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

Do Structured Settlement Payments Need to Be Equal Payments?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Do Structured Settlement Payments Need to Be Equal Payments?

1. Qualified Structured Settlement Payments

• Generally qualified structured settlement payments can be equal or unequal
• There are many different types of structured settlement payments to choose from.  See Types of Structured Settlement Payments | Your Structured Settlement Payment Options (4structures.com)
• You can combine different types of cash flows to suit your needs, in a single contract if you wish.

2. Non Qualified Structured Settlement Payments

• IRC Section 72(u)(1)  "The Non Natural Person Rule"
• The so called "Non Natural Person Rule" provides that "if an annuity contract is held by a person who is not a natural person, then such contract shall not be treated as an annuity contract for purposes of subtitle A (other than subchapter L) and 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
• As an exception to the " non-natural person rule, payments must be substantially equal within the meaning of IRC 72(u)(4).

IRC 72(u)(4) Definition of Immediate Annuity

For purposes of this subsection, the term “immediate annuity” means an annuity—

• 72(u)(4)(A) 

  Which is purchased with a single premium or annuity consideration,

• 72(u)(4)(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

• 72(u)(4)(C) 

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

 

In the structured settlement space, this applies where a domestic (US) non qualified assignment is funded with an annuity, where the annuity is owned by a non-natural person.  

Examples

AGL Assignments, LLC is the non qualified assignment company for Corebridge subsidiaries  American General Life Insurance Company and United States Life Insurance Company in the City of New York  (NY cases) and is registered in Delaware.

MetLife Assignment Company, Inc. is an assignment company, registered in Delaware, that handles both qualified and non qualified assignments where Metropolitan Tower Life annuity is the issuer of an annuity owned by MetLife Assignment Company, Inc.

Are There Any Workarounds to IRC 72(u)?

Non Qualified Assignments Where Funding Asset is Not an Annuity

AGL Assignments, LLC is the non qualified assignment company for Corebridge subsidiaries American General Life Insurance Company and United States Life Insurance Company in the City of New York  (NY cases). A non qualified structured settlement solution is available in all states except Pennsylvania, using a Funding Agreement instead of an annuity. The Funding Agreement is not an annuity.

Reinsurance Structured Settlements

Periodic Payment Reinsurance | Reinsurance Structured Settlements 2023 (4structures.com)

Use of Non-Domestic Assignment Companies

• Structured Assignments, SCC Barbados
• Havelet Assignment Company -Barbados
• Dominion Assignment (Switzerland) for Independent Life's iStructure Dominion Assignment Company - Independent Life
• Kenmare Assignments  (Ireland)

Last updated November 13, 2023

 

 

 

John Darer Reviews How AI Demonstrates How Bad Information from Annuity.Org Gets Spread

by John Darer CLU ChFC MSSC CeFT RSP CLTC

I asked Microsoft's AI what was the difference between a structured settlement and an annuity and this was the result

Aligned

"A structured settlement is a form of negotiated settlement of claims and lawsuits in which some portion of damages is paid in the form of periodic payments. It is not a financial product, but rather a method of payment¹. On the other hand, an annuity is a financial product that provides a guaranteed stream of income over a specified period or for life^{1 2}.

Trails Diverge

"While structured settlements are often funded by annuities, they are not the same thing. Annuities can be purchased by individuals, while structured settlements are awarded by courts to plaintiffs². Additionally, annuity sales do not require court approval if you purchased or inherited the annuity, whereas structured settlement payments require court approval to sell²."

I hope this helps clarify the difference between the two", said Microsoft AI Bing.

Bing cited sources as follows :   1.  4structures.com, and 2. Annuity.org

Bing AI is unable to discern fact from fiction when it comes to the tractor beam of the " awarded a structured settlement" vortex.

Structured settlements are negotiated and are the result of a compromise.

Awards are not settlements

• A Grammy Award is not a settlement 
• An Academy Award (Oscar) is not a settlement
• If the President pins the Medal of Honor on you it is not a settlement
• If you make Dean's list it's not a settlement

 

Lists of civil awards and decorations of the United States - Wikipedia

Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews: Annuity.org | Sweeping Up Poor Annuity.org Research (typepad.com)

Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews: Awarded a Structured Settlement Vortex (typepad.com)

You Negotiate. If a Compromise is reached, it may include a structured settlement

Structured Settlement Annuity Issuer Contact Numbers | Old Structured Settlement Need Info?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

4structures.com LLC maintains a list of Customer Service Telephone Numbers for Current and Former Structured Settlement Annuity Issuers. Structured Settlement Annuity Company Customer Service Phone Numbers (4structures.com)

In addition 4structures.com LLC continues to build links to access helpful administration forms for payees of qualified structured settlement annuities, non qualified structured settlements, structured attorney fees and more.

Common Change Requests for Structured Settlements

• Change of address
• Set up EFT
• Change of bank for EF
  
• Check beneficiary
• Name or change beneficiary
• Add a contingent beneficiary 
• Change of Payee
• Payment split due to divorce

4structures' John Darer maintains this as a service not only for his own clients, but as a courtesy for all consumers of structured settlements  

When I first entered the structured settlement industry there were more than 20 life insurance companies offering structured settlement annuities.  Some of those companies who have ceased writing structured settlement annuities, maintain service departments for the run- off business, while other companies have sold those blocks. In some cases the structured settlemnet annuity block has been sold more than once. In one case, Allstate, its New York company and its non-New York company were sold to different purchasers.

