Plaintiff attorneys should use caution when encountering a latter day defense tactic that still occasionally pops up in negotiations, involving pressuring the plaintiff into a structured settlement with payment terms of only a few years in the current environment. Such moves were popular a few years ago. Whatever the packaging, the primary motivation was to help the adjuster get credit and help the settlement broker make a living. Generally the negotiations involved an agreement to structure an arbitrary amount of money a certain way that held no rhyme or reason when it came to the plaintiff's needs.
If there's something of value to offer that's one thing. At one point in time there WAS a value to short term structures. There will likely be again in the future when interest rates and tax rates rise. But now? Structured settlements under two years duration offer spendthrift protection but little else in today's market.
That may mean something to somebody, but the caveat is that it might
cost you or your client money. There are other solutions
that may offer more in the short term.Take a look at short term taxable Treasury Rates-they stink!
3 month T-Bill .14%
6 month T-Bill .20%
1 year T-Bill .36%
2 year T-Notes .90% Source: Bloomberg.com September 13, 2009
Take a structure purchased now that pays a single lump sum on January 15, 2010 and you live large on January 15, 2009 with approximately 4.25% less than dough was put in for you. But it's "tax free" LOL...just kidding on the LOL!
A Structured settlement is an excellent long term financial planning vehicle. There many other applications where it truly has great value.
While it is certainly its prerogative to construct an offer of its choosing, extremely short term structures using the above tactic is discouraged. Care must be taken by the defense to gain the best understanding it can of the plaintiff's needs. A better understanding leads to more thoughtful, therefore more attractive offers.