Best Company 

B. The overall annuities are allocated over a minimum of 3 life companies with no more than $1,000,000 per life company;
C. The overall annuities will have a weighted average duration between 10-20 years; and

D. The effective rate of return for the overall purchase of in-force annuities must meet or exceed 4.25%

This part of the settlement planner's declaration conflicts with his statement earlier in the declaration, an admission that what he calls " in force" annuities are a byproduct of a structured settlement factoring transaction.

• Factored structured settlements are not annuities
• Factored structured settlements are not overall annuities
• The settlement planner completely omitted the inherent and sometimes significant transactional risk in the purchase of factored structured settlement payment streams.
• The settlement planner recommends to the court that the QSF Administrator be authorized to buy the factored structured settlement payment streams. How does that impact constructive receipt or economic benefit?

According to the under perjury declaration by the California Settlement Planner, the QSF Administrator was to be authorized to purchase "in force" annuities... which would then be "reinvested" in the claimant's Special Needs Trust at an assumed internal rate of return of 2%.

The qualified settlement fund appears to involve a single disabled individual. 

So as articulated in the declaration, the proposed QSF, under this convoluted concept, would act as an intermediary under the auspices of the California Superior Court to buy and hold factored structured settlement payment streams that are labeled annuities but are not annuities?  Exactly how would those payments be tax-free as damages?

When a tradition a structured settlement is established in a personal injury settlement, the transaction begins with a promise to pay in a release.  This is critical. The promise to pay could be made by the Defendant, the Defendant's Insurer, or in the case of a QSF, the QSF Trustee/Administrator and future periodic payments represent damages that are exempt under IRC 104(a)(2).

Step 2 in establishing a traditional structured settlement would be a qualified assignment, whereby the qualified assignment company assumes the obligation to pay from the defendant, insurer or QSF and purchases a qualified funding asset.  Where the damages are taxable, or where they are tax exempt but do not qualify under IRC 130 (such a wrongful imprisonment), a non-qualified assignment is used. Many non-qualified assignment companies are offshore, in Barbados or Ireland. The few that are in the domestic U.S. rely on the use of the immediate annuity exclusion in IRC 72(u), or in two instances, the use of a funding agreement issued by an insurance company, or periodic payment reinsurance where the ceding entity is an insurance company.

Step 3 traditionally involves the purchase of the funding asset by the assignment company to fund its obligation to pay (in this case would be to the Special Needs Trust). Most often the asset is a traditional structured settlement annuity. A real annuity, not a factored payment structured settlement payment stream mislabeled as one.

If there is no assignment, and none is mentioned in the declaration to the Court under penalty of perjury,

1. Then is one to presume that the QSF is to stay open until the payment obligation is exhausted?  Robert W. Wood, author of the treatise Qualified Settlement Funds and Section 468N opined on June 23, 2014 that (1) QSFs may sometimes be used inappropriately to defer receipt of monies for protracted periods; (2) It seems more likely that the IRS would establish some sort of anti abuse rule addressing the inappropriate use of QSFs to defer income. (3) To be cautious one should try to establish QSFs where there are multiple claimants 
2. If so, the continued viability of the QSF administrator is and should be an important consideration for the lawyer, judge, guardian or fiduciary. 
3. Then there is the tax issue related to interest income earned by the QSF while holding the factored structured settlement payment streams. According to 26 § 1.468B-2 Taxation of qualified settlement funds and related administrative requirements, a qualified settlement fund is a United States person and is subject to tax on its modified gross income for any taxable year at a rate equal to the maximum rate in effect for that taxable year under section 1(e).

Why Weren't Transaction Risks of Factored Structured Settlement Payment Streams Mentioned?

The Victims of Terrorism Tax Relief Act of 2001, the now 50 state Structured Settlement Protection Acts and subsequent reforms of those acts were a reaction to market conduct. It could be reasonably foreseen that there could be litigation and there has been.

It's a Thing

The California's settlement planner's believed source for factored structured settlement payment streams had investors in the Access Funding lead paint cases where payments were suspended pending the outcome of litigation. Investors in factored payment streams originated by Pinnacle Capital and  Sempra Finance face heavy losses in the notorious Barber case where a  minor's structured settlement was pillaged starting when he was only 10 year sold. One investor alone may lose in excess of $500,000. In the Wall case, investors lost their entire investment of $153,000 plus legal fees, plus the legal fees of their adversary, Altium Group.

