The "Butt Heads" of the Factoring Industry need to get their FAQs straight
A. RAM Funding Bleats in its Structured Settlement FAQ:
Q. Do I Get Interest on My Structured Settlement? A. No. The interest is a part of your structured settlement agreement and is therefore, tax-free. You do not then get interest on top of that.
Comments: Carefully chosen words by RAM Funding's marketing people to start off a sentence with the word "no" to make a structured settlement seem as if plaintiff is not getting any interest. Further in artful wording adds to the confusion. What a plaintiff wants to know is "am I getting a return on my money?" Although it is technically not your money until you receive it, the answer is yes! The return is intrinsic to the benefits set forth in the settlement agreement and in the structured settlement annuity contract. The benefits set forth in the settlement agreement were not pulled out of thin air. They are based on a structured annuity quote that has been procured by the settlement planner, structured settlement broker or brokers placing the structured settlement.
With any structured settlement quote you should be able to see what the cost of the structured settlement is and what the total of future payments are guaranteed to be (or expected to be, in the case of lifetime payments beyond a certain period) An advantage of a structured settlement is that you know what you will receive and when you will receive it. For those that want certainty, with no volatility this is a good alternative. Assuming the cost of the structured settlement annuity is $500,000 and the total of your future payments is $1.5MM then you essentially have $1MM of "interest" built in. If you subsequently turn around and invest your structured settlement payments after you receive them, you may have interest or capital gain on top of those invested payments.
The tax-free status in a structured settlement is due to tax exclusion for workers compensation, or damages on account of personal physical injury or physical sickness as set forth in Internal Revenue Code Sections 104(a)(1) or 104(a)(2
B. RAM Funding Bleats in its Structured Settlement FAQ: "Structured settlements received special legislative treatment by the U.S. Congress in 1982, as a way to make large settlements more agreeable to the payor, who does not need to come up with a large lump sum, yet still provide certain protection to victims."
Comments: Structured settlements DID receive special legislative treatment by Congress in 1982 as reflected in the Periodic Payment Settlement Act of 1982.
The Act, also known as Public Law 97-143 or P.L. 97-143 codified all of the prior revenue rulings related to periodic payments to injured parties This law allowed defendants to assign their obligations (via a "qualified assignment") to make future periodic payments to a third party without retaining a future obligation to the injured party. The assignee is granted a tax exclusion which makes the transaction work. This law enables the defendant to enter into a structured settlement without retaining a future obligation to the injured party because that obligation under the settlement agreement has been assigned to a third party. The Factoring "Butt Heads" leave out that Claimants and plaintiffs benefited as well because , as a result of P.L. 97-143, there was an option where they no longer had to rely on the defendant going bust while holding the obligation to make periodic payments to the plaintiffs .
The characterization about the payor not having to come up with a large lump sum is a figment of The Factoring "Butt Heads" imagination since it's a good bet they have not taken an active part in settlement negotiations that include, or result in a structured settlement. If there is an agreement that includes a structured settlement with a cost of $1,500,000, a trust seeded with 2,500,000 and other up-front cash of $2,000,000 to pay legal fees, don't the defendants have to come up with $6,000,000 to fund it?. Perhaps that's many multiples of the annual income of the genius that came up with the Factoring "Butt Heads" bogus statement.
RAM Funding Bleats in its Structured Settlement FAQ: "The Truth about Structured Settlements (showing "originality" by taking a page from Tony "Boo Hoo"'s Annuity MD play book). They are easy for lawyers, and save the defendant a huge amount of cash flow. Benefits that "protect" you from yourself are a fine ruse. The fact is, a lump sum of cash would, in most cases, benefit the victim at the expense of the defendant. You certainly have the ability to manage your own money, invest it wisely, and increase the amount
Comments: Some lawyers would say that structured settlements are not easy. I certainly try to make them easier for my clients. They do not always save the defendant a huge amount of cash flow. Remember that structured settlements are negotiated. The plaintiff must sign a release in order to get a structured settlement, EVEN IF the structured settlement emanates from a qualified settlement fund. Saying that benefits that protect yourself are a fine ruse are ignorant and irresponsible. There are countless stories in the media of celebrities who squander their wealth. The Factoring "Butt Heads" miss the obvious in that ANY settlement benefits the victim at the expense of the defendant. Who writes the checks?
The Factoring "Butt Heads" need to get their FAQs straight. The advice contained in their Structured Settlement FAQ (as it stands 02/02/2008) should be discounted given that they come from The Factoring "Butt Heads", whose interest in giving this advice , in my opinion, is principled on profiteering at the tort victim's expense. Since were talking "size", what sort of "huge" discount do The Factoring "Butt Heads" take on structured settlement factoring transactions? Courts in Florida, where The Factoring "Butt Heads" have their "crib", will have records of prior transactions. The State of Florida requires a more comprehensive itemization of charges and expenses on disclosures for structured settlement factoring transactions than many other states.
There's an important message to be had from this funny video. If a "butt head" wrecks your children's swing set you can always replace it cheaply. If a" butt head" plays on your weaknesses, and as a result wrecks your kid's or your long term financial plans, you may not be able to earn back the mistake.
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