You can invest your money in structured settlements or you can also offer the same to buyers of structured settlements as a kind of compensation for the damage suffered by an individual. If you want then you can sell a portion or the entire settlement in turn for a huge amount of money. On the other hand, you can also use the settlement for the purpose of cyclic payments.
Most of the time people sell such an investment when they face health related or legal emergencies. Thus, buyers should think of these entire issues prior to opting for a structured settlement. In case of a person suffering from injury, the settlement provided to him should be sufficient to pay for the medical expenditures and the everyday necessities of the family of the injured person. The situation should never arise where the sufferer would have to sell a portion or the entire settlement to cover these expenditures.
Prior to purchasing this investment, buyers should speak to structured settlement brokers as well as legal representatives. It is the main job of the broker to deal in these settlements and as such, the suggestion of a broker will be helpful. Buyers of structured settlements have to think carefully regarding the various offers offered in the market. They can get a lot of information regarding such offers from the broker. The broker can give buyers advice regarding the different deals offered and he will also tell them the deal, which will be great for any situation. Since the brokers assist in the sale of structured settlement, they are in the position to ask for maximum gain for buyers.
If buyers intend to buy the settlement as a kind of investment for periodical payments then they should look out for the best offer. If they purchase the settlement with the assistance of a broker then buyers of structured settlements will be able to cover all the required expenditures.
This kind of investment will suit the minors the best, as the buyers of structured settlements will be able to receive a huge sum of money when they reach the age of consent. Thus, the minors should purchase this kind of settlement
Monday, January 7, 2008
Where Do You Find The Best Buyer of Stuctured Settlement Payments?
A buyer of structured settlement arrangements can provide the cash you need in the short term and eliminate the need to wait for payments each and every month. In addition to removing the risk and uncertainty that comes with holding any debt instrument, it allows you to take advantage of a large influx of money.
You may have recently settled an injury lawsuit out of court and there are many questions going through your head. Does it really have to take me 20 years before I can collect all of my money? I have seen companies advertise on TV that they are a buyer of structured settlements. They say that I don’t have to wait. I can sell my annuity payments to them. Is this true? Why would I want to? If I decide to sell, how do I go about selecting the right company?
Yes, it is true. You can sell all or part of your structured settlement payments. There are many reasons and advantages of doing so. Let me explain how this works and what advantages that you can expect when you sell your annuity interest.
The buyer of structured settlement that you choose will give you a lump sum payment. The process usually takes a couple of weeks instead of the year, 10 years or 20 years that you may have to wait to receive the total settlement. So, you can get the cash you need in a relatively short period of time.
Why would you want to do this? Maybe your injury has put you behind in your bills and you are tired of hearing from your creditors. Or, you have always wanted to own a home of your own and it is a buyer’s market out there. Will it be next year? 10 years from now? You have been given the opportunity to make an investment that you just know is about to take off. There is no time to wait. Maybe, you have figured out, taking into account the steady rise in the rate of inflation, that your settlement won’t be worth anywhere near the value that it is today.
The buyer of structured settlement may be the solution. It would give you the cash that you need to realize your dreams or to settle your debt. Your investments such as the house or the business may actually gain you more money over time than your structured settlement would.
There are many buyers of structured settlement out there. How do you choose the right one for you? Many of these companies offer free quotes, give you information about their miscellaneous fees and outline their terms. Go to several companies and get this information. Then consult with your lawyer or financial advisor. Before selecting a buyer of structure settlement to handle your deal, you can check on their reputation.
You have made your decision. You have decided to sell only a part of your structured settlement. You have selected the right buyer of structured settlements for you. You have reviewed the paperwork with your attorney and have signed it. You have waited the two weeks or so it takes to process this transaction. Finally the buyer of structured settlement has sent you the check. You can now pay of your debt, buy that house or make that investment.
Congratulations!
You may have recently settled an injury lawsuit out of court and there are many questions going through your head. Does it really have to take me 20 years before I can collect all of my money? I have seen companies advertise on TV that they are a buyer of structured settlements. They say that I don’t have to wait. I can sell my annuity payments to them. Is this true? Why would I want to? If I decide to sell, how do I go about selecting the right company?
Yes, it is true. You can sell all or part of your structured settlement payments. There are many reasons and advantages of doing so. Let me explain how this works and what advantages that you can expect when you sell your annuity interest.
The buyer of structured settlement that you choose will give you a lump sum payment. The process usually takes a couple of weeks instead of the year, 10 years or 20 years that you may have to wait to receive the total settlement. So, you can get the cash you need in a relatively short period of time.