Conclusion

In closing, I recognize that some of the support for the positions taken here post date the date of the California Settlement Planner's declaration, that in of itself is not exculpatory.  In 2012, the year the Declaration was submitted to the California Superior Court in the county of San Francisco. In 2012 I wrote "Before recycled structured settlement payment rights become the "Tupperware" of the financial services industry,  it is worth making a few points for individual investors" having observed the following recounting by Patrick Hindert from the Evolve QSF Symposium Memphis TN September 27-28 2012.

A Periodic Payment Plan funded with "recycled" structured settlement payment rights, providing promises to pay periodic payments acquired in the secondary market have:

• No tax authority
• No regulatory oversight
• No credit/performance enhancements
• No state ‘guarantee fund’ protection
• No liquidity
• Many risks associated with enforcing and monitoring receivables acquired through structured settlement payment rights ‘transfers’
• An unrated (‘naked’) promise by delegee/obligor (i.e. ‘general unsecured creditor’)
• Non-transferable

The California settlement planner reads this blog.  In January 11, 2012, 4 months before the date of the California settlement planner's declaration, I published Secondary Market for Structured Settlement Payments: Labeling is Questioned.

I encourage lawyers, settlement planners, judges , guardians ad litem and fiduciaries to become fully informed about the risks of investing in factored structured settlement payments streams.  Raise a jaundiced eyebrow when you see a salesman in the cloak of a settlement planner try to misdirect you into believing you are investing/buying an annuity. The fact that they are not annuities is very important as is an understanding of the transactional risks. There's clearly more to it than meets the eye. There are probably more than a few plaintiffs who have been sold these instruments and judges who have approved them, without having had complete and full disclosure of all the risks. 

 

 

 

 

 

 

Qualified Settlement Fund | "A Tax Free Way Station" for Attorney Fees?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

What is a Qualified Settlement Fund?

A Qualified Settlement Fund is a fund, account or trust authorized by Treasury Regulation 1.468B-1(c). Under the regulation, each QSF must:

1. Be established pursuant to an order of, or is approved by, the United States, any state (including the District of Columbia), territory, possession, or political subdivision thereof, or any agency or instrumentality (including a court of law) of any of the foregoing and is subject to the continuing jurisdiction of that governmental authority;
   
2. It is established to resolve or satisfy one or more contested or uncontested claims that have resulted or may result from an event (or related series of events) that has occurred and that has given rise to at least one claim asserting liability; and
3. The fund, account, or trust is a trust under applicable state law, or its assets are otherwise segregated from other assets of the transferor (and related persons).

A Tax-Free Way Station?

It has been said that "A qualified settlement funds are a great tool in litigation to 'park' money or create a tax free way station", which conjures up that at least quarter of a century old dilemma once pondered by 1990s slackers Wayne and Garth.  [Jeopardy question for readers born after 1985, "What is Wayne's World?"]  #mikemyersbeforeaustinpowers

According to Chris Lordan CPA, whose Minnesota firm administers qualified settlement funds,  "an independent, qualified trustee, often an accountant or a lawyer, is appointed to handle the trust. The trustee manages the funds, handles ongoing claim resolution, and works with the plaintiffs to determine the trust’s payout structure.The trustee also assures strict compliance with 468B and other regulations: without constant and careful oversight, the benefits of the qualified settlement fund may not be fully realized or even disallowed".

If it's a trust under state law, wouldn't any income and gains generated  by the investment of the assets in the trust be subject to tax on a state or federal level? Even money markets aren't paying zero these days.

As of October 31, 2018

CIBC Bank USA 2.16% APY

HSBC  2.01% APY

Goldman Sachs Marcus 2.05%

Source:  Bestrates.com

One of the duties of a QSF administrator is to file tax returns for the QSF. For a New York QSF, this might include a Federal return, as well as fiduciary tax forms for New York state and other applicable taxing authorities.

So it seems a bit far fetched to call a qualified settlement fund "a tax free way station", in my opinion.  But that's just me. How about § 1.468B-2 Taxation of qualified settlement funds and related administrative requirements?  No way?  Way.

 

Is Comprehensive Settlement Planning "Casino Buffet" Needed When You Want a Slice of Pizza?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

If you're in New York City looking for a slice of pizza and a cold brew do you need to go to a casino buffet?

