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

Do Structured Settlement Payments Need to Be Equal Payments?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Do Structured Settlement Payments Need to Be Equal Payments?

1. Qualified Structured Settlement Payments

• Generally qualified structured settlement payments can be equal or unequal
• There are many different types of structured settlement payments to choose from.  See Types of Structured Settlement Payments | Your Structured Settlement Payment Options (4structures.com)
• You can combine different types of cash flows to suit your needs, in a single contract if you wish.

2. Non Qualified Structured Settlement Payments

• IRC Section 72(u)(1)  "The Non Natural Person Rule"
• The so called "Non Natural Person Rule" provides that "if an annuity contract is held by a person who is not a natural person, then such contract shall not be treated as an annuity contract for purposes of subtitle A (other than subchapter L) and the income on the contract for any taxable year of the policyholder shall be treated as ordinary income received or accrued by the owner during such taxable year
• As an exception to the " non-natural person rule, payments must be substantially equal within the meaning of IRC 72(u)(4).

IRC 72(u)(4) Definition of Immediate Annuity

For purposes of this subsection, the term “immediate annuity” means an annuity—

• 72(u)(4)(A) 

  Which is purchased with a single premium or annuity consideration,

• 72(u)(4)(B) 

  The annuity starting date (as defined in subsection (c)(4)) of which commences no later than 1 year from the date of the purchase of the annuity, and

• 72(u)(4)(C) 

  Which provides for a series of substantially equal periodic payments (to be made not less frequently than annually) during the annuity period.

 

In the structured settlement space, this applies where a domestic (US) non qualified assignment is funded with an annuity, where the annuity is owned by a non-natural person.  

Examples

AGL Assignments, LLC is the non qualified assignment company for Corebridge subsidiaries  American General Life Insurance Company and United States Life Insurance Company in the City of New York  (NY cases) and is registered in Delaware.

MetLife Assignment Company, Inc. is an assignment company, registered in Delaware, that handles both qualified and non qualified assignments where Metropolitan Tower Life annuity is the issuer of an annuity owned by MetLife Assignment Company, Inc.

Are There Any Workarounds to IRC 72(u)?

Non Qualified Assignments Where Funding Asset is Not an Annuity

AGL Assignments, LLC is the non qualified assignment company for Corebridge subsidiaries American General Life Insurance Company and United States Life Insurance Company in the City of New York  (NY cases). A non qualified structured settlement solution is available in all states except Pennsylvania, using a Funding Agreement instead of an annuity. The Funding Agreement is not an annuity.

Reinsurance Structured Settlements

Periodic Payment Reinsurance | Reinsurance Structured Settlements 2023 (4structures.com)

Use of Non-Domestic Assignment Companies

• Structured Assignments, SCC Barbados
• Havelet Assignment Company -Barbados
• Dominion Assignment (Switzerland) for Independent Life's iStructure Dominion Assignment Company - Independent Life
• Kenmare Assignments  (Ireland)

Last updated November 13, 2023

 

 

 

Warburg Pincus and Prudential form Prismic Life Re Bermuda based Life & Annuity Reinsurer

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Prudential "to Reinsure Block of Structured Settlement Annuity Contracts", if Regulators Approve

Prudential Financial, Inc. and Warburg Pincus announced September 7, 2023, the launch of Prismic Life Reinsurance, Ltd. (Prismic Life Re), a licensed Class E Bermuda-based life and annuity reinsurance company.  Prismic Life Re will assume a $10 billion block of Prudential's structured settlements if approved by regulators.

Note: The Prudential press release abbreviates to the shorter "Prismic". However an internet search brings up results for a San Francisco company, named Prismic, that builds websites.  Given Prudential's structured settlement footprint in all 50 states, I've opted to abbreviate to Prismic Life Re.

Who is Warburg Pincus?

At Warburg Pincus, is a private equity firm based in New York City. Established in 1966, Warburg Pincus has invested more than $112 billion in more than 1,000 companies in more than 40 countries around the world.

Source: Warburg Pincus website

What is a Bermuda Class E Long Term Insurer?

According to the Bermuda Monetary Authority,

LONG-TERM - CLASS E: Long-term insurers and reinsurers with total assets of more than $500 million; and not registrable as a Class A or Class B insurer.

Prudential and Warburg Pincus, together with a group of investors, have agreed to make equity investments in Prismic Life Re and will oversee its long-term strategy through participation on its board of directors.

On September 11, 2023 Reinsurance News reported that Nomura has announced it has made  an equity investment into Prismic Life Reinsurance, a licensed Class E Bermuda-based life and annuity reinsurance platform, alongside Prudential Financial, Warburg Pincus and other investors.  Combined, Prismic Life Re will have an initial equity investment of approximately $1 billion. 65% of the equity is owned by a group of investors that Nomura is a founding investor of, while Prudential Financial owns 20% and Warburg Pincus owns 15%.

How Will The Reinsurance of $10B of Structured Settlement Annuity Contracts Affect Annuitants?

According to the September 7, 2023 announcement, Prudential expects to reinsure to Prismic Life Re a block of structured settlement annuity contracts with reserves of approximately $10 billion, subject to the receipt of required regulatory approvals.

Prudential’s obligations to the holders of the rights to receive structured settlement payments will remain unchanged following the reinsurance arrangement and Prudential will continue to administer the contracts.

Why is Prudential's Motivation?

