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

Structured Settlement Term of The Day: Rated Age

by John Darer® CLU ChFC MSSC RSP CLTC

Faster than you can say " cheap Rolex" it appears that one structured settlement firm's value proposition is to "knock off" their clients

"To hold down the cost for the client the structured settlement broker will try to obtain ...an impaired life expectancy for the claimant". - from another Structured Settlement Company web site

Pick your poison...?

 

At 4structures.com, LLC we actually like to keep our clients: (1) alive; and (2) to live as long and productive lives as possible. If during the course of the settlement planning process we can obtain a rated age from a life insurance company that issues structured settlement annuities,  we will be in a position to offer a reduced cost solution to providing the needed future benefits. With a rated age, an improved structured settlement payout can be provided per settlement dollar allocated to a structured annuity which includes lifetime payments. A rated age does not affect structured settlement payments for a fixed period certain or guaranteed lump sum payments.

For more information please watch this video:

Note: This video, is an update from the original video that appeared with this post

How Not To Kill Your Client's Structured Settlement By Fumbling At The Goal Line

by John Darer CLU ChFC CSSC

Epitaph for a would-be structured settlement:

Documentation that says in pertinent part " For the consideration of Five Hundred Thousand ($500,000.00) the receipt and sufficiency of which is hereby acknowledged, plaintiff hereby releases, remises...

" Plaintiff has been advised by counsel...

Followed by client's signature

Action Followed by fax to defense counsel.

CONSTRUCTIVE RECEIPT...Two big words.  Add one fatal tax principle.  Possible E&O Claim.

Practice Tip: If your client is going to structure then the consideration must include the periodic payments as consideration, not the cost of the payments.

Chicago Writer Out of "The Loop" In Business.Com "Guide To Structured Settlements"

by Structured Settlement Watchdog

Chicago SEO hack Matt Alderton states one reason that structured settlements can benefit plaintiffs and defendants in injury cases:

"If you're injured, having a claim paid to you in periodic payments via a structured settlement, rather than in one large lump sum, saves you from paying taxes on your settlement and can help it last a lifetime".

The True Facts:

A lump sum payment of damages for workers compensation, physical injury or physical sickness that meets the requirements of IRC 104(a) is income tax free. Interest and/or capital gains on that lump sum investment may be taxable. A structured settlement provides income tax free payments of damages that qualify under IRC 104(a). If an annuitant dies and the present value of the annuitant's estate (including, among other things, any unreceived certain structured settlement payments or guaranteed lump sums) exceeds the estate tax exemptions estate taxes are due.

Matt Alderton belly flops  in his recommendation to hire a structured settlement specialist "who will advise your attorney on making the settlement". His top recommendation is to work with the Structured Settlement Alliance, alter ego of "cash now pusher" JG Wentworth. Talk about shooting yourself in the foot.

The coup de grace is that this appears in a Business.com segment on workers compensation, an area of structured settlements that is difficult if not impossible to factor.

What part of "do the research BEFORE you write" do these SEO types not understand?

SEO= search engine optimization

How Structured Settlements Work | Structured Settlements

by John Darer® CLU ChFC MSSC RSP CLTC

Check out this structured settlement flow chart which helps explain how a structured settlement works when a structured settlement is funded with one or more structured annuities.

How Structured Settlements Work  by 4structures.com®

The flow chart introduced as part of 4structures' efforts during National Financial Literacy Month may be helpful to attorneys, plaintiffs, judges, claims adjusters and even some settlement professionals to better understand the sequence of events that occur when a structured settlement is created with a qualified assignment. Without a clear understanding of the sequence of events there is a risk that settlement documents will contain flaws.

What is a Structured Settlement?   How Do You Get a Structured Settlement?

Types of Structured Settlement Payments

Structured settlements provide core income stability with the safety, security and guarantees from well capitalized life insurance companies, or Treasury Funded Structured Settlement payments.

A structured settlement is like getting a paycheck from a "job" that you can never be fired from.  That's just one reason why plaintiffs choose structured settlements for part of their recovery. Structured settlement payments are income tax-free, if they represent payment of damages from physical injury, physical sickness, wrongful death or workers compensation under IRC §104(a)(1) or IRC §104(a)(2).