Of course not.   Are you really going to wait on line for an hour and pay $40-$60 for all you can eat and thousands of choices, when you can find a pizza joint on just about every corner and pay $2 a slice for your guilty pleasure because (1) that is what you want;  (2) that is what you think will be satisfying;  (3) let's face it, New York makes some great pizza. So does New Haven CT!

While I am a believer in comprehensive settlement planning, I also think that my colleagues in the settlement industry must be mindful of creating and pushing a figurative "casino buffet" when all someone wants or needs is a savory slice of New York goodness.

Be mindful that when someone is in a life transition, the overwhelm wire can be tripped easily.

Of course if you apply a "fiduciary standard" to every situation, in this metaphor do you have a duty to disclose all the side effects of eating a New York slice with a cold one (or a glass of merlot)? 

Or how much profit the pizza shop owner makes after expenses and paying off the wise guys for protection?   Or how much the delivery guy makes.

There's a reason that Buffalo Wild Wings, Shake Shack (and places whose menu revolves around a simple core product)  do well when people are looking for what they are known to offer

They don't confuse/overwhelm you with choices that put you in a fog. It's a known quantity. Familiarity is comfort for some.   By comparison the Rio Carnival World Buffet located in Las Vegas takes almost 10 minutes to walk the length of the buffet station. According to the Guinness Book of World Records, the largest buffet consisted of 5,612 different dishes in an event organized by the Art of Living Foundation (India) at Sri Sri Dham, Ahmedabad, India, on  November 2, 2010.

Perhaps I'm oversimplifying, but I sense a high rah-rah factor for a one stop shop

Walmart and Target are massively successful retailers but not for every one every day.  There is plenty of room for different business models, boutiques and nimble operations.

Sometimes you just want a slice and a glass of wine with your honey

 

Sometimes you just want a slice and cold brew with your bud

 

 

 

 

 

 

 

 

 

 

 

 

 

 

So many choices and this is just the dessert buffet!    Time for a "Decision Free Zone" at the Cosmopolitan in Las Vegas?

 

Structured Settlements Into Settlement Trust As Shield Against Cash Now Vultures?

by John Darer CLU ChFC MSSC RSP CLTC

Does having structured settlement payments paid into a settlement preservation trust provide better protection than simply relying on state structured settlement

Cash Now Symphony Featuring The Hyena and The Vultures, 'Scavengers of the Worst Kind".   With cash now predators, your structured settlement is either ripped or pecked to death

protection statutes?

How it works

• Payee of the structured settlement is the plaintiff's trust instead of the plaintiff
• A professional trustee is used.
• Court scraping cash now vultures must deal with an intermediary with a fiduciary duty to act in the payee's best interest.
• The professional trustee may be consulted by the payee to discuss the payee's needs, investments, business ideas and loans in the context of fiduciary duty and discuss the best way to address those needs without the only solution being the sale of structured settlement payment rights.
• A professional trustee carries errors and omissions insurance.

What is a Fiduciary?

A fiduciary duty is the highest standard of care.  The person who has a fiduciary duty is called the fiduciary, and the person to whom he owes the duty, is typically referred to as the principal or the beneficiary. If an individual breaches the fiduciary duties, he or she would need to account for the ill-gotten profit. His or her beneficiaries are entitled to damages, even if they suffered no harm. 

Fiduciary duties exist to encourage specialization and induce people to enter into a fiduciary relationship.  By imposing these duties, the law reduces the risk of abuse of a beneficiary by the fiduciary.  As a result, potential beneficiaries can have greater confidence in seeking out a fiduciary.  [ Source: Legal Institute-Cornell University Law School]

Aren't there extra costs associated with having a trust?

Yes, all trustees charge a fee to act as a trustee (fiduciary). Let's assume, for example that the trustee fee is 75 basis points (.75pct) per $1,000,000, that's $7,500 annually.

Arguably a trustee fee is small in comparison to a very bad structured settlement factoring such as the one that Cedric Martez Thomas entered into with false advertisers Novation Funding LLC, where there is no other way to describe it but the seller got raped.

