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

AnnuityPaymentFreedom Pans for "Structured Settlement Planning" Leads With No Bona Fides

by Structured Settlement Watchdog

Oy, chocolate chip cookie, acai bowl and fish burrito loving lawyer Jovan A. Johnson, is now doing "Structured Settlement Planning" but only "earns money if a visitor contacts him (through his website) to sell annuity payments rights and completes such a transaction"?  Huh?

I think a few other structured settlement planners, settlement planners with credentials might have something to say about that.

An active member of the California bar, Johnson operates several websites and admits making money if a visitor contacts him to sell annuity payment rights. He also exploited the names and contact information for structured settlement brokers and firms on his sites, AnnuityPaymentFreedom and Paymaster.co, until it was exposed here.

Lest anyone has forgotten...

Structured Settlement Brokers Are Being Billboarded by San Francisco Lawyer Shilling Factoring - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews April 2, 2023

Why Annuity Payment Freedom is a Bit Like a San Francisco Sidewalk - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews February 6, 2022

Paymaster.Co Maintains Sloppy Structured Settlement Information | Needle Stays On Unreliable - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews

A Contrast of Factoring Shillers on "Structured Settlement Planning"

1a/ According to Annuity.org, the Florida based factoring shills for Conshohocken PA's CBC Settlement Funding  "Structured settlement planning is the process of creating a customized payment plan for an injured party after a legal settlement. The goal is to help the injured party meet their needs and goals"

1b. Contrast that with what Jovan Johnson says "We provide free, publicly accessible, financial information. We earn money if a visitor contacts us to sell annuity payments rights and completes such a transaction". [offers a check off box on a seeking information form]

If "we" is Jovan Johnson and the only way "we"(Johnson) get paid is "when a visitor to the site contacts him to sell annuity payment rights", how is that structured settlement planning?

2a. Microsoft Co-Pilot says

"Structured settlement planning refers to the process of designing a financial arrangement where a person receiving a legal settlement, typically from a personal injury claim, receives their compensation in a series of periodic payments over time instead of a single lump sum, allowing for tailored payouts to meet their future needs like medical expenses or income replacement, often with tax advantages; this is usually facilitated by a specialized consultant who works with both the plaintiff and defendant to structure the payments appropriately. 

2b. Says Johnson...

"Provide the best website and experience that we can for our visitors. This includes five areas by which we organize our work:

• creating a site experience that is easily navigable,
• publishing accurate, thorough, and digestible content**, 
• create resources that help people,
• answering questions that we anticipate our visitors may have, and
• providing great service for those who contact us and elect to engage us when selling their annuity payment rights.

Trust

We endeavor to earn your trust. We believe that providing content and resources upon which people can rely requires that we inspire trust.

How about being "Jovial" and not bogarting terms that have nothing to with what you're up to?

That just might inspire more trust. Own what you are.  

Jovan A. Johnson Mails It in on AnnuityPaymentFreedom.Net

1. "In order for a factoring company to purchase a structured settlement, they will work with the potential seller to analyze the annuity contract and gather information before providing a quote. Next, if the quote is accepted, court approval will be required before the annuity is sold" 

Comment:

The highlighted section immediately above is indicative of someone who cannot properly articulate (or chooses to improperly articulate) what structured settlement factoring is. Nobody who is receiving structured settlement payments can sell the annuity contract generating the payments. Even a contract lawyer like Jovan A.Johnson should know that. The companies who pay Jovan Johnson the fees he admits to earning can tell him that. 

Disclaimer:  Jovan A. Johnson, an active member of the California bar at time of publication, but holds no insurance or securities license. Download Individual Name Search Jovan Johnson. He should not be confused with Jovan Johnson the Atlanta based wealth management specialist orJovantia O. Johnson who at one time held a California Insurance license, but has been inactive since 2016. 

