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

Structured Settlement Annuities Are NOT Tax Exempt but the Damages May Be

by John Darer CLU ChFC MSSC CeFT RSP CLTC

There is a false narrative concerning structured settlement annuities that claims that structured settlement annuities are tax exempt. Structured settlement annuities are not tax exempt.

Structured settlement annuities are not tax exempt. The focus is on the damages

Where used as a "qualified funding asset"  the structured settlement payments may be tax exempt, but the essential reason for the tax exemption is the damages that the payments from the structured settlement annuities represent.

For example:

1. Payments for workers compensation  see IRC 104(a)(1)
2. Payments for damages on account of personal physical injury, physical sickness and wrongful death, see IRC 104(a)(2)   [and IRC 104(c) for Alabama wrongful death]
3. Payments for wrongful imprisonment, see IRC 139F

Structured settlement annuities can be used to fund the payment of damages in settlement of lawsuits comprised of many types of taxable damages

Even though they are funded with structured settlement annuities, if established properly each payment in such cases is taxed in the year received.

I'm sure that the false narrative is not intentional, but what is surprising is the false narrative is articulated in public facing communications by certain people and companies with credentials and experience. Those who spread the false narrative, even unintentionally, may be used as sources of "validation" for content barfers in (or serving) the structured settlement secondary market. Clearly this does not serve the greater good for consumers or the industry.

 

 

Genex Capital SSQ Website is a Relic, Posts Insurer Ratings Information 10 Years Old!

by Structured Settlement Watchdog

Genex Capital, the structured settlement buyer operating out of a mailbox at a UPS store in Dover, Delaware,  apparently thinks decade old third party ratings of insurers  are useful to consumers. Many of these companies don't even write structured settlement annuities. There are wide swaths of the alphabet missing. Why would Genex Capital, run by a successful guy named Roger Proctor, a guy who has a multi million dollar condo at the Fairmont Pacific Rim and another home on an island, and Boris Drubetsky  be so lax as to allow the continued display the useless insurance company information?  Has it all "gone to pot" over there?

I continue to marvel at current interest rates juxtaposed against Roger Proctor's decade old wail about interest rates rising in an attempt to get suckers to sell their structured settlement payments to Genex Capital for pennies on the dollar. History has shown that it would have been a financial disaster. Interest rates now stand even lower than they were when Proctor made his wolf call. In June 2009, the 10 year Treasury hit 4%. At time of publishing the 10 Year Treasury is at 1.62% (it has been as low as 1.47% in recent weeks).

If you have a structured settlement that was set up when you were a child there is a really good chance that you are earning more on  a tax free basis than you would be in a savings account , CD or United States Treasury. This structured settlement is desirable to investors who are seeking high yields, high yields than can only be achieved if you get short changed.  If you have a structured settlement that was set up in 2009 for example and the yield exceeds 4-5% with a company like New York Life, Pacific Life, American General, John Hancock, Berkshire Hathaway, USAA Life, MetLife, don't be a fool and sell.

 

 

 

 

 

 

Genex Capital Bizarre Explanation of Why Discount Rates For Cases Are So High When Rates Are So Low

by Structured Settlement Watchdog

Genex Capital Basic Economics

"Sellers of structured settlements have been asking why are discount rates for their cases so high when the Federally set interest rate is so low.

The answer to this is basic economics:

1. The Fed rate is low because there is reduced market activity and the Fed is trying to stimulate such activity.

2. Demand for money is high but lending supply is low (this is what they mean when they say money is tight). 

3. While the Fed rate is low, try to get a mortgage or loan, or worse yet a credit card interest rate that is in the single digits". 

Source: Genex Capital website, retrieved 6/26/2019

Comments

The St Louis Fed chart here show not much tightening for commercial or industrial loans for large and middle market firms. Is Genex Capital one of those, or is Genex Capital just small potatoes?  JG Wentworth has a 4% cost of money. And RSL Funding claims that "you've likely been ripped off by JG Wentworth" in its latest marketing message, implying a low cost of money. What does that mean in the context of what Genex Capital has stated?   Why are deals getting done in the 5-6% range, when Genex Capital appears to be trying to justify rates much higher?

The data straight from the Fed seems to conflict with the Genex Capital explanation

Moving on to the Mortgage Rates Mosh Pit.  The statement "While the Fed rate is low, try to get a mortgage or loan, or worse yet a credit card interest rate that is in the single digits" is a

Double Digit Rates Are a "Ribbit" Off in 2019

figurative toad stool.  Peter Warden The Mortgage Reports editor does an excellent job of what's driving current mortgage rates. Doesn't jive with what Genex Capital has posted on its website.