Cedric Martez Thomas is a New York native who did a horrible deal with Novation Funding LLC in Okeechobee County Florida in October 2015. He sold $6,600,000 for a little over $1,000,000 from his AIG structured settlement.  Cedric Thomas could have received more than $2,400,000-$2,500,000 in cash for the benefits he sold according to two structured settlement purchasers that I contacted at the time of his deal. Cedric used the "under inflated balloon" he received from Novation to buy about $700,000 of West Palm Beach area Florida real estate, according to my research, which is not far from the offices of Novation Funding LLC.  Novation continually advertises that they give the maximum payouts and such claims using its DBA Novation Settlement Solutions, are totally false and misleading on the basis of this deal. Because there are no laws that govern the solicitation of structured settlement annuitants by companies such as Novation Funding LLC, and no requirement that such companies be licensed or hold errors and omissions insurance for any financial advice that they may have provided, annuitants can be victimized.

An annuitant can instead interface with a trustee, who again has a fiduciary duty to him or her and discuss these types of deals

The trustee would certainly shop the market place for the best deal if such a deal was in the trust beneficiaries best interest.  For this reason, I doubt that any trustee would have approved Cedric Martez Thjoams' deal with Novation Funding LLC. 

Why aren't the structured settlement protection statutes enough?

In theory yes but recent history has proven that in reality not.  State statutes have not universally kept up with current business practices. Relying on inexperienced unlicensed solicitors, whose compensation is based on a large variable discount rate spread, to provide financial advice is a recipe for disaster.  Deal after deal has been approved in some of the worst cases of abuse where the judge's best interest decision was highly questionable.

Inserting a trustee into the mix assures that a competent fiduciary is accountable to the trust beneficiary. 

Should you use a settlement trust with every structured settlement?

No.  But if there is a concern about stronger protection from the cash now vultures, the use of a trust in conjunction with a structured settlement is one option. The needs of the client are primary when using this or any type of settlement strategy.  The size of the case will come into play as well.

It's a Matter of Trust!

"The closer you get to the fire the more you get burned
But that won't happen to us
Because it's always been a matter of trust"  -Billy Joel

Looking for First Capital Surety & Trust Company?

Are you looking for First Capital Surety & Trust Company?   First Capital Surety & Trust Company was a previous name of what is now known as Capital First Trust Company, a popular trustee for settlement trusts used by settlement planners to help manage personal injury recoveries.

Capital First Trust Company (“Capital First”) is an independent state-chartered trust company with its charter situs being South Dakota. Capital First’s business is to serve as trustee and trust administrator for Settlement Trusts and Wealth Management Trusts, i.e. financial and estate planning trusts. Pursuant to South Dakota statute, Capital First may administer trusts in all fifty states and is trustee for more than 1,100 trusts.  Capital First Trust Company has its administrative offices in Milwaukee, Wisconsin.  

If you have a trust that was originally set up with First Capital Surety & Trust Company and have questions, you may reach out to your original settlement planner if you are still in touch, contact me at 888-325-8640, or call Capital First Trust Company at 800-521-2359.

Looking for Morgan Chase Trust Company?

by John Darer CLU ChFC MSSC RSP CLTC

Are you looking for Morgan Chase Trust Company?   Morgan Chase Trust Company was a previous name of what is now known as Capital First Trust Company, a popular trustee for settlement trusts used by settlement planners to help manage personal injury recoveries.

Capital First Trust Company (“Capital First”) is an independent state-chartered trust company with its charter situs being South Dakota. Capital First’s business is to serve as trustee and trust administrator for Settlement Trusts and Wealth Management Trusts, i.e. financial and estate planning trusts. Pursuant to South Dakota statute, Capital First may administer trusts in all fifty states and is trustee for more than 1,100 trusts.  Capital First Trust Company has its administrative offices in Milwaukee, Wisconsin.  

If you have a trust that was originally set up with Morgan Chase Trust Company and have questions, you may reach out to your original settlement planner if you are still in touch, contact me at 888-325-8640 or call Capital First Trust Company at 800-521-2359.

Settlement Trust Company First Capital Surety & Trust is Rebranded as Capital First Trust Company

by John Darer CLU ChFC MSSC RSP CLTC

Who is Capital First Trust Company?

Capital First Trust Company is an independent, South Dakota-state chartered trust company with its principal office in Sioux Falls, South Dakota and an office located in Milwaukee, Wisconsin. Capital First was originallly known as First Capital Surety & Trust before an July 28, 2016 rebrand. Capital First Trust Company focuses on Personal Injury Settlement Trusts, Special Needs Trusts, and Advisor Directed Trusts. 