Our interest is seeing that consumers have the clearest path to accurate information about structured settlements.  see The Structured Settlement Watchdog® John Darer®

 

 

What Happens if You Die and Never Reviewed or Changed Beneficiary in 37 Years?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Why It's Important to Name and Review Beneficiaries? 

I've previously reviewed the important topic of beneficiary designations extensively in two blogs on the 4structures.com Settlement News Network blog.

Structured Settlement Beneficiary | Why It's Important (4structures.com)

Structured Settlement Beneficiary Designations (4structures.com)

This is also relevant and important to life insurance, bank accounts, investment accounts and retirement accounts and overall estate planning. "Setting it and forgetting it" could have unintended consequences.  Check out the Rolison case that has been heavily litigated in the Western District of Pennsylvania and a had published decision in April 2024.  See The Procter & Gamble U.S. Bus. Servs. Co. v. Estate of Rolison, Civil Action 3:17-CV-00762 | Casetext Search + Citator

Losinger is Winner as Former Partner of Dead Proctor & Gamble Employee Inherits $1M Plus 37 Years After Split

In 1987, Jeffery Rolison filed a handwritten form naming his then partner, Margaret M. Sjostedt  (now Margaret Losinger) the sole beneficiary of his P&G retirement account. Rolison never changed it between 1987 and his death in 2015.  Rolison and Marget broke up in 1988. Margret is set to inherit that $1 million retirement account (over Rollison's estate) as Rolison never updated the beneficiary designation and Margaret was still listed as the beneficiary when he died.

THE PROCTER & GAMBLE U.S. BUSINESS SERVICES COMPANY, as Plan Administrator and on Behalf of THE PROCTER & GAMBLE PROFIT SHARING TRUST AND EMPLOYEE STOCK OWNERSHIP PLAN and THE PROCTER & GAMBLE SAVINGS PLAN Plaintiff,
v. ESTATE OF JEFFREY ROLISON, Deceased, MARGARET M. LOSINGER, and MARY LOU MURRAY Defendants.
IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIANo. 3:17-CV-00762
(JUDGE CAPUTO)

"Rolison Knew That He Needed to Check and Change Beneficiary Numerous Times But Simply Failed to Do So"-Court

"There no record evidence in this case that supports the Estate's position that Rolison failed to change his beneficiary status because of any misrepresentation or omission on P&G's part. Instead, again, the record reflects that P&G warned Rolison to check and change his beneficiary designation numerous times between 1987 and 2015 and that “Rolison knew that he needed to take affirmative steps to change his previous beneficiary status,” but that he “simply failed to do so.” - Court

 

 

Do Structured Settlement Payments Have to Be Equal Payments?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Whether Structured Settlement Payments Have to be Equal (or Substantially Equal) Depends on the Nature of Claim and the Settlement Planning Solution being used

The substantially equal payment requirement applies in situations where:

- There is a non-qualified assignment where a periodic payment obligation is assigned to a U.S. domestic assignment company.
- An immediate annuity is utilized as the funding asset.

What are Non Qualified Structured Settlements and Non Qualified Assignments for Tax Deferral (4structures.com)

IRC Section 72(u) was added as part of the Tax Reform Act of 1986.

• An annuity contract owned by a non-natural person is not considered an annuity contract for tax purposes  IRC §72(u)(1)(A)
• 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   IRC 72(u)(1)(B) and also cited in a presenation to the United States Senate Committee on Finance May 24, 2016 JCX 45-16 (May 20, 2016) "By contrast to the treatment of life insurance contracts, if a deferred annuity contract is held by a corporation or by any other person that is not a natural person, the income on the contract is treated as income accrued by the contract owner and is subject to current taxation. The contract is not treated as an annuity contract".