Sometimes the servicing has been outsourced offshore, with well intentioned service subcontractors in place. But the representatives in some cases are sorely lacking in the historical context, giving you the feeling that they are merely schooled in or reading from a list of talking points. This has in some cases led to consumer confusion. 

If you're one of those consumers click on the above link.

The structured settlement business is seeing the best year in its history, despite fewer markets. 5 of the biggest months for structured settlement annuity production in the history of structured settlements have occurred in the last 9 months! 2023 is set for an all time record year for production.

 

 

Structured Settlement Brokers Attempt to Drive Sales with Sole 30 Year Old Legal Malpractice Case

by John Darer CLU ChFC MSSC CeFT RSP CLTC

For three decades certain structured settlement brokers and settlement planners have raised the 30 year old Grillo legal malpractice case to drive structured settlement annuity sales, by trying to scare the crap out of plaintiff lawyers.

But why has there been such a dearth of notable, relevant legal malpractice cases related to structured settlements in 30 years?

If there have been no other notable legal malpractice cases in 30 years, then maybe this is not such a big deal, even if the premise of offering a structured settlement is sensible.

"Since Grillo, other cases have been filed against attorneys and other participants in personal injury cases where lump sums were accepted instead of structured settlements" claims one of settlement advisers.

Well if that's really the case. why keep it a secret? How about providing the details, for the sake of credibility?

A Death That Nobody in the Structured Settlement Industry Noticed, until 12 Months Later

When celebrities and famous people die, we notice. Christina Marie Grillo Sullivan was certainly someone of note to structured settlement brokers and settlement planners. She left this realm on September 17, 2014. Nobody in the structured settlement and settlement industry noticed. No announcement, bulletin or anyone posting on Facebook or Twitter or memorial video on YouTube.

Then, September 14, 2015, I happened to look up Christina Grillo on the Internet and discovered that she had died a year earlier. I immediately wrote and published this tribute Christina Marie Grillo Sullivan (1982-2014) | An Extraordinary Woman - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews (typepad.com)

But not a peep from NSSTA, SSP or any structured settlement broker or settlement planners who had been using her name to drive structured settlement annuity sales. Nobody noticed. 

The Court transcript from the more than three decade old late minor's prove up hearing does not appear to jive with the marketing by generations of structured settlement brokers and settlement planners

All is not what it seems folks. Giddy settlement advisers taking creative liberties concerning the case of Grillo v Pettiete, or Grillo v Henry (the guardian ad litem) is not a good look.  Sometimes a story gets told incorrectly and the "urban legend" gets passed from generation to generation. 

I have read a copy of the transcripts and it did not appear to go down the way a generation of settlement planners has spinned it, and continues to spin it to sell more structured settlement annuities or even special needs legal related services. Settlement advisers and anyone else interested can and should read them for themselves by clicking on the links below.

Download TRANSCRIPT1_001 Mr Juniker 1-3-1991

Download TRANSCRIPT2_001 Josephine 1-10-1991

Download TRANSCRIPT3_001 Texas Court of Appeals decision reinstating cause of action against Guardian Ad Litem 1-14-1999 likely led to the settlement.

The "Grillo case"  has been promoted as the poster child for potential attorney fee liability for failing to consider (or offer) a structured settlement to their client.  [see Grillo v Pettiete Cause No. 96-145090-92 and Grillo v Henry Cause 96-167943-96, 96th District Court Tarrant County, Texas.

In that now "dog-eared" legal malpractice case there arose legal questions over whether there is ever a duty to offer a structured settlement. Plaintiff's legal malpractice attorney was quoted as saying "the defendant insurance company offered a structured settlement to the child and plaintiff alleged that the offer was never relayed to the parents and, in fact, never relayed to the court.”. Read the transcripts.

In New York, the 22 year old 2001 Appelate Division 2nd Dept. ruling in Lyons v Medical Malpractice Insurance Association is cited from time to time. The focal point of the Lyons case was on plaintiffs' counsel understanding of Present Value and the duty of privity. In the case there were "questions of fact as to whether the represented present value of the settlement package was a fraudulent, intentional, or negligent misrepresentation, and whether the plaintiffs' alleged reliance thereon was reasonable".  Further, the Appelate  Division ruled that "there was sufficient privity between the parties to support a claim for negligent misrepresentation and that MMIA was aware that the alleged misrepresentation was going to be used for a particular purpose, the plaintiffs were a known party who allegedly relied on the alleged misrepresentation in furtherance of that purpose,and there was conduct by MMIA linking it to the plaintiffs and evincing its understanding of such reliance".

Cite: Alexander Lyons, an Infant, by His Father and Natural Guardian, David Lyons, et al., Appellants, v. Medical Malpractice Insurance Association, Respondent, et al., Defendants.2000-09060
SUPREME COURT OF NEW YORK, APPELLATE DIVISION, SECOND DEPARTMENT 286 A.D.2d 711, 730 N.Y.S.2d 345
June 26, 2001, Argued September 17, 2001, Decided.

Introduction of Structured Settlement Affidavits

Prior to Lyons, the 1990s saw voluntary structured settlement affidavits by a number of New York structured settlement brokers and settlement planners, which were also called a Certificate of Reliability and Assurances (CORA).