From there, the release states that Prudential aims for Prismic Life Re to be a strategic reinsurance partner with the ambition to grow their reinsurance relationship materially in years to come. PGIM and Warburg Pincus will provide asset management services to Prismic.  PGIM is the investment management business of Prudential Financial, Inc.

Through expanded reinsurance capacity, Prudential expects Prismic Life will allow the company to provide more people with access to its industry-leading life and annuity products.

Charles Lowrey, chairman and CEO of Prudential Financial, Inc., said in the press release: “This unique reinsurance platform will play an important role in our vision to be a global leader in expanding access to investing, insurance, and retirement security for people around the world. Prismic Life Re will enhance our ability to address the evolving needs of our insurance customers and clients while continuing to meet our obligations to policyholders. It represents a formidable combination of industry-leading expertise, global capabilities, and the backing of two of the world’s leading insurance and asset management firms.”

Prismic Life Re will leverage PGIM’s and Warburg Pincus’ global investment management capabilities across public and private markets, including public fixed income, private credit, private real estate, and private equity. Prismic will become a client of PGIM Portfolio Advisory, a newly established affiliate within PGIM that combines asset-liability management expertise with portfolio strategy and asset allocation to deliver

Prismic Life Reinsurance, Ltd. announced that it expects to receive $1 billion in funding from Nomura Holdings, Inc., Prudential Financial, Inc., Warburg Pincus LLC and other investors -September 10, 2023 | MarketScreener

Prudential Financial, Inc. and Warburg Pincus announce launch of Prismic Life Re (pgim.com)

Prudential Financial, Inc. and Warburg Pincus announce launch of Prismic Life Re - Warburg Pincus

Build Enduring Guaranteed Income Streams with Great Structured Settlement Rates 2023

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Make good use of stuctured settlements and build enduring
guaranteed income streams

Structured settlements are on track for a record year in 2023

Labor Day 2023 is here and you, but lawyers and their clients don't need to labor too hard to find great structured settlement rates. Compelling yields in Excess of 5% are possible on intermediate and long term cash flows.  

So what does 5% tax-free mean?

Taxable Equivalent Yields at Different  Hypothetical Tax Rates

15%       5.88%

18%       6.09%

28%       6.94%

31%       7.25%

33%        7.46%

40%        8.33%

50%      10%

See expanded taxable equivalent yield chart

What about investing in the Stock Market?

Well you're not going to put all your eggs in one basket are you?  But let's say you did and if you had the fortitude to ride the ups and downs and stay in the S&P 500 from January 3, 2003 to December 31, 2022 you would have averaged 9.80%.

However, if you missed just the 20 biggest trading days in the S&P 500 from January 3, 2003 to December 31, 2022, you would have averaged only 2.9%. If you missed the 30 biggest trading days the averag would onl have been 0.8% (and it goes downhill from there), according to the J.P. Morgan Asset Management 2023 Retirement Guide published March 2, 2023 p46.

Read Structured Settlement Rate of Return Compared to Alternative Investments (4structures.com) for more details.

Note: Structured settlement rates vary by insurance company and other factors such as duration. Read more about structured settlement quotes

NY Senate Bill Requires Licensing for Commercial Loans But Not Structured Settlement Factoring to Vulnerable NY Individuals

by John Darer CLU ChFC MSSC CeFT RSP CLTC

What is New York Senate Bill S6688?

Under New York State Senate Bill 6688, it would be unlawful to engage in the business of making or soliciting commercial financing products to businesses

NY Sen James Sanders, Jr. 

Image: Ronzoni/Wikipedia

located in New York State without first obtaining a license. S6688 is sponsored James Sanders, Jr, of District 10 in Queens who is the Chairman of the Committee on Banks. The bill would add Article IX-A of the banking law and the administrative code of the city of New York Section 363 Commercial Finance Licensing.

What is Missing from New York Senate Bill S6688?

At a time when structured settlement factoring companies appear to be open to being licensed, it's interesting to see that New York prioritizes small businesses over individuals, many of them disabled and minorities who are exposed to predatory practices that in one case cost a man from Long Island in excess of $1.4 million dollars and a Staten Island Ferry Victim millions as well. In the two examples the men were forum shopped into another state to skirt New York state's tough protections by unlicensed financial predators. Recently a recent high school graduate from the Bronx, with a penchant for taking selfies at his job at a New York pizza parlor near Times Square that he started after a structured settlement transfer petition was submitted days after his graduation from a New York City high school, to a New Haven Connecticut Superior Court. The transfer petition was rejected in a Connecticut state court.

What is a Commercial Financial Product?

"Commercial financing product" means any advance of funds to a commercial or business enterprise made for the purpose of assisting the business with its capital needs, including but not limited to:
(a) loans or lines of credit made to a business or commercial enterprise in a principal amount of five hundred thousand dollars or less, whether secured or unsecured;
(b) purchase transactions where an entity purchases accounts, receivables, intangibles, revenue or other actual or perceived assets of the business if any single payment or advance of the purchase price for the purchased accounts, receivables, intangibles, revenue or other actual or perceived assets of the business is in the amount of five hundred thousand dollars or less; or
(c) any leasing transaction where any funds are provided to the business or commercial enterprise by the leasing business or any affiliate of the leasing business in the amount of five hundred thousand dollars or less.
Among several exemptions, New York Senate Bill 6688 is " any person who makes or solicits five or fewer commercial financing products within any twelve month period".