IRC 72(u)(4) Notable Exceptions to Ownership of Annuity by Non Natural Person

This subsection shall not apply to any annuity contract which—

(A) is acquired by the estate of a decedent by reason of the death of the decedent,

(B) is held under a plan described in section 401(a) or 403(a), under a program described in section 403(b), or under an individual retirement plan,

 

(C) is a qualified funding asset (as defined in IRC 130(d), but without regard to whether there is a qualified assignment),  What is a Qualified Assignment? (4structures.com)

 

(D) is purchased by an employer upon the termination of a plan described in section 401(a) or 403(a) and is held by the employer until all amounts under such contract are distributed to the employee for whom such contract was purchased or the employee's beneficiary, or

 

(E) is an immediate annuity.

IRC 72(u)(4) (C) and (E) are germane to structured settlements

A 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, or any obligation of the United States  Subject to IRC 130(d).

1. such annuity contract or obligation is used by the assignee to fund periodic payments under any qualified assignment. 
2. the periods of the payments under the annuity contract or obligation are reasonably related to the periodic payments under the qualified assignment, and the amount of any such payment under the contract or obligation does not exceed the periodic payment to which it relates,
3. such annuity contract or obligation is designated by the taxpayer (in such manner as the Secretary shall by regulations prescribe) as being taken into account under this section with respect to such qualified assignment, and
4. such annuity contract or obligation is purchased by the taxpayer not more than 60 days before the date of the qualified assignment and not later than 60 days after the date of such assignment.

Types of Structured Settlement Payments | Structured Settlement Payment Options (4structures.com)

What is an Immediate Annuity under IRC 72(u)(4)(E)?

For purposes of this subsection, the Code says the term "immediate annuity" means an annuity—

A. which is purchased with a single premium or annuity consideration,

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

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

So there you have it. That's where the equal payments (or subtantially equal payments) comes from.

Why Doesn't IRC 72(u) apply to annuities owned by a Qualified Assignment Company?

Because there is an express exception made in IRC 72(u)(3)(C) for an annuity that is a Qualified Funding Asset under IRC 130(d)

Non Qualified Assignment Solutions with Domestic Assignment Company Where IRC 72(u) Applies

• Corebridge subsidiaries American General Life Insurance Company and United States Life Insurance Company in the City of New York through their appointed brokers, where an annuity is used to fund an obligation to make periodic payments.  Note that the same product providers offers an alternative niche domestic solution using a funding agreement (in lieu of an annuity) as a work around for where a deferral is desired without going to an offshore assignment company.
• Metropolitan Tower Life Insurance Company (MetLife) 

Last updated August 8, 2024

 

 

 

 

Structured Settlement Article | "Expert Reviewed" Holey Moly in Forbes Advisor 2024

by Structured Settlement Watchdog

Forbes Advisor published inaccurate "Expert Reviewed" Holey Moly from a UCLA law professor, only months after publishing Jeremy Babener's excellent Forbes Advisor contribution about structured settlements. 

 A. Two Key Takeways Holey Moly

• A structured settlement means the plaintiff gets a series of payments over time rather than a single lump-sum payment.
• The defendant can purchase an annuity from an insurance company to pay the structured settlement

Commentary

• A structured settlement is a (1) negotiated, (2) customized stream of periodic payments, (3) paid as damages as part of the consideration (4) in exchange for a release of liability to resolve a claim, lawsuit, or dispute.
• A structured settlement is not an either/or binary.  
• A structured settlement may be funded with a structured settlement annuity [see IRC 130(d)]
• The majority of structured settlement annuities are purchased by qualified assignment companies. See Step 2 of Structured Settlement Flow Chart (Annuity) below.  Qualified assignmments have been the standard since President Ronald Reagan signed the bipartisan Periodic Payment Settlement Act into law in January 1983. For a deep dive on qualified assignments, see What is a Qualified Assignment? (4structures.com)
• Regardless of whether a structured settlement annuity is purchased, or if purchased by a self insured Defendant, a Defendant's or Respondent's liability insurer, or a qualified assignment company, where an annuity is purchased it is purchased from a life insurance company.  Under the laws of most states an annuity "is issued by a life insurance company in exchange for a premium" For example  California Code, Insurance Code - INS § 10509.913(a) | FindLaw, 

