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Firmwide QSF Promoter's Inartful Gaffe "Defendant Receives an Immediate Payoff" in "How It Works"

by QSF Chef*

An attorney for a firm that is a heavy promoter of Firmwide QSFs has made quite the gaffe, in an article promoting same on his firm's website. 

"How it works

When the settlements and fees are settled into a QSF, the defendant receives an immediate payoff/1099"**

 

Wait, whaaaaat!

Wait, Whaaaaaaat?

 

What is a Payoff?

(1)   a payment made to someone, especially as a bribe or reward, or on leaving a job: 

"widespread rumors of payoffs and kickbacks in the party"  Synonyms: payment · payout · reward · recompense · consideration · bribe · inducement ·enticement · incentive · payola · douceur 

 

(2) the return on investment or on a bet

Source: Oxford Languages

What is a 1099?

A 1099 is an Internal Revenue Service (IRS) form that is used to report income received through sources other than employment. The IRS refers to 1099s as information forms. They serve as a record that reflects income given to someone by a person or organization that they are not formally employed by.  Source:  UpCounsel.com  What is a 1099?  Everything You Need To Know

I love language and part of what I've done blogging over the years is to point out where perhaps there might have been a better choice of words. 

This isn't the first time I've questioned the use of the term "payoff" in connection with settlements. See my January 31, 2010 blog Northeastern Capital's Amusing Financial Literacy Lesson

 

Note

*QSF Chef is a QSF blog nom de plume I'm trying out. Why? Because it rhymes!

** at time of publishing this appeared in an article credited to Sam Dolce-Powers

 

 

Knight in Daze After Novation Capital Structured Settlement Transfer Petition Denied By NY Judge

by John Darer® CLU ChFC MSSC RSP CLTC RSP CLTC

After Squandering 60% of The Cash in 2 Years, Judge Denies Knight Sale of 54.5% of Monthly Payments

Jamal Knight, an Orange County, New York man who squandered approximately 60% of the $1 million net settlement he received  in April 2006, was denied a petition to sell 54.5% of his monthly structured settlement payment rights by a New York Judge. In denying the request, under New York's Structured Settlement Protection Act,  Hon. William J. Giacomo made note of:

1. Knight's inability to "demonstrate an acuity for financial management". Despite the sizable net settlement sum he received "up front" he still finds himself in debt.
2. The monthly payments from the structured settlement seem to be the only financial security he retains.
3. Knight's being unable to explain where 40% of the sell proceeds would go
4. Doubts that "the amorphous investment" that his CPA was recommending "would garner a greater return for Mr. Knight than his structured settlement"
5. Further dissipation of his funds is not in his children's best interest.

In Matter of Novation Capital, LLC v Knight 2008 NY Slip Op 51628 (U)  Decided July 29, 2008.

In April 2006, Jamel Knight's net settlement was allocated 60% to cash and 40% to a structured settlement with Massachusetts Mutual Life, an A++XV rated annuity issuer. The annuity pays him $1,978.11 per month for life with 360 months (30 years) certain. He also receives $700 per month in disability payments.

According to the footnotes to the Slip Opinion, Knight gave his father $400,000, his mother $100,000 and $100,000 to various friends and took on debt to purchase house, build a vacation home and open a soul food restaurant that paid him $25,000-$30,000 in 2007. His mortgage is $2,500 per month.

Knight has 5 children ranging in age from 1 to age 17. His two oldest do not reside with him and the oldest is now a father.

This is a tragic but classic case which highlights why tort victims need to receive comprehensive settlement planning advice and education at and before the time of settlement and, they need to have an ongoing plan for recovery management.

It's unclear, from the information presented in the Slip Opinion, why so much money went to Knight's parents at the expense of setting up education funds for his children, or whether the subject was even raised at the time settlement discussions ensued.