Structured Settlement Ethics | Why Structured Settlement Affidavit Matters (4structures.com)

In 2006, as part of sweeping legislation addressing business practices concerning the creation of structured settlements, as well as the possible factoring of structured settlement payment rights, passage of the New York Structured Settlement Protection Act in 2006 New York Code - Laws: General Obligations : (5-1701 - 5-1709) Structured Settlement Protection Act introduced a standard requirement under New York General Obligatons Law for certain mandatory disclosures.

Subsequently, a number of county Supreme Courts in the New York City Metropolitan area made structured settlement affidavits standard operating procedure wherea structured settlement was part of a settlement requiring court approval.

To put things into perspective on the "passage of time"

What Happened in 1991 - On This Day

United States President was George H.W. Bush

Historical Events in 1999 - On This Day

United States President was William Jefferson Clinton

Catching my drift?

 

 

Gobler's "Should You Cash Out a Structured Settlement" is a Turkey

by Structured Settlement Watchdog

Gobler's "Gobledegook"

The New York Post published a Personal Finance piece July 19, 2023, authored by freelance writer Erin Gobler, that it disclaims to a source ironically named "Credible", for which The New York Post earns a fee if you click a link and close a loan through Credible.

"Gobbler" to "Gobler"

In a case of you lost it at hello, Gobler writes

"If you’re the plaintiff in a personal injury or similar claim and win your case, you could find yourself awarded a large amount of cash. But you may not necessarily get that money in one lump sum. Instead, monetary awards may be disbursed over a longer period in what’s known as a structured settlement" says Gobler.

Let's Talk Turkey

1. An Award is not a Settlement
2. A Settlement is not an award. That's why it's called a settlement. Pretty basic stuff.
3. A monetary award, would not be disbursed as a structured settlement.
4. A settlement is a negotiated compromise. This is key. You don't need to "win your case" to enter into a structured settlement with your adversary or their insurance company.
5. In New York, there are a pair of periodic payment of judgments statutes that provide for portions of a judgment in excess of certain thresholds to be paid by what is known as a structured judgment. The statutes are described at New York CPLR 5031-5039 for recovery of damages due to Medical, Dental and Podiatric malpractice (known as Article "50-A") and CPLR 5041-5049 to recover damages for personal injury, injury to property or wrongful death, not subject to Article 50-A  (known as Article "50-B")
6. As long as there are good faith appealable issues and the parties have a meeting of the minds, they can enter into a settlement in lieu of judgment. 

The Value of a Settlement Planner

Gobler  "A structured settlement can provide a source of tax-free income over a long period. But for someone who needs the money right away — perhaps due to the injury that landed them in court in the first place — cashing out the structured settlement could be an option. However, it’s important to consider the benefits and downsides beforehand".

All the Trimmings

1. Work with a credentialed and experienced settlement planner to explore your options before signing any release. What is Settlement Planning? Settlement Advisors and Transitional Financial Planning NY|NYC|CT|NJ (4structures.com)
2. A structured settlement can provide tax free income over short term, intermediate term and long term time frames. 
3. Periodic payment settlements can be used in the comprise of claims for damages that are taxable. What are Non Qualified Structured Settlements and Non Qualified Assignments for Tax Deferral (4structures.com)
4. Muliple income streams can be customized in the same annuity contract, or in multiple contracts, diversified by company if desired or prudent. What Are Structured Settlement Annuities? Structured Settlements FAQ (4structures.com)
5. Don't enter into a structured settlement if your mind is on "cashing out" in the near term.

One of the clearest elements of my 18 year mission as the Structured Settlement Watchdog is to help provide consumers the clearest path to accurate information about structured settlements. 

John Darer Reviews Divorce and Structured Settlement Annuity Issuer Service Standards

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Divorce is a Reasonable Forseeable Possibilty

The divorce rate in the United States around 44.6% of marriages.  Source: The Hive Law

As the Structured Settlement Watchdog I typically do 100 hours of pro bono work each year. Not only is it well received and needed by consumers, it also informs on service gaps (known, unknown or should have known gaps) and on how companies in the industry can improve.  

Known Structured Settlement Servicing Issues That Have Been Uncovered

1.  Carefully Document the File When Split Funding Structured Settlements

When using split funded structured settlements in any combination, whether a mixed duration split, annuity company split, or a product split, it's a good idea to have a simple summary of the documentation delivered to the client.

In 2015, I received a call from a concerned Allstate annuitant whose benefits had been abruptly "cut off". The structured settlement payment stream from the annuity, was the annuitant's share from a divorce settlement, Naturally they were concerned. I did not write the policy.  

Unfortunately, just two years following its life insurnace companies ceasing underwriting this line of business, Allstate had outsourced customer service to a Phillipine call center with inadequate training. The rep ecnountrered by the annuitant was neither knowledgeable enough, nor helpful. The ill-prepared Allstate Phillipine call center rep needlessly sent the annuitant into a state of panic by incorrectly stating (because they likely did not know how Allstate issued annuity policies) that her benefits were over.

Fortunately, the annuitant contacted me, someone with enough experience to know the history and nuance and peculiarity of how Allstate issued policies. Instead of issuing a single policy, as is the customary practice with every single life insurance company I've dealt with in 40 years in the insurance industry, Allstate split the certain and life contingent portions into two separate annuity policies. 

_________________________________________________________________

SIDE BAR

Structured settlement annuities are a unique policy form that enables different types of structured settlement payments to be combined in a single annuity contract.