Structured settlements established for taxable damages offer tax deferral.  See What are Non Qualified Structured Settlements and Non Qualified Assignments for Tax Deferral (4structures.com)

Why Is Miami Law Firm Promoting "Cash Now Pusher"?

Why does the Miami Florida law firm of Gerson and Schwartz , P.A.,a supporter of structured settlements on the one hand, appear to be promoting NATLE endorsed "cash now pusher" Strategic Capital Corporation on its Miami Personal Injury Lawyer blog on the other?

Gerson and Schwartz also contends in its post of January 30, 2008 "Sale of Structured Settlement Annuities"  that that THE INTERNAL REVENUE CODE, specifically  IRC 5891 expressly authorizes the sale of structured settlements annuities by plaintiffs.

Comments

1. Perhaps the intention of these "responsible plaintiff's lawyers" was right but, the post appears to have material inaccuracies and delivers the wrong message
2. I'll leave the legal definition of the phrase "expressly authorized" to you lawyers.
3. According to Wikipedia, "The Internal Revenue Code (or IRC) (more formally, the Internal Revenue Code of 1986, as amended) is the main body of domestic statutory tax law of the United States"
4. The  words "annuity" or "annuities" appear nowhere in IRC 5891
5. A structured settlement factoring transaction deals with the sale of structured settlement payment rights NOT the sale of structured settlement annuities, which are typically owned by a qualified assignment company.
6. The sale of structured settlement annuities requires valid life insurance license issued by the insurance department in the state of solicitation, a prerequisite which it is believed most purchasers of structured settlement payment rights DO NOT possess.
7. IRC 5891 entitled "structured settlement factoring transactions", deals solely  with the imposition of an excise tax "on any person who acquires directly or indirectly structured settlement payment rights" [See IRC 5891 (a)]. It goes on to deal with exceptions to that excise tax [See IRC 5891 (b)]. It DOES NOT expressly authorize such transactions.
8. Prior to enactment of the Victims of Terrorism Tax Relief Act of 2001, the act of Congress which created IRC 5891, the tax consequences were less clear.
9. The Gerson and Schwartz, P.A. blog post also refers to the de facto endorsement of "Cash Now pusher"  Strategic Capital  Corporation by the "Academy of Florida Trial Lawyers", a former name of its professional association which I believe has been the "Florida Justice Association" for almost a year since prior to their post. Strategic Capital pays $10,000-$14,999 as a financial benefactor of Florida Justice Association.
   

Click here for the text of IRC 5891.

The other day I questioned a Coral Gables law firm which had reciprocal promotions with the same  "Cash Now pusher" Strategic Capital on their websites. What is going on in South Florida?

Some thoughts for personal injury lawyers and leaders of legal trade associations

• What exposure to personal injury attorneys have in (1) promoting factoring (2) promoting a single company (3) promoting a single company that is a known "Cash Now pusher"? (4) promoting a single company that is a known "Cash Now pusher" because it gives a financial donation to your professional association?
• If a lawyer was going to steer a desperate client why would he or she not consider the more relevant concept of a structured settlement factoring exchange where multiple sources could be quoted easily and efficiently letting market forces take effect? Doesn't the "implied due diligence" stare right back at you?
  
• If a lawyer was going to steer a desperate client why would he or she not consider a company which DOES NOT perpetuate the fraud that is "cash now" advertising? Doesn't the "implied due diligence" stare right back at you?
• If a legal trade association such as the Florida Justice Association gives what amounts to a "paid endorsement" why would it not consider a company or entity that DOES NOT perpetuate or participate in the fraud that is "cash now" advertising. Doesn't the "implied due diligence" stare right back at you?

Structured Settlements Guide Misinformation of The Day-2

by John Darer CLU ChFC CSSC

A publication called  "Structured Settlements Guide" continues to post misinformation about structured settlements.

Structured Settlements Guide Misinformation-1

Structured Settlement:

"If you were involved in an accident at work, been involved in an automobile accident, or a wrongful death case and won that lawsuit then you were awarded a settlement. If the amount was small it would have been awarded to you in a lump sum. If it was a rather large amount then it would be awarded to you in a Structured Settlement".

COMMENTS

1. Critical Mistatement of Fact: You cannot be awarded a settlement
2. Structured settlements are the result of a compromise not an award. Even if the structured settlement is agreed to post verdict the fact remains that it is because parties have decided to resolve their differences rather than continue the litigation.
3. Structured settlements are entered into on all sizes of cases.