B. In discussion about Taxation and Pros of structured settlements Bieber and co. write:

1."the money from the settlement is tax-exempt, if the plaintiff invests the money from the settlement, interest earned could be taxed. However, the rules are different for plaintiffs who receive a structured settlement as an annuity. The principal and interest received are generally tax-exempt in this situation"  [see First Bullet Point for Commentary]

2."If a plaintiff receives compensation for physical personal injury, generally the settlelment is tax-exempt if the settlement is for:

• Physical injuries or sickness (except for medical expenses that were deducted on the plaintiff’s taxes)
• Mental anguish or emotional distress related to a physical injury or sickness (if not related, it is taxable)
• Discrimination that does not include lost wages
• Lost property value if the settlement is less than or equal to the basis of the property"  (see Third Bullet Point in Commentary below)

3."While the money from the settlement is tax-exempt, if the plaintiff invests the money from the settlement, interest earned could be taxed. However, the rules are different for plaintiffs who receive a structured settlement as an annuity. The principal and interest received are generally tax-exempt in this situation"

4. "Structured settlements provide a continuous stream of tax-free income. Payees will not need to worry about owing the IRS or their state any money from the settlement".

Commentary

• Whether a structured settlement is funded with an annuity has no independent bearing on the taxability of the settlement. Certain financially distressed hospitals in the New York City area have entered into agreements to pay over a short period of years with or without annuity funding.  
• The damages that settlement payments represent (as reflected in the settlement agreement executed by the parties, reflecting the intention of the parties) do have a bearing on taxation.
• Lost property value of the settlement is less than or equal to the basis of the property is listed as representative of tax exempt. I strongly suggest anyone exploring this type of structured settlement read this.  Construction Defect Structured Settlements (4structures.com)

Don't let your head explode. There's lots out there. Not all of it is accurate. I help you digest it

 

Survivor Payments | "All payments From a Structured Settlement Are Guaranteed" ?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Structured Settlement Survivor Payments

Seen on the Internet about Structured Settlements this week

A. "If no beneficiary was designated, the payments will become part of the recipient's estate and be distributed according to their will or state laws".

The statement needs further clarification.

Commentary

1. If the Payee dies without having designated a beneficiary to the annuity issuer prior to the Payee's death, AND there are any remaining period certain payments or guaranteeed lump sums, those payments will be paid, when due, to the Estate of the Payee. From there, payment will be distributed in accordance with the Payee's will, if there is one, or state intestacy laws if there is no will.  See intestacy | Wex | US Law | LII / Legal Information Institute (cornell.edu)

2. If a Commutation Rider is in place when the Payee dies, any remaining certain payments and guaranteed lump sums are commuted to a lump sum in accordance with the terms of the commutation rider.

3. If the Payee dies after there are no remaining period certain payments or guaranteed lump sums then payments will cease at the Payee's death.  

Structured Settlement Beneficiary | Why It's Important (4structures.com) May 8, 2024 update

Structured Settlement Beneficiary Designations (4structures.com) May 24, 2021

B. "All payments from a structured settlement are guaranteed"

Commentary

All payments from a structured settlement are contractually guaranteed in accordance with the terms of the contract. 

When a structured settlement is established there are multiple contracts

• A settlement agreement and release which establishes an obligation to pay periodic payments as damages in exchange for a release of claims.
• A qualified assignment, which is a subsitution of obligors from a Defendant or his/her/its insurer(s) to a qualified assignment company
• An annuity contract, which is purchased as a "qualified funding asset" by the qualified assignment company and is owned by the qualified assignment company.

How Do Structured Settlements Work | Structured Settlements Explained (4structures.com)

While the terms "guaranteed" and "certain" are often used synonymously by those holding an insurance license, including some settlement planners and structured settlement brokers and even lawyers, such use is inaccurate and can lead to misinterpretation and/or misunderstanding by Payees.