Why New York Should Enact Companion Legislation or Tag on Licensing Requirements, for Structured Settlement Factoring Companies

There is already support in the structured settlement secondary market for licensing, so why not get on with it?

New York Senate Bill 6688 exempts from the article, "any person who makes or solicits five or fewer commercial financing products within any twelve month period". Any potential legislation should be mindful that structured settlement factoring companies often operate under different aliases or fly by night LLCs, making it difficult to trace the source. These fly by night LLCs could be used to keep solicitations under 5. Upon information and belief, one company based in Florida has used hundreds of LLCs. Furthermore, as I wrote the other day, some may also use offshore lead generation firms to skirt privacy protections under the TCPA. See "Structured Settlement Cash Now Companies in 'Pyramid Scheme' to Avoid TCPA Privacy Rules" here

The lack of licensing has cost New Yorkers most vulnerable millions of dollars due to predatory practices. The ability to fine , suspend or revoke is a powerful deterrent. The consequence's can be sobering. Such consequences are already in place in the legal profession. A disbarred New York attorney, who also happens to be a structured settlement broker and licensed New York insurance agent regulated by the New York Department of Financial Services, was automatically disbarred after having admitted to a felony while driving in which someone was injured. Ironically the disbarred lawyer's structured settlement firm donates over $100,000 annually to New York State Trial Lawyers Association as does another competing firm.    

What can the New York State Trial Lawyers Association do as well as the Academy of Trial Lawyers in New York to propose and support such legislation?

NYSTLA and the Academy collectively have solicited and received hundreds of thousands or more from structured settlement firms, to further those associations and their members' political agenda. Members of those associations have placed their clients into structured settlements. If members of NYSTLA and the Academy believe now, or in the past, that structured settlements are appropriate for their clients, are they doing all they can to protect them from predators? This is a no brainer.

What is A Structured Settlement Broker? Structured Settlement Broker 2023

by John Darer CLU ChFC MSSC CeFT RSP CLTC

What is a Broker?

A broker is a person who serves as a trusted agent or intermediary in commercial negotiations or transactions. Brokers are usually licensed professionals in fields where specialized knowledge is required, such as insurance, finance and real estate.

A structured settlement broker should hold one or more active insurance licenses and carrier appointments

A broker's rate of compensation (called brokerage or commission) is determined according to custom of the particular trade or by law, and is computed commonly either as a fixed percentage of the value of the transaction or on a sliding scale (higher the value, lower the percentage or the reverse).

Read more about What is a Broker? 

What is a Structured Settlement Broker?

A structured settlement broker is someone that holds at least an active life insurance license in one or more states and carrier appointments, who provides professional advice and places structured settlement annuities and other qualified funding assets. Structured settlement brokers may hold other professional licenses and provide settlement planning advice and placement of financial vehicles pursuant to their professional licenses.

Contact a Structured Settlmeent Broker Now

How is a Structured Settlement Broker Compensated?

A structured settlement broker is paid by commission, either as a licensed and appointed agent of a life insurance company and/or as a licensed broker or producer. In a letter posted on the website of the New York Department of Financial Services, the Office of General Counsel opined that it would be unlawful for a licensed broker to pay a licensed agent who was not appointed by the annuity issuer.

Who Regulates Structured Settlement Brokers?

As a licensed insurance agent, licensed broker or producer, a structured settlement broker who places structured settlement annuities as part of the consideration for the release of legal claims, is regulated by the  laws of the states in which he/she/they are licensed. The states control the sales and solicitation process and have the power to fine, suspend or revoke licenses. The annuity issuer can pull appointments as well.

What is a structured settlement annuity?

A structured settlement annuity is a contract issued by a life insurance company,  the primary use of which is as a qualified funding asset to fund obligations to pay future periodic payment obligations under a settlement agreement and pursuant to a qualified assignment agreement.  Qualified assignment agreements are governed by the rules set forth in IRC Section 130.  In rare circumstances, where are future periodic payment obligations are unassigned, the structured settlement annuity may be owned by the Defendant or its insurer.  Structured settlement annuities can only be placed by individuals and entities (1) holding an active life insurance license and (2) appointed/authorized by the annuity issuer for structured settlement annuities. Read more about structured settlement annuities 

Can a structured settlement annuity be sold?

No, a structured settlement annuity cannot be sold. A structured settlement annuity purchased as a qualified asset is owned by a qualified assignment company. The terms of the settlement agreement when the structured settlement was established do not grant the annuitant any ownership interest in the annuity contract. Only the rights to the structured settlement payments may be sold, subject to the structured settlement protection act in the state of domicile.

Is JG Wentworth a Structured Settlement Broker?

No, simply buying an expensive Google paid ad does not make an individual or company a structured settlement broker.   It has been observed that JG Wentworth also uses the term structured settlement consultant in its Google paid ads for JG Wentworth or its other entities that buy people's structured settlement payment rights for pennies on the dollar. 

Last updated August 19, 2023

 

Winter Storm 2019 | Don't Shiver Let Structured Settlements Deliver!

Don't Shiver, let structured settlements deliver. Get out of the lawsuit winter storm and into the warmth of structured settlements. Customized steady tax free income. You can even plan to go South every winter with payments to pay for it.