__________________________________________________________________

 

What happened was that the periodic certain policy stopped and the "switch" to the life contingent policy did not happen as it was supposed to. It took some calling to find someone at the home office of Allstate who was from the old structured settlement department  (Allstate stopped writing new structures in 2013), who could take remedial action but eventually the situation was rectified. It would have been helpful however and have saved the annuitant a quite a bit of agita, if the original broker had placed a summary in with the delivery of the policy. 

Split Funded Structured Settlements Require Careful Documentation - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews (typepad.com)

2.  When a Policy payment is split between two former spouses then each spouse should receive notices concerning the policy

Eight years from the above Allstate issue there is a new issue.  The payments are life contingent and require an annual attestation of Proof of Living [see Proof of Living and Structured Settlements (4structures.com)]. It was relatively smooth sailing from 2016-2022.  Something has changed. The divorce split annuitant had been contacting E.M. at Allstate and she would send the Proof of Living form which the annuitant would complete and send in. However apparently things changed in 2023 when E.M. was no longer there and Allstate having been reconstituted as Everlake Allstate Life Structured Settlements | What You Need To Know (4structures.com).

The split annuitant speaks of intolerable on hold times on the Everlake service line and being told  that Everlake (or its servicing company) would only send notice to her ex-husband, who she has been divorced from for 15+ years! She is listed as an annuitant in the company records as a result of the long in place divorce decree.

3. When one divorced spouse payee initiates a Structured Settlement Transfer and the Annuity Issuer will not split, or further split payments?

This exposes the non-selling split annuitant spouse and dependents to a servicing agreement and possible invasion of privacy from secondary market actors that are mostly non regulated. At what point should this issue be disclosed and who is responsible for disclosing it? 

4. Companies who are divesting their life insurance or annuity divisions or product lines that include structured settlements should include this consideration on their punch list

It seems to me that dealing with this forseeable issue earlier rather than later, by establishing updated policies and procedures to address these issues, will be less of a burden for the annuity issuer and qualified assignment company than having to dig out after a divestiture. There is the reputational risk exposure as well.

Divorce Statistics that Validate Why Annuity Issuers, Attorneys and Settlement Planners Must Initiate Discussions to Address Reasonably Forseeable Issues in updated Company Procedures and Workflow

• The average length of a marriage that ends in divorce is 8 years.
• Women file for 66% of divorces.
• The most common age for divorce is between 25-39 years old.
• The median age for divorce is 39.
• The divorce rate among those over 50 (gray divorce) has doubled since the 1990s.
• 60% of second marriages end in divorce.
• The rate of divorce decreases with higher levels of education and income.
• States that have no-fault divorce laws have higher divorce rates than states that require proof of fault.
• Children of divorce are more likely to experience emotional and behavioral problems.
• Children of divorce have a higher risk of divorce themselves when they grow up.
• The average age for couples to divorce for the first time is 30 years old for men and 29 years old for women.
• The divorce rate for first marriages within the first five years is around 20%.
• The divorce rate for military couples is higher than the general population, with a rate of 3.7% compared to 3.2%.
• The percentage of divorced adults in the US has more than doubled since 1960, from 9% to 22%.
• The percentage of divorced adults who remarry is around 75%.
• The divorce rate for couples who marry before age 25 is around twice as high as for those who marry after age 25.
• The divorce rate for same-sex couples is around 39%

Source: 113 Divorce Statistics On The Divorce Rate In America (For 2023) - The Hive Law

What About Non Binary Couples and Divorce?

How Many Gay Marriages End In Divorce? - Pride Legal

 

 

 

 

Can a Structured Settlement Annuity Be Sold?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

A structured settlement annuity cannot be sold.  Individuals with structured settlements do not own the annuities that fund their structured settlements. They cannot sell what they do not own. Structured settlement annuities are generally owned by qualified assignment companies or non qualified assignment companies. In the less common so-called buy and hold cases, the buying and the holding is by the Defendant or insurance company.

But Annuty Expert Advice Said I Could Sell My Structured Settlement Annuity? 

Shawn Plummer, the proprietor of Annuity Expert Advice, has won the Canard of the Week multiple times for just this sort of "fupped duck" answer. 

 

"Can I sell my structured settlement annuity to a third party without the court being involved? No, in most cases, the court must be involved when selling a structured settlement annuity. This is because you must first obtain court approval to sell your settlement payments legally".

 

Plummer's answer is wrong on the fundamentals.

• As previously stated if you are receiving structured settlement payments you don't own the structured settlement annuity. 
• A Court cannot order or approve you selling something you don't own
• A Court must be involved only when you are attempting to sell structured settlement payment rights

If that's what Plummer meant why all the muddled words?

We can all have a little laugh at a meme of a blow up duck to drive home a point, because when it comes to structured settlement annuity ownership, Plummer is simply providing misinformation on the subject. I don't think it is intentional. Plummer is simply not a structured settlement annuity expert, he's an annuity content creator. Plummer appears to have no professional credentials for structured settlements at the time of publishing.

 

Cordero v Transamerica Society of Settlement Planners Post Mortem

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Next week attorneys Eddie Stone and Stephen G Harris reprise their debate concerning the matter of Cordero v Transamerica in a post mortem for members of the Society of Settlement Planners. Patrick Hindert of Independent Life Insurance Company again moderates.

The Cordero case is over, a failed effort notable for not targeting, as a Defendant, any structured settlement factoring companies and instead going after the life insurance companies that issued the structured settlement annuities and the qualified assignment company.