Structured Settlements Guide Misinformation-2

Structured Settlement:

Roughly 20 years or so ago if you had won a lawsuit the cash payout was in the form of a lump sum. It was felt by many that the injured plaintiff would wisely invest that money so they would have an income for the rest of their lives. As it turns out that was not the case in several situations. Therefore, lawmakers decided that large sums would be distributed on a periodic basis; monthly, quarterly, annually etc. etc. An agreement was made between the injured party (plaintiff) the lawyers (for both sides) a Financial advisor and the defendant. It then had to be determined how the payments would be distributed and this was called Structured Settlement Annuity.

COMMENTS

1. If you win a lawsuit many cases are still being paid in the form of a lump sum.
2. In enacting the Periodic Payment Settlement Act of 1982, lawmakers created tax and other incentives for parties to enter into structured settlements as good public policy. They did not not mandate structured settlements. Some states, such as New York, have periodic payment of judgements, but these are not settlements.
3. Structured settlement involves an agreement between at least two parties, the defendant and/or its insurer and the claimant or plaintiff. The financial advisor IS NOT a party to the settlement agreement.
4. A structured settlement annuity is a contract issued by an insurance company that sets forth the benefits the annuity issuer is contracted to pay. In a display of woeful lack of comprehension the author of the Structured Settlement Guide suggests a sequence in which step 1 is an agreement made between the plaintiff, lawyers fro both sides, the defendant and the financial advisor; Step 2 is a determination of how paymenst are to be distributed and he/she calls step 2 a structured settlement annuity.

Structured Settlements Guide Misinformation-3

Structured Settlement Annuity:

The defendant in large cash sum cases would purchase an annuity for the distribution of funds through an Insurance Company. This distribution then allows for the plaintiff or beneficiary to live off the proceeds for the duration specified or for the duration of recovery

COMMENTS

1. If there is a cash sum of any size there can be no structured settlement, unless such sum is part of the consideration for a case resolved by way of a qualified settlement fund under IRC 468B.
2. Generally, the parties must agree to periodic payments in order for there to be a structured settlement.

Structured Settlements Guide Misinformation of the Day

"In simple words, a structured settlement annuity can be considered as a lump sum that would be paid in exchange for a periodic payment". Add this false and uneducated statement to the list of those that appear in Structured Settlements Guide "the delusional guide to structured settlements".

Due to the prolificacy of errors and misinformation in the Structured Settlements Guide this author has started a dedicated category to inform consumers. and to prevent consumers from being victimized by the misinformation found in Structured Settlements Guide. The new category is called "Misinformation About Structured Settlements in Structured Settlements Guide". Structured Settlements Guide dominates Google search engine results for structured settlements.

This author will not dignify Structured Settlements Guide by preceding it with the pronoun "the".

The Structured Settlements Guide Stink Cloud

Structured Settlements Guide your online "delusional" guide to structured settlements is the latest Google Adsense Carpet Bomber to stink up the structured settlement space with the most potent form of kaka. Check this out.

According to the anonymous lightweights whose established practice, apparently through ignorance, is to misinform the public through the Structured Settlements Guide, "a structured settlement is defined as a legal contract wherein an individual makes payments in exchange for a release of liability. It could be the outcome of a personal damage or some other form of injunction. The payment is done over a period of time in fixed installments rather than a lump sum amount."

Comments:

1. Unless the individual is very rich, and uninsured, it is unlikely that an individual would be making payments via a structured settlement, in exchange for a release from liability. Who would accept a structured settlement from an individual instead of one that is funded or guaranteed by a multi billion dollar corporation?
2. According to Cornell University Law School, an injunction "is a court order requiring an individual to do or omit doing a specific action. It is an extraordinary remedy that courts utilize in special cases where preservation of the status quo or taking some specific action is required in order to prevent possible injustice.
3. A payment is "made", NOT done-like a piece of steak, or frat party trophy.
4. Structured settlements may encompass one or a series of different types of cash flows. For example you can have structured settlement payents for life, increasing at 4% AND include a series of deferred annual payments and deferred lump sum payments all within the same annuity contract.
5. Peachtree Settlement Funding banner ads appear frequently on the Structured Settlements Guide. One wonders who they are writing their checks to to associate with this drivel.