Why would you want to do this? Maybe your injury has put you behind in your bills and you are tired of hearing from your creditors. Or, you have always wanted to own a home of your own and it is a buyer’s market out there. Will it be next year? 10 years from now? You have been given the opportunity to make an investment that you just know is about to take off. There is no time to wait. Maybe, you have figured out, taking into account the steady rise in the rate of inflation, that your settlement won’t be worth anywhere near the value that it is today.
The buyer of structured settlement may be the solution. It would give you the cash that you need to realize your dreams or to settle your debt. Your investments such as the house or the business may actually gain you more money over time than your structured settlement would.
There are many buyers of structured settlement out there. How do you choose the right one for you? Many of these companies offer free quotes, give you information about their miscellaneous fees and outline their terms. Go to several companies and get this information. Then consult with your lawyer or financial advisor. Before selecting a buyer of structure settlement to handle your deal, you can check on their reputation.
You have made your decision. You have decided to sell only a part of your structured settlement. You have selected the right buyer of structured settlements for you. You have reviewed the paperwork with your attorney and have signed it. You have waited the two weeks or so it takes to process this transaction. Finally the buyer of structured settlement has sent you the check. You can now pay of your debt, buy that house or make that investment.
Congratulations!
Basics of Structured Settlements - Your Rights And Taxes
Structured settlement factoring regulations have undergone significant changes in recent years. You can now sell your structured payments with greater security and confidence. These changes are in place to make it easier for the person that has a need to get their compensation faster. While it is still going to cost you a sizeable amount of money when it comes to securing cash now for future structured settlements, the process is now a bit less complicated, especially in regards to working with insurance companies that used to resist the structured settlement transfers.
What's Changed And What You Need To Know
There are several key things that have changed in regards to structured settlement sales. First, it is not simply easier to make happen. Although 30 some states had already passed laws helping individuals to do sell their structured settlements already, the entire country now gets to benefit from these laws. In effect, they streamline the process making it a faster, safer way to get the funds that you need.
Another important consideration is that of taxes. There was a continuous battle going on over whether or not you had to pay taxes on the funds from your structured settlement if in fact you did sell it. The laws that just went into play say that there never was a need to pay taxes and that there is now no need to pay taxes on these funds. Therefore, the tax consequences that were once considered to be larger risks in whether or not you should sell your structured settlements have been leveled, making it less of a risk for you.
One thing that hasn't changed is the fact that you will lose money if you sell your structured settlement now as opposed to holding onto it over the course of the original term. In fact, this new structured settlement law does not provide you with any reassurance or limitations in regards to how much companies will have to pay you to purchase your settlement. This kicks the door wide open for various problems including losing a considerable amount of money through the sale of your structured settlement.
In addition to this, it has become even more important for the seller of a structured settlement to seek out the help of their trusted attorney, or someone that can work closely with them to insure that they are not being taken advantage of during the process of selling their structured settlement.
There are many times when the sale of a structured settlement is essential to the well being of the person that holds it. Life changes and and so does the need to get your hands on the money that should be your own. With the help of the recent laws, individuals can secure the funds to do with what they need to, without worrying about many of the pitfalls that once were in place. Now, you have the ability to make your own decisions regarding these structured settlement sales. That's a good thing.
A Better Way to Sell A Structured Settlement - Via Auction
Structured settlements were introduced in Canada and the United States in the 1970's. They were introduced as an alternative to lump sum payments, common in insurance settlements and lottery winnings. In the decades since, they have also been accepted as legal financial instruments in England and Australia. The aforementioned common law countries have decided to include structured settlements in their statutory tort laws. These four countries handle tort law and the settlement packages a little bit differently, but the general overall definition applies across the board. In a nutshell, a structured settlement by legal definition is a statutory agreement to pay a specified sum of money over a period of time, on a payment system.
Payment Arrangements
When someone wins a court settlement (or if they settle the case beforehand), the insurance company often gives the winner a choice of taking a specified amount of money in a lump sum, or a bit more money if the insurance company can enter into a structured settlement arrangement. Of course, it is in the insurance companies best interest to pay the claimant in a structured settlement, because the insurance company can earn interest, during the structured payment cycle, on the full sum of money it would have paid in a lump sum.
The insurance company wins in the profit game, when they get to enter into a structured settlement. They will be able to invest the full sum of money owed, and they get to earn interest or dividends on the money in hand during the payment period.