The losing cause focused on the anti-assignment provisions and there was an attempt to make that three pointer, but ended up with nothing but rim.

Hindert Said That Anti Assignment Clauses Were a Pitfall, in 2013

So in my opinion Patrick Hindert, as moderator, is an a difficult position. There are questions he should be answering. Hindert cannot hide the fact that in 2013,  while still basking in the glow of the 2012 National Association of Settlement Purchasers' Alexander Hamilton Award, he participated in Strategic Capital's "Factoring Roundtable". Patrick Hindert is quoted and the still published quote excerpt says the following   

"A... pitfall occurs if settlement documents include anti-assignment clauses, which do not specifically reference and permit transfers pursuant to IRC 5891 and state structured settlement protection statutes".

pitfall - Patrick Hindert - Sell Structured Settlement Payments - Cash For Future Payments (strategiccapital.com)

It should be noted that the Cordero settlement agreement does not have that language, nor would it, given that the Victims of Terrorism Tax Relief Act of 2001 (that begat IRC 5891) did not go into effect until January 2002

Hindert supported and defended the right to free alienability of property rights (in this case the right to factor)

NASP has bestowed its Alexander Hamilton Award eight times "to distinguished individuals who have supported and defended the right to free alienability of property rights." NASP considers this right to be its own cornerstone and the foundation of the structured settlement factoring business".  Patrick Hindert,  S2KM Ltd  November 22, 2015  Source: S2KMblog.typepad.com, retrieved May 4, 2023. 630pm EDT.

Strategic Capital is a structured settlement factoring company based out of Toronto, Canada.

Hindert Cited on Anti Assignment Clauses in 2015 Structured Settlement Factoring Company Guide by Factoring Company Strategic Capital

In Strategic Capital's Structured Settlement Guide | Selling Structured Settlements Across the Country and the World, published in December 2015, it says at pages 101-102.

"As Patrick Hindert, Managing Director at S2KM Limited and a lawyer highly experienced in the settlement industry, said 'anti-assignment clauses in settlement documents are enforceable and, if enforced, could prevent structured settlement recipients from selling structured settlement payment rights'.

For example, says Strategic Capital, "one Florida court case (Rapid Settlements, LTD v Kimberly Dickerson, et al) made it to the court of appeals  (and still the judge declined the sale, saying it was clearly against the agreement. But judges do not always uphold such language".  Strategic Capital says "Thus, even if your paperwork has such a clause it may be worthwhile to consult with them ('Stratcap') and see what they say about your chance of approval"

Here is a link to the guide:

Structured-Settlement-Guide.pdf (strategiccapital.com)

Stratcap does not give the cite to the 2006 case, but here it is:

District Court of Appeal of Florida,Fourth District RAPID SETTLEMENTS, LTD., Appellant, v. Kimberly DICKERSON, et al., Appellee. No. 4D05-4643 decided November 22, 2006

Obviously the 2006 decision is a Florida District Court of Appeals decision and not the 11th Circuit Court of Appeals or the New York Court of Appeals, decisions that were made by a higher courts and were more recent.

Resources for People Who Have A Structured Settlement and who:

• Are being bombarded with calls from structured settlement factoring companies
• Are being bombarded with texts from structured settlement factoring companes
• Have had some weirdo show up announced at your house who knows all about your structured settlement
• Had friends or relatives mention they were contacted by a structured settlement factoring company and now they are trying to influence you.

Selling A Structured Settlement in 2023? Get The 411 on Cash Now. Don't Be a Victim (4structures.com)

Independent Professional Advice (IPA) for Structured Settlement Sellers (4structures.com)

• Turned 18 (or will turn 18 shortly) and just found out you have "this thing called a structured settlement" and want to know "What the heck is that?"

Structured Settlements | What Is a Structured Settlement? (4structures.com)

Settlement Planning Financial Calculators (4structures.com)

 

 

Annuities and "Bobby Bonilla Day" | Time to Stick a Fork in It?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

If you really think about it, you too may find it quite odd that some promoting annuities, including structured settlement annuities, persist with the lack of awareness in using the joke that is Bobby Bonilla Day in their annuity marketing. 

Does Bobby Bonilla Have An Annuity, or Something Else?

Was what Bobby Bonilla agreed to an annuity, or was it actually unfunded deferred compensation? Let's discuss...

What is an Annuity in New York?

"An annuity is a contract between a purchaser and an insurance company in which the purchaser agrees to make a lump sum payment or series of payments in return for regular disbursements, beginning either immediately (within 12 months) or at some future date".  Source: New York Department of Financial Services

Is/Was the New York Mets an Insurance Company?

Is the New York Mets an insurance company? Hmm, we'll revisit that later in this post.

Bobby Bonilla Day | "In Good Fun" Picking The Scabs Of Victims of a Crime Every July 1st?

Marketers seemingly can't help themselves in making Bernie Madoff part of the Bobby Bonilla "annuity" story. in marketing materials and news articles on an annual basis. The repetiton of the story and the Madoff connection, is disprespectful to victims of the Madoff Ponzi scheme, . Among Madoff's victims were director Steven Spielberg, actors Kevin Bacon and Kyra Segwick, Nobel Peace Prize winner and Holocaust survivor the late Elie Wiesel, Hall of Fame pitcher Sandy Koufax, in addition to former Mets owners Fred Wilpon, Jeff Wilpon and Saul Katz who were major investors, not to mention others who were not celebrities. 