Structured Settlements | The Year in Review 2018

by John Darer CLU ChFC MSSC CeFT RSP CLTC

2018 was a good year for the structured settlement primary market.  Preliminary reports suggested after the end of the 3rd Quarter that industry production might again exceed the symbolic $6 billion. We await the final tabulation. Extreme stock market volatility leading to a certain "sobriety" in investor confidence, interest rate improvements in the second half of the year, new products and companies available to a larger group producers and greater sophistication of industry participants all played a role. 

2018 was a year of major changes in the fortunes of structured settlement factoring participants as a cascading amount of bad news and exposure of an insane amount of corruption showcase an industry that is a hot mess, not unified, with no accountability from a lack of regulation and for the most part,devoid a moral compass. Bad business practices in the secondary market endure. The National Association of Settlement Purchasers has suffered from membership attrition as Seneca One and Novation Funding have left and Stone Street Capital was acquired by JG Wentworth. JG Wentworth has had the advantage of a very low cost of money which meant that it was difficult for other buyers to win in head to head competition. Other companies are mired in costly litigation with each other or with third parties (including former customers) that threaten the financial viability of a number of companies. 

Here is a month by month digest of our industry and related commentary from 2018:

January 2018

1/9/2018  Annuity Sold, LLC and other companies associated with Owings Mills duo Ryan Blank and Richart Ruddie are nailed for fraud in a Structured Settlement Buyer crackdown by the Maryland Attorney General. As part of the settlement Annuity Sold and the others agreed to be banned from doing business in Maryland for 7 years and had to pay restitution, fines and costs.

Lincoln Financial announced it had entered into a definitive agreement to buy Liberty Life Assurance Company of Boston from Liberty Mutual Group

MetLife, inc. announced a merger between subsidiaries Metropolitan Tower Life and General American Life Insurance Company to streamline its corporate and administrative structure.

1/26/2018 An Arizona Bar complaint is filed against Kelly Warner Law Firm and 3 of its partners stemming from a scheme to defraud the Courts and scam Google into de-indexing content alleged to be defamatory. Firm is tied to Richart Ruddie, the Owings Mills fraudster.

February 2018

USPTO issues Woodbridge Wealth Trademark less than 2 months after SEC sued Woodbridge and its former CEO alleging a $1.2 billion Ponzi scheme

2/2/2018   Florida structured settlement factoring company Novation Funding seeks Suffolk County New York approval to buy $4.6 million in future payments for $9,000

One month after payments were due to star Barry Cooper has not received the " secondary market annuity" payments he acquired from Somerset Wealth (with substantially the majority of his retirement savings).

The Consumer Financial Protection Bureau (CFPB) published an update to its guide for people who have disability, personal injury or structured settlement payments, focusing on " What should I know before giving up my monthly disability, personal injury or structured settlement payments in exchange for a one-time lump sum payment?"

Berkshire Hathaway Structured Settlements Expands Its Hardship Exchange Program to Arizona, New Jersey, Pennsylvania, Virginia, West Virginia.  Cash now pushers are up in arms.

Zak Thompson, a 26 year old Maryland Reliance Funding factoring company employee, unethically gave skip trace Info on a Maryland cop to a  "Bro", Eugene Matusevich who then harassed the cop over a $50 Ticket.

Liberty Life issues answers to important questions about  LLAC Notice of Financial Commitment, MIC Guarantees and BARCO.

March 2018

Genex Capital is now suing Terrence Taylor, the black amputee burn victim with a young child over an investment it made in structured settlement payment rights. On October 27, 2017, there was a ruling in Portsmouth Circuit Court that Taylor's case could proceed against Structured Asset Funding/123 Lump Sum and  Isettlements, an affiliated company of 123 Lump Sum to seek vacated court orders and unwind many of the 8 improvident structured settlement factoring deals originated collectively by those entities.  New York Life Insurance Company, the annuity issuer sought to file an inter pleader which would suspend payments to investors, until the Court determines who they belong to. Taylor says he was a resident of West Virginia at the time of many of the transactions, which were submitted by Stephen Heretick, the same lawyer, to a Portsmouth VA Circuit Court that is at the center of a Class Action suit over thousands of other transactions. 

3/28/2018  On  a lighter note, I pranked Conshohocken Pennsylvania factoring company CBC Settlement Funding and , apparently determined to chase down every lead , they returned a contact from Jabba DeHutt with an email address of [email protected]

3/27/2018 The fact that "settlement planners" are using the term "structured settlement planning", separate and distinct from "settlement planning" is recognition that there is specialized knowledge and skill in planning with structured settlements. A structured settlement is a core settlement planning tool and it is also a tool, which, if effectively used, can bring about settlements that result in the satisfaction of the parties.  Planning ahead adds an additional dimension to the process and allows participants to see issues and mind the gap.

3/25/2018 Structured Settlement "Restructuring" Scam is Exposed

3/21/2018 I examined the ethics of a national Financial Services Company to finance the purchase of structured settlement payment rights from a structured settlement annuitant at a substantial discount and subsequently benefit from fees derived from providing financial advisory services or stock brokerage services to the would be seller, solicited by an licensed or unlicensed representative of the originator of the deal on the very same funds?

A $2,000 property dispute arising from the removal of a maple tree under which  a woman's beloved pet was buried, set off a chain of events that 8 months later, has led to the resignation of powerful longstanding West Virginia state delegate Ron Walters, a Charleston WV structured settlement broker with Structured Financial Associates.