The structured settlement factoring industry has a preponderance of "sucks" when it comes to dissemination of accurate information. In doing so, with a few exceptions,  the structured settlement secondary market does a real disservice to consumers and has done so for a very long time.

 

 

 

Structured Settlement Quotes Are Not A Marketplace | What Are Structured Settlement Quotes?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Structured settlement quotes are not a marketplace. 

Structured settlement quotes are normally associated with quotes for structured settlement annuities by licensed insurance agents and brokers who are appointed by structured annuity issuers. 

How are structured settlement quotes used today?

• Structured settlement quotes may be used as part of a settlement offer to plaintiffs by defendants or their insurance carriers.
• Plaintiffs in personal physical injury or wrongful death cases may also seek out structured settlement quotes from structured settlement experts who are licensed insurance agents or brokers, who are structured settlement experts, to help secure tax-free stable cash flow for their future.

Examples of legitimate structured settlement quotes

• Structured settlement quotes for future periodic payment obligations that are funded by structured settlement annuities.
• Structured settlement quotes for future periodic payments that are funded by United States Treasury obligations.
• Structured settlement quotes for future periodic payment obligations that are funded by reinsurance contracts or agreements
• Structured settlement quotes for a future periodic payment obligation that is funded by index linked structured settlement annuities
• Structured settlement quotes for a future payment obligation that is funded by a market based structured settlement solution.

With a few exceptions, structured settlement quotes are generated by life insurance company or provider software.

Is a Lump sum that a Structured Settlement Cash Now Company Gives You A Structured Settlement Quote?

No, such companies are quoting a lump sum for selling your payments for pennies on the dollar. 

Why Do You See Companies That Buy Structured Settlement Payments for Pennies on the Dollar, Use The Term "Structured Settlement Quotes"?

You would have to ask them, starting with Genex Capital. Generally participants in the structured settlement secondary market can't help themselves but to say or insinuate anything in their marketing whether it's accurate or not. 

Genex Capital acquired a website that was called Settlement Quotes in November 2011 and renamed it Structured Settlement Quotes.  Despite the name, Genex Capital offers to purchase of structured settlement payment rights (receivables) receivables, which it inaccurately labels annuities and then markets them to investors through a website called Assured Annuity.  Based on how the majority of transactions are structured when a lawsuit settles, it is doubtful that Genex Capital, or any similar company that buys structured settlement payment rights, has ever purchased a structured settlement annuity. Despite the obvious potential marketplace confusion that it would create, Genex Capital went forward with the renaming in 2012. A search of the USPTO databased shows no trademark for structured settlement quotes and it seems highly doubtful Genex Capital would receive one if it applied.

The National Association of Insurance Commissioners does not consider factored structured settlement payment streams annuities or insurance products. Insurance companies who buy factored structured settlement payment streams on an institutional level, must not account for them as annuities or insurance products according to Statutory Issue Paper No. 160, published by the NAIC in December 2018 and finalized April 6, 2019.

Furthermore, such receivables as purchased by investors are expressly excluded under the Life & Health Guaranty Associations Model Act (#520) which had been adopted by 37 states, as of July 2022.

Image source: Imgflip

 

 

Secondary Market Annuity Investors Face Uncertainty And a Wait of a Year Or Longer

by Structured Settlement Watchdog

Continuing our coverage of the transactional risks of investing in factored structured settlement payment streams in comparison to how such investments were marketed to investors, in its June 4, 2019 update to investors, Somerset Wealth Strategies' Tom Hamlin delivered the bad news, 6 weeks after a highly negative ruling by the Maryland Court of Special Appeals.

"The defendants in the class action have asked the Maryland Court of Appeals (Maryland’s highest court) to hear the case, a request that court may but is not required to grant. It will take weeks, or possibly months, before the Court of Appeals decides if it will hear the appeal, and if it does, there will be further briefing, oral argument, and additional delay while the court prepares its decision. As a result, it may take a year or longer for the appellate process to conclude". [Emphasis ours]

"There are 150+ investors, plus 5 affected firms that are fighting for payment rights" said Hamlin in a September 18, 2018 missive.

Somerset's securities arm, Hamlin and former rep Brian Horn are each subject to a FINRA complaint filed by Barry Cooper,  a Florida retiree whose money was invested in 2013 and was due to receive payments from his investment beginning January 2018. As things stand Mr. Cooper,  who was depending on the "secondary market annuity" money for a secure retirement, is looking at payments beginning at least 2 1/2 years later than scheduled, IF and only if the appeal prevails.