"As a side note, the Mets had significant investments at the time with Bernie Madoff and believed they were poised to rake in large profits to offset some contract moves. We all know that did not work out very well (more on market volatility later)". -Boston area structured settlement brokerage firm Chronovo "How an Annuity Turned $6M into $30M!!!" June 30, 2022 (and still posted on its website June 20, 2023)

Too bad they didn't read this, or if they did read it, didn't give it much thought:

• "Some victims, including those who could barely afford to invest in the first place, lost their entire life savings and several later committed suicide as a result". Source: Daily Mail April 14, 2021
• For Madoff Victims, Scars Remain 10 Years Later : NPR
• "It was disbelief. It was distrust. I mean this man was highly recommended,” said Ilene Kent of Columbus, Georgia, who said her elderly parents lost three-quarters of their net worth in the $65 billion fraud".  CNBC December 10, 2018
• For Bernie Madoff victims, 'betrayal still hurts' years later | CUOMO | Watch (msn.com)  January 11, 2023

Must people keep picking at these people's scabs as a reason to hock annuities, to party, or in one case, offer mobile phone service?  Was this "Eephus Pitch" about something that wasn't even an annuity, as defined by New York's insurance regulator? Would it be enough without the embellishment of a financial term and the tie in by sales people and reporters to a dead crook?  Perhaps not.  Please read on.

Fact or Fiction?  Bobby Bonilla Day| Was It Really an Annuity, or Just Unfunded Deferred Compensation?

This 2020 article by NBC Sports explains deferred compensation. Reminder: Bobby Bonilla's payments from the Mets aren't mockworthy - MLB | NBC Sports

Had the Mets actually purchased an annuity to fund their obligation to Bobby Bonnilla from the outset, their cost would have fixed at effective discount rate in the annuity purchase cost at the time the deal closed. But they would have had to put up the cash to buy the annuity which they were using for other things. They would have locked-in the prevailing rate at the time of the contracted agreement and instead of getting squeezed as interest rates dropped, the present value of the payments would have done the opposite.

Interest rates/ Discount rates rise means lower present value. Conversely interest rates/ discount rates drop means higher present value.

So... if the New York Mets were/are not an insurance company as that is defined under New York law and had the New York Mets owners had actually funded their obligation to Bobby Bonilla by buying an annuity, they would not have found themselves in the financial predicament they found themselves in. And, if it wasn't an annuity and all the only logical conclusion putting together these clues, then it undermines the entire sales pitch of those that make a meal out of "Bobby Bonilla Day"

Bobby Bonilla Deal Referred to as Deferred Payment Agreement NOT an Annuity

Deferred-money deals have been going on for a long time, but the Mets did more of them than most, according to a 2016 report by ESPN. The first deferred-money deal we know about is Darryl Strawberry's 1985 contract, in which the Mets deferred 40 percent of his 1990 $1.8 million team option ($700,000) at a 5.1 percent interest rate. The deal, which pays out $1.64 million from 2004 to 2033, was obtained through a life insurance company.

Bonilla's agent, Dennis Gilbert, was an insurance agent at the same time he developed into a superagent (Gilbert's clients included Bonilla,Barry Bonds, Jose Canseco and Danny Tartabull), so he was more uniquely prepared to understand annuity-type payouts than other agents.  Source: ESPN " Why the Mets Pay Bobby Bonilla" June 30, 2016

And the definitive from Bloomberg, citing Dennis Gilbert, Bobby Bonilla's frickin agent...

"Nothing about this Bonilla contract seems so bad so far, right? No talent squandered, no flotsam acquired in return. Just a rich family’s pocket change. Who cares? It’s not your money. Most accounts of the Bonilla deal describe it as a bold innovation gone awry, but it wasn’t in either respect. It was just an annuity. (Technically, Gilbert clarified for me, it was “nonqualified deferred compensation.” Annuities pay out for life.)  See Bobby Bonilla Contract Was Good for Baseball’s New York Mets - Bloomberg  by Devin Gordon March 16, 2021 

Time to Switch Up The Narrative and Pinch Hit For Bobby Bonilla as an "Annuity" Example

Bobby Bonilla made a good deal.  But enough already. As I've previously proved in prior writing, Bonilla's stats and his "annuity" was well eclipsed by more than capable former baseball players.

In 2022, I highlighted how a Boston area company opted to promote Bobby Bonilla Day 2022. despite local legend Manny Ramirez having a far more impressive career, better stats and a better "annuity", or deferred payment agreement, I also cite Ken Griffey, Jr. and others who are better examples. See Chronovo Could be Promoting Annuities Using Red Sox Legend Instead of Bobby Bonilla, NY Mets Madoff Misery - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com August 4, 2022

What about Babe Ruth  (1895-1948) who played for the Boston Braves and the New York Yankees?