3/12/2018 We exposed Gold IRA Guide to structured settlement derivatives, which they scam labelled Secondary Market Annuities, for misrepresenting risk of structured settlements derivatives.

3/10/2018 We questioned the adequacy of the vetting process of originators of structured settlement derivatives that settlement planners are selling to lawyers and their clients

JG Wentworth in epic FUBAR advertises " If it doesn't make dollars it doesn't make sense"

April 2018

Structured Settlement Anti-Assignment Provisions| Non-Enforcement Leads to Suit Against Insurer  Cordero v Transamerica Annuity Service Corporation 18-cv-21665  United States District Court Southern District of Florida

CBC Settlement Funding engages in fraudulent advertising, through Sell Any  Annuity,  suggesting that selling your annuity or structured settlement(for pennies on the dollar) will earn you something in an April 21, 2018 tweet.

Novation Funding Concedes that the 113,010 unwanted calls to  3,577 accounts reflected in their own records in the TCPA action  Kevin Buja, individually and, on behalf of others similarly situated, Plaintiff v Novation Capital LLC et al. United States District Court Southern District of Florida Case 9:15-cv-81002-KAM  Document 182  Matter was settled later in the year.

We expose two consumer scams that are making the rounds in the structured settlement secondary market (1) Structured Settlement Factoring Company Uses Potentially Unlawful Investment Projection to Twist the Annuitant Out of Their Structure  (2) Structured Settlement Factoring Companies are Selling Irrational Fear Using the State Insurance Guarantee Funds Limits as a Weapon, to Induce People to Sell at Huge Discounts 

Maryland Law Professor Karen Syma Czapansky questions whether courts should permit sales of periodic payments under a structured settlement when the structured settlement is compensation paid by the defendant in a tort suit brought by or on behalf of the seller for damages caused by childhood lead poisoning that left the seller incapable of self-support. Professor Czapansky concludes that allowing sales in this situation is unjustifiable and opines that the Maryland SSPA should be amended to ban the sale of structured settlements by lead-paint victims, just like workers compensation recipients.  (36 Va. Envtl. L. J. 1)

Michelle Caine of Prudential was named President-Elect oi the NSSTA

May 2018

We publish "6 Ways to Clean Up Structured Settlement Advertising Fraud"

General Electric Co is working with investment bankers to find ways to shed its insurance business, which has caused it to book hefty charges while sparking shareholder lawsuits and an investigation by U.S. regulators, people familiar with the matter said on Tuesday May 22, 2018, according to CNBC. Vigilance to protect structured settlement annuitants who were sold structured settlements on GE heritage and GE Capital guarantees and Keep Well agreements is required.

SEC Says Woodbridge Ponzi scheme ripped off 2,600 retirees in its amended complaint

Questions Arise over whether New York's Advance Funding is really a Ponzi scheme

There is a Class Action settlement in the Aviva CMA  class action case favorable to structured settlement annuitants

Structured settlement.us.com deceitfully suggests in their fraudulent ads all over the internet that selling your structured settlement for pennies on the dollar is a financial windfall.

June 2018

Toronto based settlement purchaser Strategic Capital is exposed for having one of its employees publish a customer review on LinkedIn one month after the employee, Max Worth, was hired.

DCF Exchange, a broker of structured settlement derivatives, publishes a supposedly redacted closing book as an exemplar, but it reveals confidential information

6/15/2018 I sleuth efforts by Buffalo settlement planner John Bair to launch a "structured settlement exchange". Ask reasonable question about how conflicts of interest will be resolved given that he/his entities are directly or indirectly involved in pre settlement loans, structured settlement brokerage, QSG adminstration, investment advisory, origination of structured settlement factoring, assignment companies. Asks me to sign an unreasonable  NDA which I refuse.

Highpoint Funding, in high grade BS from Boca Raton, suggests that you pay off student debt by selling your structured settlement for what amounts to pennies on the dollar.

TopTenReviews is exposed as a dubious review site that has for  intentionally misrepresented to consumers that certain unlicensed and unregulated companies which buy structured settlement payment rights, for pennies on the dollar,as structured settlement annuity companies.

A representative of SMA Hub sends an email solicitation subject line "Guaranteed A+ rated annuities ROI 4-5%" to a CT resident despite not holding a valid CT insurance license.

Hartford Financial Services Group (The Hartford) completes the sale of its Talcott Resolution life and annuity run off unit to an investor consortium.

July 2018

CBC Settlement Funding continues its downward advertising spiral by suggesting that selling your structured settlement (for pennies on the dollar ) is a prize that you should keep your eye on.

A sharp Chester County, PA Judge denies the 3rd attempt in 11 months by factoring companies to pillage the structured settlement of a Jerry Sandusky Penn State sexual assault victim.

Novation Funding's continued fraudulent advertising about maximum payouts is again exposed in the Lydell Todman case and its relentless efforts to grab a lead paint victim's structured settlement in the Junior Matos case.

Seneca One undermines the entire structured settlement secondary market in a single tweet that quotes hedge fund titan Paul Tudor Jones  "Don't focus on making money, focus on protecting what you have". Translation...protecting what you have Seneca One style is selling your structured settlement for pennies on the dollar.

