by John Darer CLU ChFC MSSC CeFT RSP CLTC
Smucker "Pumps Up the Jam" on Lump Sum Dissipation with Murphy
The American Association of Settlement Consultants (AASC) announced November 10, 2022, that members of the House Ways and
Means Committee, led by Lloyd Smucker of Pennsylvania and Gregory F. Murphy of North Carolina have formally requested a government-funded study assessing the long-term economic and lifestyle impact of premature lump-sum settlement dissipation. The task will be assigned to Honorable Gene Dodaro, the Comptroller General of the United States and head of the Government Accountability Office (GAO), who will assess the feasibility of conducting the study and respond accordingly.
In their request, the Congressmen strongly stated the need for authoritative data on the troubling incidence of premature dissipation associated with lump-sum cash settlements, “For low-income Americans and or disabled individuals, settlement income is depended upon to cover essential costs such as mortgage payments, accident-related medical expenses, and other basic living expenses."
"We are deeply concerned by historical data showing legal settlements made in the form of lump sum payments to injured parties and their families quickly dissipate, leaving victims without income when they need it most.” they said, according to the AASC release,
In addition to analyzing the incidence and impact of premature dissipation on injured parties, the request also asks that the study assess the long-term impact on mortgage foreclosures, medical debt, and other personal debt. With the availability of data that paints a complete picture of premature dissipation’s negative impact, injured parties will be able to make a more educated decision and fully assess the risk associated with cash versus annuitization of payments.