Babe Ruth DID have annuities and actually bought annuities. For example, see 1923 Babe Ruth Annuity from Equitable Life Assurance Society

The image from the auction house includes authentication "The policy (12 x 17 inches),which is not signed by Ruth, displays one horizontal and two vertical folds (as issued), as well as a few small edge tears and tiny stains. In Very Good to Excellent condition overall. Accompanied by a second-generation photo (10 x 8 inches; of Babe Ruth (late in life) shaking hands with an unidentified insurance executive and vintage newspaper clippings documenting his annuities with the Equitable Life Insurance Society"

" I may take risks in life, but I will never risk my money, I use annuities and I never have to worry about my money"-Babe Ruth

The inscription on Babe Ruth's grave at Gates of Heaven cemetery in Valhalla New York reads

"May the divine spirit that animated Babe Ruth to win the crucial game of life inspire the youth of America!"- Cardinal Spellman   Source: Find-a-Grave.com

What About NBA legend Shaquille O'Neal on Annuities? Shaq actually bought annuities

Shaq: “He was very successful and he had saved a lot of money, so I asked him how he and his family did so well. He told me, “We have annuities.” I asked, “What the hell is that?” He explained to me, “It’s when you pay a life insurance company a single premium, which they will pay back years later in the form of a fixed sum.” That sounded like something I needed. When I started making all the big bucks and I had more money than I could spend, I put big hunks of it into annuities. I bought them for myself, my parents, for my brother, and for my two sisters. What it meant was when I turned forty years old, which back then seemed like light-years into the future, I would receive a nice monthly sum for the rest of my life that would keep me in excellent financial shape. Thanks, Lester.”  (Lester was Shaq's accountant)  Read the full story here Having blown $1,000,000 in 1 day, Shaquille O'Neal Sought Accountant's Help to Prevent Going 'Broke' in the Future - The SportsRush  April 19, 2023

Other NBA Players and Annuities

Grant Hill, Caron Butler among retired NBA players thriving financially - Sports Illustrated

Football Players and Annuities

What About Steve Young, Former USFL Quarterback "The Happiest Annuity Story Ever"?

Football For A Buck: Steve Young Has The Happiest Annuity Story Ever (forbes.com) October 10, 2018

SportsBlog :: NFL Retired Players United :: The NFL Player Annuity Plan: How Sweet it is! November 26, 2016

A Witty Story About The Rolling Stones and the Alliance for Lifetime Income

The Rolling Stones Know What You Need: An Annuity - The New York Times (nytimes.com)

Writers and Annuities

"Buy an annuity cheap, and make your life interesting to yourself and everybody else that watches the speculation".

Time to sunset the Bobby Bonilla Day false narrative. It may be a story for deferred compensation, but when Dennis Gilbert Bonilla's agent says it was a deferred payment agreement, it takes the wind right out of the sails from those pushing the Bobby Bonilla annuity false narrative. Think about it!

 

 

 

 

 

 

11th Circuit Court of Appeals Pulls The Plug on Cordero Serial Structured Settlement Factoring Case

by Structured Settlement Watchdog

The 11th Circuit of the United States Court of Appeals has pulled the plug on Lujerio Cordero's Serial Structured Settlement Factoring Case, following the majority opinion in the New York Court of Appeals in April 2023.

What is Serial Structured Settlement Factoring?

Serial Structured Settlement Factoring refers to actions by individuals who have engaged in multiple structured settlement factoring transactions, sometimes in a short time frame, leading in some of the worst cases to erosion of the financial security that was established at the time of settlement. 

The Cordero Serial Structured Settlement Factoring Case

Over the course of just twenty-two months, plaintiff-appellant Lujerio Cordero—a childhood victim of lead poisoning—assigned his rights to nearly one million dollars in structured settlement payments to factoring companies for pennies on the dollar. Through six transfer agreements that he lacked the capacity to understand, Cordero relinquished his rights to monthly payments with a total aggregate value of $959,834.42 spread over the course of about twenty-six years for a series of immediate lump-sum cash payments that amounted to $268,130.  Source: 11th Circuit Court of Appeals opinion filed June 16, 2023.  LUJERIO CORDERO, Plaintiff-Appellant, versus TRANSAMERICA ANNUITY SERVICE CORPORATION, a.k.a. Wilton Re Annuity Service Corporation, Defendant-Third-Party Plaintiff-Appellee,TRANSAMERICA LIFE INSURANCE COMPANY, Defendant-Cross Claimant-Appellee, on Appeal from the United States District Court for the Southern District of Florida D.C. Docket No. 1:18-cv-21665-DPG

Mother Helped Him Sell?

"At the urging of his mother, he gave up his right to the $1 million over the next three decades — in exchange for lump-sum payments of about $268,000, the court documents indicate", said Insurance Journal Structured Settlement Cash-out Left Impaired Man with Little. Transamerica Not Liable (insurancejournal.com) June 22, 2023

Cordero's acted on his behalf in the establishment of the structured settlementin the first place.

11th Circuit Notes That Cordero DID NOT Sue the Structured Settlement Factoring Companies

After Cordero exhausted his cash payments, he endeavored to recover the money that he assigned to the factoring companies. But, instead of suing the factoring companies or attempting to void the transactions, Cordero sued Transamerica Annuity Service Corporation and Transamerica Life Insurance Company (collectively,“Transamerica”), the entities that issued and funded his periodic payments before he assigned them. Cordero asserted two claims against Transamerica: one for breach of contract under New York law, and the other for exploitation of a vulnerable adult under Florida’s Adult Protective Services Act (“FAPSA”), Florida Statute § 415.111  Source: Ibid.

_______________________________________________________________________

Side Bar

The wording of the 11th Circuit decision in the immediately above referenced section needs clarification in the opinion of this author.