FINRA Complaint against Brian Horn

Claim alleges RR recommended the claimant use the majority of his retirement savings to purchase a Secondary Market Annuity that was unsuitable for the claimant, that the product was misrepresented as being a safe investment, and that the solicitation was made to the claimant's wife who had no authority over the claimant's account. Product purchased in 2014. [Source: FINRA Broker Check for Brian Horn]

FINRA Complaint against Thomas Hamlin

Claim alleges breach of fiduciary duty, negligence, negligent supervision, common law misrepresentation, breach of contract and unauthorized trading. Transaction at issue occurred in 2013, and involved a Factored Structured Settlement "FSS" payment stream through an approved Outside Business Activity "OBA".[ Source: FINRA Broker Check for Thomas Burgess Hamlin]

It should be noted that neither Somerset, nor Hamlin or Horn is a party to the Maryland proceeding. However hundreds of thousands it has been represented to me have been spent in an effort to protect their clients and themselves.

 

 

 

Workers Compensation Structured Settlements | Qualified Assignments On or AFTER August 5, 1997 Filings?

by John Darer® CLU ChFC MSSC CeFT RSP CLTC

Workers Compensation Qualified Assignments for Structured Settlements

Qualified assignment only became available for workers compensation cases filed AFTER August 5, 1997.

The Taxpayer Relief Act of 1997 amended the Internal Revenue Code, adding workers’ compensation payments under IRC § 104(a)(1) to the language of IRC §130, making them eligible for qualified assignment the same as physical injury or physical sickness tort claim payments under IRC § 104(a)(2), but applicable to claims under workmen’s compensation acts filed after the date of the enactment of the Taxpayer Relief Act (August 5, 1997).

On or prior to August 5, 1997, workers compensation parties could only make limited use of structured settlements where the future periodic payment liabilities were assigned (at the Safeco Life's SAFECO National facility) or through reinsurance, where the employer was insured.

 

 

Difference Between an Annuity and a Structured Settlement | A Genex Capital Banana Skin

by Structured Settlement Watchdog

Roger thanks for the laughs bud. Roger Proctor, who touts his former membership in the American Trial Lawyer Association (now AAJ) is the CEO of Genex Capital, which acquired StructuredSettlement-Quotes in 2011.

"What is the difference between an annuity and  a structured settlements?" is the basic legal question,  Let’s take a closer look, particularly the highlighted text (emphasis added)

A Look at Structured Settlements

"Structured settlements are exactly what they sound like. These are generally the result of a lawsuit involving personal injury or liability, and represent an award in the plaintiff’s favor. The defendant has been found guilty or has chosen to settle rather than go to trial. The settlement amount has been converted from a lump sum into a series of payments over time. These are called deferred payments".   Source:  SSQ website, "a member of the Genex Capital family"

Setting aside the being sucked into the "awarded a structured settlement vortex" fallacy...

So let me get this straight, according to the Genex family member, if Bea Litheringidiot murders Dudley Do Right, and Ms. Idiot is found guilt by the King County Washington criminal court, Idiot can set up a structured settlement instead of copping a plea?

Hot Diggity Fog  [Genex Capital (via SSQ) ]

"As you can see, the difference between an annuity and a structured settlement is actually pretty significant when you actually dig down into the subject"    Source: SSQ Ibid.

Where digging down involves as much digging as "plumbing the depths" of dirt on home plate with a Hoover.   #FrankDrebin #EnricoPalazzo  #LeslieNielsen RIP

 

via GIPHY

Genex Capital Roger Proctor's Advice To Sell Your Structured Settlement 10 Years Ago Would Have Lost You Thousands

by Structured Settlement Watchdog

Don't take financial advice from people who are not licensed to provide such advice

There's no way to sugar coat the fact that had any structured settlement annuitant taken Roger Proctor's advice to sell their structured settlement in 2009, they would have lost thousands and thousands of dollars.  Roger Proctor spent more than a year soliciting structured settlement annuitants to sell because rising interest rates were going to make them poorer. The inflation rate at present is 1.91% according to the latest release by Inflationdata.

Here's what the Proctor said on June 28, 2009:

"You may have heard in the media in recent weeks that interest rates have bottomed and are slowly creeping back up. I (Proctor)believe that this is the beginning of a new cycle of incremental increases in interest rates over the next few years. When interest rates go up, the present value of a person’s structured settlement goes down. This is a simple truth. As such, if you are considering selling your structured settlement, now is the time to get the best rate".

Here's Roger Proctor's urgent wolf call from March 26, 2010:

"WARNING AGAIN: If you are thinking of selling your structured settlement payments, do it NOW, before interest rate increases eat into the value of your future payments and make you poorer".

Millionaire with island home and multi million dollar condo

Mr. Proctor, based in Vancouver,  has personally made hundreds of thousands or millions, from paying pennies on the dollar to American citizens with structured settlements. Upon information and belief he owns a home on an island and a multi million dollar condo at the Fairmont Pacific Rim complex in Vancouver, from where Genex  Capital operates its business. Whether or not he/Genex pays pennies more than another company is irrelevant. His advice stunk. He has nothing in common with structured settlement annuitants.