The rebranding made sense, descriptive of the nature of settlement trusts and the need of many personal injury settlement recipients to preserve capital.

CAPITAL FIRST=PRESERVE CAPITAL

What is Capital First Trust Company's Business?

Capital First’s business is to serve as trustee and trust administrator for Settlement Trusts and Wealth Management Trusts, i.e. financial and estate planning trusts. Pursuant to South Dakota statute, Capital First may administer trusts in all fifty states and is trustee for more than 1,450 trusts.  Trusts can be invested in common trust funds or, in the case of directed trusts,  a trust’s assets are invested and managed by an entity other than Capital First, such as an RIA, broker dealer, financial planner or other investment service provider.

• Supplemental Needs Trust
• Medicare Set Aside
• Settlement Preservation Trust
• Life Insurance trusts (ILIT)

Where is Capital First Trust Company Located?

Capital First Trust Company 230 West Florida , Suite 400 Milwaukee, WI 53204

Last updated September 15, 2024

Lending Your Settlement Money | Being Generous v Being a Sucker

by John Darer® CLU ChFC MSSC CeFT RSP CLTC

"When life changes money changes and when money changes life changes" says Susan Bradley of the Sudden Money® Institute.  One aspect of settlement money  "life changes" is the people who come out of the woodwork seeking loans. 

Special care must taken with decisions with settlement money, particularly if you are physically or mentally unable to work because your settlement money has to last.

A very poignant article  Buddy Can You Spare Five Grand?, has been published in the August/September issue of AARP magazine.  Yeah Yeah... I've been receiving it since I turned 40.  The article, by Laura Daily,  discusses  several real-life scenarios to inspire readers to create their own ground rules for giving or lending.

The six money lending scenarios covered by the article are:

• The Accident Victim
• The Emotional Blackmailer
• The Friend Who Wants More
• The Heartsick Relative
• The Hard to Believe Storyteller
• The Prodigal Nephew

"Buddy Can you Spare Five Grand?" is an important read for those receiving settlement money and those who sell a structured settlement for a lump sum of cash.  Think it through.

Have a look at  A Personal Injury Victim's Dilemma | Lending Settlement Money (4structures.com)

Last updated May 31, 2024

 

 

 

People With Disabilities Under 65 | Three Hurdles to Overcome To Get On Medicare

by John Darer® CLU ChFC MSSC CeFT RSP CLTC

Before they can get on Medicare, people with disabilities, who are under age 65, must first RECEIVE Social Security Disability Insurance (SSDI) for 24 months.

But SSDI generally does not begin until five months after an individual’s disability has been certified. As a result, people with disabilities face three consecutive waiting periods prior to getting health coverage:

(1) a determination of SSDI approval from the Social Security Administration; Among the requirements worth mentioning is that there is a "recent work" test and "duration of work" test requirement in most cases to determine eligibility for SSDI.

(2) a five-month waiting period to receive SSDI; AND,

(3) another 24-month waiting period to get Medicare coverage.

Limber up!  You have 3 hurdles to negotiate in order to get Medicare if you're under age 65!

Last update August 19, 2022

Retirement Planning and LTC Disconnect

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Long Term Care is the top concern of 31% of 67 year olds surveyed by MetLife Mature Master Institute, yet less than 25% have addressed this concern with long term care insurance. Nationwide found in a similar survey that most Americans over age 50 have some plan in place for retirement,  57% do not account for long term care in their planning.

Insurance News Net observes an ongoing disconnect between long term care awareness and long term care planning.

Consider that Bank of America Merrill Lynch found in its 2013 employee benefits survey that 79% of the 1,000 employees it surveyed would be willing to give up 5% or more of their salary if it meant having reliable income in their later years.  38% said they would give up 10% or more and 52% of pre-retirees would give up 10% or more.

Addressing retirement without planning for long term care is a long term recipe for a bad time. 

 If you're in your mid 60s and first thinking about long term care insurance you've got a greater expense, which leads to affordability issues and makes for possibly more limited options and possible age-related insurability issues.     

Plan ahead to avoid retirement asset erosion and the concomitant effect on ability to meet financial commitments.

Don't forget to ask your parents about their long term care planning. Involve your siblings. It's as much about you  and your quality of life as it is about them and theirs. 

Settlement proceeds from a personal injury, wrongful death or other type of settlement may be structured to contribute to the annual funding of long term care insurance.