August 2018

• Whistleblower suit v Novaton Ventures LLC and John MarsanoFormer employees claim that they observed various unethical and illegal conduct approved and encouraged by settlement purchaser Novation's senior management  Novation Ventures, LLC, a Florida Limited Liability Company, Plaintiff and Counter-Defendant v James Viera and Bryann Cabral, Defendants and Counter-Plaintiffs | James Viera and Bryann Cabral Plaintiffs v John Marsano, Defendant  Circuit Court 15th Judicial District in and for Palm Beach County, Florida Circuit Civil Division Case 2017CA00619XXXXMB
• More fraudulent advertising from Sell Any Annuity. They claim to be find you the best structured settlement broker when multiple calls confirmed that the only broker ever  recommended CBC Settlement Funding.
• United States Court of Appeals affirms Summary Judgment that United States does not have to fund ELNY Insolvency shortfall   KAREN L. SHAW, INDIVIDUALLY, AND KAREN L. SHAW, AS GUARDIAN OF THE PERSON OF RICHARD SCOTT SHAW, AN INCOMPETENT, RAYMOND A. SHAW, INDIVIDUALLY, Plaintiffs-Appellants v. UNITED STATES, Defendant-Appellee  2017-2136  Appeal from the United States Court of Federal Claims in No. 1:14-cv-00783-MMS
• We questioned of the utility of Structured Settlement Commutation Riders in view of the substantial Increase in Estate Tax exemption
• Florida retirees who were sold "Secondary Market Annuity Buyers" by Somerset Wealth, payments that have been entangled in the Access Funding litigation and Appeal are now missing 8 months of payments.
• DRB Capital sets up a Bounty Fund for Whistle blowers  as Structured Settlement Factoring Civil War begins

September 2018

• Nevada District Court judge Kerry Earley found that structured settlement factoring company Seascape Leasing LLC and lawyers, Patrick M. Etchebehere and Julie D. Noe  "committed a fraud on the court by clear and convincing evidence" in a prior successful attempt to transfer the structured settlement payment rights of Brandon Boiclair   [See in Re: Seascape Leasing, LLC District Court Clark County Nevada A-18-775027-P below]
• Structured Settlement Annuitant Bill Green, is threatened by Novation Funding over advances given on a structured settlement factoring deal he cancelled for a grotesque deal offered by Synergy Settlement Solutions LLC, formed only this month.  [ no relation to Synergy Settlement Services]
  
• RSL Funding claims in a September 12, 2018 tweet, that selling your structured settlement or annuity  (for pennies on the dollar)  is a home run in their book
• A legal blog about structured attorney fees published a cringe worthy, in-artfully worded post about IRS Private Letter Ruling 199943002, a 20 year old ruling that preceded the introduction of variable structured settlements by Metropolitan Life Insurance Company.
• A number of settlement purchasers are using the " Do You Know What You're Structured Settlement Is Worth?" hack to get your confidential information.
• Negotiation Firm Launches website. Offers Unique Value Proposition to Selling Structured Settlement Annuitants
• AIG Structured Settlement Class Action is dismissed with prejudice

October 2018

Settlement Planning firm claims that a qualified settlement fund is "a tax free way station for attorney fees", when 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?

The importance of periodically reviewing beneficiary designation is illustrated in true story of a young husband doesn't get around to changing a beneficiary from childhood structured settlement and disinherits his young wife from income that he and she were dependent on to make ends meet.

Another Florida structured settlement factoring company calls selling your structured settlement (for pennies on the dollar) a touchdown.

A California lawyer supports an 18.82% Discount Rate in a highly questionable IPA for a disabled African American New York man who had an 11.77 discount rate in a prior attempt rejected.

Subterfuge? When assembled in a timeline over the course of two years, publication dates of a series of articles by industry commentators and in trade journals coincidentally correspond to significant dates in the AIG Structured Settlement Class Action, such as filings of motions or briefs and the dismissal with prejudice.

John Bair of Milestone Consulting confirms in an email to a third party from his Milestone email address that it is "the only primary market as well as origination firm for secondary market transfers that he knows of". Still does not publicly address the conflicts of interest asked of in June.

Seniors have endured investment nightmare after investing their lottery annuity winnings with New York's Advance Funding at a return that exceeded the junk bond rate in the year of investment.

True SMA LLC, a firm named after Secondary Market Annuities, i.e. scam labeled structured settlement derivatives, is offering negotiating services to structured settlement annuitants who have contracted with structured settlement buyers.  The firm offers to negotiate better deals for structured settlement annuitants seeking to sell structured settlement payments but then takes a rapacious, out of touch amount of the money from the poor bastards selling their annuities. Following the breadcrumbs from a recent True SMA LLC business dealing has revealed reason to question True SMA LLC's business practices.

Paralyzed 2003 Staten Island Ferry Crash victim James McMillan, fights back against vulture factoring companies. who exploited McMillan and took advantage of historically lax ex parte reviews in Judge Michelle Morley's Sumter County courtroom  (9 yesses in 2013 alone), that pillaged his structured settlement and undid a lot of the good work that Evan Torgan, his New York personal injury lawyer did in getting him the recovery

On October 25, 2018, The United States District Court, Southern District in Miami, found former Woodbridge CEO Robert Shapiro, his wife and various named entities owned by Shapiro responsible for paying $892 million to the SEC. The fines will go to a "fair fund" that will be used to help compensate the victims of $1.2 billion Ponzi scheme.

Woodbridge Group of Cos., 17-12560, U.S. Bankruptcy Court, District of Delaware.