 

Structured Settlement Industry On Track for $9B After Stellar First Half of 2024

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Structured Settlement Industry production figures have been released and it's looking to be a record year, again!

• The total for June                         $   708   Million
• The total for 2^nd Q 2024                $2.220   Billion
• The total for 1^st Half of 2024         $4.485   Billion

A Structured Settlement Is All It's " Quacked Up" To Be | John Darer Reviews

by John Darer CLU ChFC MSSC CeFT RSP CLTC Structured Settlement Expert

Ways to Use Structured Settlements in Settlement Planning 2024 (4structures.com)

Comprehensive Settlement Planning Services for Injured Persons & Law Firms (4structures.com)

Settlement Experts and Services for Defendants, Lawyers and Claims Pros (4structures.com)

New York Structured Settlements Experts | Settlement Consulting (4structures.com)

Structured Settlement Experts, Settlement Planning Experts NY | CT| NJ | USA | London (4structures.com)

QARP and UCC Article 9 | Choice of Law Considerations in AL, AK, ND, NM, TX, WI, WY, DC

by John Darer CLU ChFC MSSC CeFT RSP CLTC

A Qualfied Assignment Release and Pledge Agreement (QARP) is a type of qualified assignment that gives a
structured settlement payee a security interest in the qualified funding asset pursuant to the Uniform Commercial Code (UCC). 

What is a Qualified Assignment? (4structures.com)

What is the Uniform Commerical Code?

The Uniform Commercial Code (UCC) is a standardized set of regulations for conducting business and financial transactions in any state in the USA as well as the District of Columbia and US Territories. The UCC governs a wide range of transactions, including the sale of goods, secured transactions, negotiable instruments, as well as others. It provides rules and guidelines for parties engaged in business dealings, ensuring consistency and predictability.

State-specific variations exist within the Uniform Commercial Code (UCC). While the UCC is standardized across states, each state may introduce slight modifications or adaptations to particular sections. Generally, these alterations are minor and do not substantially affect the UCC's overall uniformity.

How Does Article 9 of the UCC and Impact the Rights of a Structured Settlement Payee?

Article 9 of the UCC overrides any language in the QARP that would restrict the claimant's ability to assign the right to receive their payment.

This poses a problem for  the QARP because structured settlement annuities must restrict the claimant's ability to assign their payments, While many states have carved out an exception for structured settlement agreements, some have not and this may impact choice of law selection for the QARP with certain annuity issuers.

Seven States and DC That Have Not Expressly Exempted Structured Settlement Agreements from the UCC

Alabama

Alaska

New Mexico

North Dakota  

Texas

Wisconsin

Wyoming

District of Columbia

These 8 juridictions may not be permitted to be used for Choice of law on the QARP.

 

 

 

 

 

 

 

 

Structured Settlement Industry BEST Quarter EVER in Q1 2024 After Record 2023!

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Has the "golden age of structured settlements" returned?   

• March 2024 premium production for the structured settlement industry was $774 MILLION!
• Q1 2024 industry production was $2.273 BILLION, a new quarterly record
• On top of the Structured Settlement Industry's $8.68B Record Year in 2023

What's Behind Structured Settlement Industry Growth?