Critique of the Financial Advice Dispensed by Genex Capital CEO  July 31, 2009

 

Is Genex Capital Chief Operating Officer Involved With Misleading Paymaster.Co Brandjacking Website?

by Structured Settlement Watchdog

Paymaster.co is a website that is one of the dime a dozen websites that are designed to generate leads for a factoring company using the names  (some of which are trademarked), contact and descriptive information for its competitors and primary market players to capitalize on their brands.

Paymaster.co Represents that the following companies buy structured settlements and puts them in the same boat with JG Wentworth

• Arcadia Settlements Group Inc 
• Capital Planning Inc.
• Millennium Settlements Inc. (which no longer exists) 
• Strategic Planners, inc. (Rick Bishop's company) 

Paymaster.co Represents that the following companies issue structured settlements although not a single one of them do

• Ametros Financial
• UBS Financial Services
• Atlas Settlement Group, Inc.
• Bradford Settlement Company
• Brant Hickey & Associates, inc.
• Chronovo
• Creative Capital Inc.
• Cornerstone Settlement Services, LLC
• Delta Settlements
• Forge Consulting LLC
• Holcomb Smith & Associates Inc.
• James E. Logan & Associates
• JCR Settlements LLC
• JMW Settlements LLC
• The McNay Group
• Mesirow Insurance Services, Inc/Alliant
• NFP Structured Settlements
• Oasis Financial
• Pat Farber's Structured Settlement
• The Pension Company, Inc.
• Ringler Associates, Inc.
• The Settlement Alliance, LLC 
• Structured Financial Associates Inc. 
• Summit Structured Settlements
• 4structures.com LLC
• Structures Inc.

in addition to Mutual of Omaha, Pacific Life and Prudential. These three companies issue structured settlement annuities, not structured settlements.

Owners Of Paymaster.Co Don't Care About Accuracy

Efforts to deal with Paymaster.co directly have gone on deaf ears. The puerile response to 3 calls today, before my number was blocked, was to forward the calls to JG Wentworth's call center. 

Predictable Shenanigans From North of the Border

What clues make the association of the Paymaster.co to Genex Capital's Boris Drubetsky?

• as you can see from the screen shot below Boris Drubetsky's Vimeo includes 2 videos, one for Genex Capital's testimonials and the other for Paymaster.co
• The misrepresentation of primary market companies follows what happened when Structuredsettlement-quotes(dot)com was re-launched in mid July 2012, after acquiring the asset from Andrew Cravenho. Then 4 primary market companies were misrepresented as structured settlement factoring companies.Roger Proctor and Boris Drubetsky deliberately tried to conceal their ownership of the brandjacking website, ultimately failing and then being forced to disclose after the settlement with Woodbridge Structured Funding in June 2015.
• The last phone call was telling though. I said please patch me through to Boris Drubetsky and the receptionist, who could easily have said Boris Drubetsky didn't work there attempted to patch me through. Then the JG Wentworth hand over.

 

It's a shame that those north of the border are unable to generate business without using the brands of others. Genex Capital also operates Assured Annuity and is one of the companies that chooses to market structured settlement derivatives as annuities. Given the recent NAIC statutory issue paper in which it is clear that the NAIC does not regard factored structured settlement payment streams as annuities or insurance product we'll see how long Boris and Roger rely on Merriam Webster for authority to support what in my opinion are misleadingly named offerings from a misleadingly named company.

Persistence Pays Off to Confirm That Genex Capital IS Associated With Paymaster.Co Just Doesn't Care About Accuracy

At 7pm EST I called and spoke to the same receptionist at Paymaster.co who said I would receive a call back in 2 minutes. When no call came I called back again ay 720pm EST on January 2, 2019. This time the call was answered "Genex Capital" by Takara.  BINGO!

Roger Proctor and Boris Drubetsky never cease to amuse me with 8 years of this nonsense.

 

 

 

Has A Structured Settlement Cash Now Company Told You to Sell For an Investment Opportunity That Bombed?

by Structured Settlement Watchdog

A plethora of structured settlement cash now companies appear to be providing unregistered and unlicensed advice to structured settlement annuitants.

Some have blatantly attempted and may succeed inducing less sophisticated folks to sell their structured settlement payments using baseless investment projections, so that they can make obscene profits.

In a week where the stock market has dropped 4% the attention turns to these scoundrels and the lives they may have wrecked with their reckless and possibly unlawful advice.

It's highly doubtful that these companies are insured for providing such unlicensed and unregistered financial advice and therein lies the social dilemma. In my opinion such companies, their employees and affiliates who participate in such activity need to be prosecuted.