Transmerica Annuity Service Corporation (TASC) was the Qualified Assignment Company and Transamerica Life Insurnace Company was the Annuity Issuer of the annuity that funded the periodic payment obligation that TASC

TASC did not issue the periodic payments TLIC did not fund the periodic payments. The Defendant or its insurer made a promise to pay the future periodic payments, the obligation to make the payments was assigned to TASC along with money and TASC then funded the future periodic payment obligation it assumed by way of the qualified assignment and funded it with a structured settlement annuity it purchased from TLIC.

For details of the sequencing, please visit this link and the flow chart on the page. How Structured Settlements Work | Structured Settlements Explained 4structures.com)_

_______________________________________________________________________

Cordero's Strategy | Attack Structured Settlement Annuity Insurers Not Factoring Companies

Thirteen months earlier, on May 18, 2022, Cordero's counsel was quoted in Do insurers have duty to question possibly ‘abusive’ annuity cashouts? | Reuters

“Because this is an important question without a clear answer, we certify it to the New York Court of Appeals,” the 11th Circuit said in a per curiam opinion by the three judges who heard argument in March (2022). Cordero’s lead lawyer, Brenton Ver Ploeg of Ver Ploeg & Marino, called the court’s question “perfectly appropriate.”

“This crucially important issue concerning abuses in the structured settlement industry is without a definitive opinion from New York’s highest court and long overdue for resolution,” Ver Ploeg said in an email,  Reuters' Barbara Grzincic reported at the time. We now know the answer.

The 11th Circuit Appeals Dismisses All 

This appeal followed the district court’s with-prejudice dismissal of Cordero’s claims and the New York
Court of Appeals answered a reformulated version of a question that we certified for its review. See Cordero v. Transamerica Annuity Serv. Corp., 34 F.4th 994 (11th Cir. 2022), certified question answered, No. 21, --- N.E.3d --- (N.Y. Apr. 25, 2023).

Given its guidance from the New York Court of Appeals that "such allegations (by Cordero) do not state a cognizable cuase of action for breach of an implied covenant (under New York law), we affirm the district
court’s with-prejudice dismissal of Cordero’s breach of contract claim.

Cordero's Florida Adult Protective Service Act (FAPSA) Claims Failed

Cordero’s FAPSA claim fails under the plain language of the statute. In his operative complaint, Cordero does not allege that Transamerica intended to deprive him of the use of his funds. See id. § 415.102(8)(a). Instead, Cordero asserts that Transamerica “allowed” (or “facilitated”) his exploitation by the factoring companies, which resulted in an unauthorized taking of his assets. Based on the facts that Cordero pleaded, Transamerica’s actions simply do not amount to “exploitation” as that term is defined in FAPSA.Because Cordero has failed to state a violation of FAPSA, we affirm the district court’s with-prejudice dismissal of his FAPSA claim.

_______________________________________________________________________

SIDE BAR

FAPSA § 415.102(8)(a) “Exploitation” means a person who:

1. Stands in a position of trust and confidence with a vulnerable adult and knowingly, by deception or intimidation, obtains or uses, or endeavors to obtain or use, a vulnerable adult’s funds, assets, or property with the intent to temporarily or permanently deprive a vulnerable adult of the use, benefit, or possession of the funds, assets, or property for the benefit of someone other than the vulnerable adult;

 

_______________________________________________________________________

In the footnotes the 11th Circuit remarked:

The facts as Cordero has alleged them are truly troubling. They describe a situation where it appears an industry is able to systematically victimize individuals who are not in a position to protect themselves. See Cordero, slip op. at 30 (Rivera, J., dissenting). But given the governing law, we cannot grant Cordero the relief that he seeks based on the claims that he asserted against Transamerica.

Attorney Ver Ploeg's comments from an email to a reporter published in May 18, 2022 and cited above, makes a false equivalency by commingling of the primary structured settlement market with the secondary market. 

Primary Market

• Insurance companies are regulated in each state that they do business.
• Insurance companies are required to use statutory accounting priniciples (SAP) when preparing their financial statements. Insurers in all states are required to use a special accounting system when filing annual financial reports with state regulators.
• Licensing of insurers, brokers and agents is mandatory.
• Having professional liability insurance is customary
• In addition to licensing many participants have industry professional designations and may hold additional professional licenses such as securities licenses.

Secondary Market

• There is no requirement for professional licensure in any state.
• A few states require registration of structured settlement transferees. Those that do have often been legislatures reaction to shockng stories exposure of misdeeds that appear in regional and national news media. However there is no licensing standard in the way that life settlements are regulated and how other fiancial professionals are regulated. One can onlyhope and continue to advocate for such a standard.  But the almost universal lack of such standard is on state legislatures who have had 22 years to get it right. 
• Probably one of the most notable statements in the New York Court of Appeals part of the case was Cordero's attorney's explanation of why Cordero did not go after the structured settlement factoring companies, which were referred to as " fly by night". This meme just about sums it up, figuratively speaking of course.
• While one can understand why a lawyer such as Mr. Ver Ploeg,would attempt to go for a perceived deep pocket. Nobody works for free, right?  Instead of shaking down life insurance companies that issue structured settlement annuities, while ignoring the bad actors, perhaps another avenue is those who are investing in reprobate structured settlement secondary market companies. Who is loaning the reprobate companies money to do what they do? If they can go after Jeffrey Epstein's bank, why not the deep pocketed investors in naughty structured settlement factoring companies? Perhaps it would be worthwile to explore those that finance serial structured settlement factoring transactions?  

Last updated June 24, 2023