Securities and Exchange Commission v. Shapiro, 17-24624, U.S. District Court, Southern District of Florida.

November 2018

A number of plaintiff settlement planners are listed on the annuity brokers list for the United States Department of Justice.  Given that the prerequsite  declaration have to be executed under penalty of perjury and must declare that they have provided substantial services to defendants and tehir counselk in each of the preceding 3 years, have any committed perjury and/or exposing themselves to US Attorney General prosecution?

"Secondary Market Annuity" buyers the Walls (retirees from Pittsburgh) are screwed as the 3rd Circuit reverses a 2017 summary judgment against the intermediary Altium Group. Clearly the "high yield low risk" investment sold to the retirees by Altium via the financial planner is anything but.

Dupage County Illinois emerges as a structured settlement factoring forum shopping venue.

In a November 1, 2018 letter to the Board of Directors of the National Association of Settlement Purchasers, DRB Capital CEO and Bounty Payer James Terlizzi maintains the following are presently occurring in the structured settlement secondary market:

• Forum Shopping
• Hiring of " Shill Counsel"
• Unlicensed Practice of Law
• Suborning (indeed conspiracy to commit) perjury and  a myriad of other unfair, deceptive and illegal acts are rampant
• Contract poaching
• Relocating claimants

Document fabrication and slander are too common to mention, wrote Terlizzi. Everyone receiving this letter knows exactly what we are talking about and also knows this is going on at unprecedented levels. Theft and thuggery have replaced robust but good faith competition.

It emerges that the " SAFE IRA Guy" sold a Woodbridge Ponzi scheme investment to an 80+ year old Delaware couple  (the husband is 88).

The professional incompetence and corruption of Maryland attorney Charles E. Smith comes to the fore as a list of annuities involved in his IPA scam with Access Funding, shows that completed transfers exploiting mostly minorities on 14 annuities which were issued by Allstate Life Insurance Company were completed at rates that well exceeded the 8% discount rate that Allstate Life Insurance Company offers to its annuitants thorugh the in house Advance Funding Exchange Program.

A November 5, 2018 article in Financial Advisor magazine opines that “financial advisors have a conflict of interest when it comes to the pension vs. lump sum decision.”   Same as what I've been saying all along with respect to unlicensed representatives of settlement purchasers giving uninformed unsuitable financial advice to structured settlement annuitants. 

Barry Cooper, a Florida retiree files a FINRA complaint against Somerset, its principal and several other employees stemming from the sale of what were labeled secondary market annuities. Cooper's payments were supposed to start in January 2018 but to date has received nothing pending an Appeal which is being heard in March 2019. The Oregon firm allegedly took an order from the retiree's wife, despite no written legal authority to speak with the wife about the retiree's account, such as a power of attorney to act on her husband's behalf. Other allegations against Somerset:

• Breach of Fiduciary Duty
• Negligence
• Negligent Supervision
• Fraud
• Breach of Contract
• Unauthorized Trading

December 2018

NAIC Statutory Issue Paper Confirms that Factored Structured Settlement Payment Streams Are Not Annuities or Insurance Products

American General Life Insurance Company has been successful in a Kentucky Supreme Court decision overturning a Kentucky Court of Appeals decision which would have permitted the factoring of workers compensation structured settlements if it had been allowed to stand.

Burlington County NJ Judges Approve 3 Structured Settlement Transfers in 3 Months for Annuitant with TBI!

Two settlement planning firms merged as Millennium split off from IFS and combined with Settlement Alliance to form Sage.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Structured Settlement | What is a Structured Settlement | Definition of Structured Settlement

by John Darer® CLU ChFC MSSC CeFT RSP CLTC

What is a Structured Settlement?

A structured settlement is a negotiated financial or insurance arrangement through which a claimant or plaintiff agrees to resolve a personal injury tort or wrongful death claim by receiving all or part of a settlement in the form of periodic payments on a agreed customized schedule, rather than as a lump sum.

A structured settlement is a negotiated agreement

Definition of Structured Settlement per IRC §5891(C)(1)

The term "structured settlement" means an arrangement—

(A) which is established by—

(i)

suit or agreement for the periodic payment of damages excludable from the gross income of the recipient under section 104(a)(2), or

(ii)

agreement for the periodic payment of compensation under any workers’ compensation law excludable from the gross income of the recipient under section 104(a)(1), and

(B) under which the periodic payments are—

(i)

of the character described in subparagraphs (A) and (B) of section 130(c)(2), and

(ii)

payable by a person who is a party to the suit or agreement or to the workers’ compensation claim or by a person who has assumed the liability for such periodic payments under a qualified assignment in accordance with section 130.

 

 

 Read What You Need to Know About Structured Settlements

 

 

Non Qualified Structured Settlements

Structured settlements can also be used for taxable damages, or for tax exempt damages that are not specifically included in IRC §130  (e.g wrongful imprisonment, wrongful conviction which are exempt under IRC §139F).

How Are Structured Settlements Funded?

Structured settlement payments are generally funded and backed by highly rated and regulated life insurance companies, a number of which have been in operation for more than 100 years.  Structured Settlements can also be funded with obligations of the United States Government (Treasury Funded Structured Settlements)

Structured settlements have received widespread bipartisan support from the U.S. Congress since the enactment of the Periodic Payment Settlement Act of 1982. 

