by John Darer CLU ChFC MSSC RSP
Settlement planners who fail to demonstrate fundamental knowledge essential to the advice they are doling out to injury victims that are relying on them by publishing information that is so out of date are an embarrassment to the profession.
Here is a quote from a website of a "serial offender" in this regard:
"The receipt of settlement proceeds, either by a lump sum or through periodic payments, when combined with the claimant’s other assets, can create an estate in excess of $1,000,000 which would be subject to estate taxes at the death of the claimant. Estate tax rates range from 37 to 55 percent of amounts above $1,000,000, and payment generally is due in cash in nine months after the death. With proper planning, the impact of potential estate taxes can be minimized" quote from website of a particular settlement planner November 27, 2011 1:48pm EST. The owner of the website claims a copyright 2007-2011.
| Year |
Exclusion
Amount |
Max/Top
tax rate |
| 2001 |
$675,000 |
55% |
| 2002 |
$1 million |
50% |
| 2003 |
$1 million |
49% |
| 2004 |
$1.5 million |
48% |
| 2005 |
$1.5 million |
47% |
| 2006 |
$2 million |
46% |
| 2007 |
$2 million |
45% |
| 2008 |
$2 million |
45% |
| 2009 |
$3.5 million |
45% |
| 2010 * |
Repealed * |
35% |
| 2011 |
$5 million |
35% |
* See paragraph to left
with respect to reinstatement
of this exemption |
|
|
To the right is a table of the amount of exemption by year an estate would expect. Estates above these amounts would be subject to estate tax, but only for the amount above the exemption.
The 2001 tax act would have repealed the estate tax for one year (2010) and would then have readjusted it in 2011 to the year 2002 exemption level with a 2001 top rate. However, on December 17, 2010, President Barack Obama signed the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. Section 301 of the 2010 Act reinstates the federal estate tax. The new law sets the exemption at $5 million per person A top tax rate of 35 percent is provided for the years 2011 and 2012. (Chart: Wikipedia)
I am embarrassed for the settlement planning profession that such individual apparently doesn't care to stay on top of the news and publish accurate information. Furthermore, by citing that he is a CSSC, the settlement planner is dragging down the integrity of Certified Structured Settlement Consultant designation with him. Thank god that NSSTA has instituted new continuing education requirements.
In discussing structured settlement rates of return the subject settlement planner is currently using (11/27/2011) examples with 7% plus rates of return and taxable equivalent yields in the 11 plus% range! The published web page disclaimer states "NOTE: The rates used in these examples were for one annuity company and were valid on the date quoted. However, rates will vary between companies are are subject to change". With a copyright of 2007-2011 listed at the bottom of the web page, when the heck were the structured settlement rates on your website quoted and with which annuity company?
The United States Treasury Department publishes an interactive chart that allows you to compare interest rates of different maturities over different time periods. The chart shows that neither of the 10 year or 30 year nominal rates exceeded 5% between 2007-2011. Structured settlement rates typically exceed, but closely track Treasury rates.
The individual in question feels it is important for every claimant to have their own consultant who is independent from the liability insurer. I agree (as a practical matter most deals are done today with brokers on both sides). Otherwise, he says you will be relying on an adversary to handle a large financial transaction on your behalf. On the aforementioned showing perhaps the adversary's advice might prove be more accurate, eh?
Comments and Trackback Policy