John Darer reviews what he sees

1. One obvious reason is the return of interest rates post pandemic, beginning in 2022 which eventually eroded anti-selection bias.  Contrast when in April 2020, the 10 year United States Treasury yielded 0.40% to the Internal Rates of Return seen in recent times on 10 year structures that have exceeded 4.5% and at times have exceeded 5%. Bear in mind that because periodic payments from qualified structured settlements (personal physical injury, physical sickness, wrongful death and workers compensation are income tax free[IRC 104(a)(1) and IRC 104(a)(2)], the payment recipient is benefiting from a very competitive taxable equivalent yield. See Tax Advantages of Structured Settlements | Taxable Equivalent Yield Chart (4structures.com)
2. It is clear from multiple sources and surveys that decumulation risk is a major concern for Americans. In June 2023, Allianz claimed that Americans fear running out of money more than fear of death. Nobel laureate William Sharpe has called decumulation "the nastiest problem in Finance".  Humans in Financial Transition are who we deal with. Structured settlements are an important part of the conversation and the solution.
3. Years of declining interest rates encouraged producing structured settlement industry particpants (including settlement planners) to up their game and be better educated and skilled at what they do. 
4. Diversification of product offerings within the industry. Annuity issuers and other product providers have stepped up to the plate.
5. Industry workflow systems continue to improve operating efficiency.
6. Increased investment by product providers and brokers/planners in business development tools. MetLife has made the most visible marketing efforts to be seen everywhere
7. Increased investment in knowledge by industry participants leads to more fluency in approach and delivery of services to clients and prospects that leads to greater opportunities
8. Continued growth of flexible business models. 
9. To some extent, there are Pandemic era backlog cases continuing to work their way to resolution.
10. To some extent the severity levels of claims have increased.

Why Structured Settlements?  Because Certain Sells®

 

 

 

 

 

Does a Structured Settlement Commutation Rider Simplify Inheritance?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Does a Structured Settlement Commutation Rider Simplify Inheritance?

"A commutation rider can simplify  inheritance. Without a commutation rider, a beneficiary must go through the process of selling their future payments to get access to cash sooner than scheduled", says Annuity.ORG, an Orlando based shill for factoring company CBC Settlement Funding of Conshohocken PA.

Let's examine their claim...

1. A structured settlement payee is contractually permitted to name and/or change beneficiaries by notifying the annuity issuer in writing and in a form acceptable to the annuity issuer. Most current annuity issuers have forms that can be downloaded for this purpose.
2. Commutation riders were introduced in the late 1990 to create liquidity to pay estate taxes at a time when the estate tax exemptions were much lower than they are today. 
3. Commutation riders were also later used where structured settlement payments feed into a Special Needs Trust (referred to in New York as a Supplemental Needs Trust). The local Medicaid agency will seek reimbursement of funds it spent at the death of the Payee/Trust Beneficiary. Some agencies even make a Commutation Rider mandatory (e.g. New York City area counties).
4. In both scenarios, the commutation rider must be established at the time of settlement and contain language required by the annuity issuer. The second one of my prior blogs highlighted below, addresses a 2019 decision in the Northern District of Georgia, emanating from a June 1998 settlement in a wrongful death case where denial of a commutation to  survivors of a survivor of a decedent in the 1996 ValuJet crash was upheld because the Settlement Agreement, Qualified Assignment and Release and Annuity Application lacked certain language.  
5. A structured settlement factoring transaction may take 60-90 days in the best of circumstances and requires the approval of a state court judges who must determine if such structured settlement transfer is in the best interest of any applicable beneficiaries. Rates of such transcations may exceed structured settlement commutation rates.
6. Commutation Riders often commute future payments NET of commissions paid to structured settlement brokers.  If death occurs shortly after settlement it could be quite a hit if there is a high percentage commutation in excess of what is actually needed to help pay a lien. Berkshire Hathaway introduced a Responsive Commutation Rider that potentially limits commutation to an objectve formula based on the amount of a Medicaid Lien or estate or death taxes

Here are some of my previous blogs about about Structured Settlement Commutation Riders

Structured Settlement Commutation Riders FAQ | What You Need to Know About Commutations - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews (typepad.com)  February 6, 2016

Estate Cannot Commute Structured Settlement to Lump Sum IF... (4structures.com) May 26, 2020

Structured Settlement Commutation Riders Must Be Revisited Before Estate Tax Cuts Expire in 2025 - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews (typepad.com) January 15, 2024

Structured Settlement Commutation Riders with SNTs Best Practices (4structures.com)  April 24, 2022 Updated  January 15, 2024

Last updated March 30, 2024