Last updated August 5, 2023

 

 

Berkshire Hathaway Structured Settlements Expands Hardship Exchange Program

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Berkshire Hathaway has taken a leadership position among structured settlement annuity issuers by addressing the realities of structured settlement factoring through strategic engagement of its structured settlement annuitants. The notices warn annuitants about conduct of structured settlement payment buyers and offer details of Berkshire Hathaway's Hardship Exchange Program. Read  Berkshire Hathaway Life Hardship Exchange Notice to Structured Settlement Payees 2-2018

Berkshire Hathaway Life Insurance Company of Nebraska

Structured Settlement Annuities

In 2017, Berkshire Hathaway began an experiment by notifying its own structured settlement annuitants in Illinois, Indiana, and Georgia.  Its mailing was limited to payees who have been with Berkshire Hathaway for two years or more.  Berkshire Hathaway did not send notices to minors or payees who had settled workers compensation claims or were utilizing special needs trusts.  It is now expanding such notices to Arizona, New Jersey, Pennsylvania, Virginia, West Virginia. Annuitants in those states will receive such notices between the weeks of February 19, 2018 to February 26, 2018.

Here is an excerpt of the warning of the most recent Berkshire Hathaway notice:

"Beware of Companies Offering to Undo Your Structured Settlement

You may see advertising from companies offering to buy future payments from you. You may even be
contacted directly by such companies who found your name in public records. You entered into a
structured settlement for good reasons, and it is usually a bad idea to undo it. If you sell payments, not
only will you give up the benefits of the structured settlement, but in most cases, you will be offered
substantially less than your payments are worth.

These companies may employ aggressive tactics to encourage you to make a bad decision. If you
respond to their advertising or if they directly contact you and you show any interest, they may reach
out to you repeatedly to try to get your business. If you exhibit a willingness to do a bad deal and sell
some payments, they may aggressively encourage you to enter into repeat transactions. Since the sale
of payments is public record, their competitors may also start to pursue your business.

Any company attempting to buy your payments will need a court order to complete the transaction.
They will be required to provide us with notice of the court hearing. If you are offered poor economic
terms, or if the company withholds important information from the court, we will intervene to make
sure you and the judge know. While we cannot prevent you from willfully entering into a transaction
that is not good for you, the court may rule that it is not in your best interests"

Rationale for Berkshire Hathaway Hardship Exchange Program

Berkshire's stated belief is that by taking an active role, fewer payees will factor, and when a payee does factor with them, more of the original transaction will be preserved.  When a payee calls, Berkshire Hathaway reinforces the value of the structured settlement and discourage the payee from factoring.  When we think it is appropriate, we work with the payee to minimize the size of the transaction.  In addition, Berkshire currently use a 6.5% discount rate rate, further reducing the size of the transaction.  Finally, Berkshire uses a hardship standard, rather than the less rigorous “best interests” standard found in most state structured settlement protection acts.

Moreover, Berkshire Hathaway continues to file informational affidavits in respect of external factoring transactions where we, as interested parties, are allowed to do so.  Berkshire Hathaway provides additional information to the court that may have been left out of the application.  In particular, they report on previous factoring transactions and declinations.  They also explain the economics of our hardship exchange program.  Anecdotally, Berkshire states that they are aware of several instances where a factoring company has materially increased their offer to the payee after Berkshire made its filing.

Don't The Hardship Exchange Notices Encourage People To Sell Their Structured Settlements?

Berkshire Hathaway Life reports that less than 1.5% of payees receiving a letter have reached out to them by phone.  Some payees who have not received a letter continue to reach out to them on their own initiative.  Taken together, of the payees who reach out to them, roughly one-third ask to be sent an application.  About half of the applications they send are completed and returned to us.  Finally, Berkshire only agrees to work with about half of those applicants who do return an application to them.

The Berkshire Hathaway program is a very good thing, in my professional opinion, and has increasing acceptance among settlement industry professionals.  Well publicized efforts to shine the light on questionable and sometimes fraudulent business conduct by structured settlement factoring weasels, not to mention a Houston personal injury lawyer who tried to buy his Louisiana client's structured settlement through an offshore entity at a horrible discount rate that was triple the best rate.

Why Berkshire Hathaway is Doing The Right Thing

1. Reinforces value of structured settlements in general and structured settlements issued by a Berkshire Hathaway company in particular.  
   
2. Provides education to annuitants about a potentially useful service, if its needed and if the annuitant qualifies. The education comes from a legitimate source  (i.e. not an affiliate marketer, illegitimate review site or structured settlement directory site, "flash LLC", self proclaimed geniuses sporting dunce caps, Indian or Philippines SEO firms with no bona fides and no direction, being paid pennies to wax wastefully).
   
3. Drives down discount rates. Other companies that want the business would have to beat Berkshire Hathaway's rate. Some fear that driving down discount rates will encourage more people to sell, but the statistics don't support that theory according to Berkshire Hathaway's report.
4. Strategic engagement reinforces the Berkshire Hathaway brand.
5. For those who have no alternative but to raise money but to sell payments, Berkshire Hathaway will split payments. This eliminates the need to use a servicing company. Customers can continue to engage with Berkshire Hathaway instead of leaving the ongoing education and engagement in the hands of third parties who seek to profit from a sale of their structured settlement payments.

 

 

 

 

 

 

 

Structured Settlement "Independence Day Sale" | Happy Independence Day Readers