Structured settlements are most often paid out in the form of an annuity over a period of time. An annuity is also legally classified as a financial instrument. Once again, the financial institution will gain an additional financial advantage, because they can collect interest or earn other kinds of income on the bulk amount, during the payment period.
Annuity & Structured Settlement Buyouts
Structured Settlements for a great deal of clients are the ideal solution. Payments spread out over a period of time allow clients to balance their finances and pay bills in the years to come. Some people get their settlement payments $300, $1000 or even more each month. Sometimes they may include lump sum payments many years in the future. This is fine as long as their life is humming along and their bills are being paid. Yet, circumstances sometimes get in the way, and people need the lump sum cash right away to solve some issue that has come up in their lives.
Because both annuities and structured payments are a legally-binding financial agreement, those items can potentially be transferred to another person under the terms of the laws that have been set up to manage these financial products. But, when faced with a serious financial crunch, some people hastily sell their annuities and structured settlements to the first company who would be willing to buy them for a lump sum amount. These companies who are willing to buy-out annuities and structured payments are commonly referred to as "Factoring" companies, because they use "Factors" to determine how much future payments are currently worth, and how much they should buy them for.
The Standard Method of Selling A Structured Settlement - Persistence and Patience (not always used)
We have all seen the countless ads on TV from a various companies, "Get Lump Sum Cash Now." For years, people have turned to factoring companies in their time of financial need. Smart consumers will learn from the insurance companies. Have you ever been involved in a car wreck? The insurance company requires for you to get three estimates and then they will pay the company that offers them the best deal.
The smart consumer will also invest a little bit more of his or her time to make sure they get the best deal for their annuity or structured settlement. They will call at least three factoring companies and get competitive bids from each. Then they will go back to the three aforementioned companies and see if any are willing to beat their best offer. It can be tiring and time-consuming to follow through in this process, but for the average person, it could be worth several thousand or even tens of thousands of dollars in one's bank account at the end of the process.
The Better Method of Selling a Structured Settlement - Open Marketplace Auction
A new service has been introduced by Quote Me A Price.com (QMAP). This website allows Structured Settlement owners the ability to list details of their payments, and receive cash bids directly from Top-Rated Funding firms. The process is relatively simple. Clients sign up for a free account and list the details of the payments they receive. Once an account is created and the details of the payment arrangement are known, Funding Firms can log in and make cash bids directly on the purchase of the settlement. Each firm can see the current highest cash offer, and if they wish to beat it with a higher cash price, they can do so. Sellers do not need to worry about being called countless times by salespeople because the contact information of the settlement owner is not shared. When a factoring company makes a cash bid on the settlement, QMAP notifies the settlement owner of the new bid via email. Having settlement buyers compete in an open marketplace lowers the profit margin for funding firms, and forces the lowest possible discount rates to be applied when funding companies compete to buy future payments. This in turn ensures that clients can get the maximum amount of money back from their settlement.
The Importance of Comparison Shopping (actual Quote Me A Price.com client)
Two siblings had been receiving separate, but identical annuity payouts in the form of a structured settlement from an accidental family member death. Sibling one got into a financial crunch. When this happened, sibling one called a "Factoring Company." She was offered a lump sum buyout, and although the offer was much lower than the value of the settlement, sibling number one didn't realize the importance of shopping the competition, and sold her settlement for $70,000. Sibling number two heard about the buyout and thought that it would be nice to have her cash now also. But, sibling number two was not as desperate for an immediate buyout. Sibling number two took the time to shop around for a better deal. Sibling two managed to uncover Quote Me A Price.com, and they helped to secure the best offer possible. Sibling number one got a $70,000 buyout and was initially happy with her cash buyout. Sibling number two came to QMAP with the same initial $70,000 buyout offer for the settlement. After working with QMAP, sibling number two got offered $100,000 for the same settlement sibling number one sold for $70,000. Sibling number two sold her settlement for $100,000 to JG Wentworth who is an auction partner in the QMAP service. While sibling number two did get the best possible deal, sibling number one unfortunately has to live with the fact knowing that she made a $30.000 mistake by not shopping the competition.
In Conclusion
Your structured settlement or annuity is the foundation of your financial future. If you find yourself in financial need now, you should at the very least give yourself a couple more weeks to shop your deal to the competition. You might be telling yourself that you cannot afford to wait, but the truth is that you cannot afford to take the first bid that you are offered. In some cases, jumping at the first offer could be the equivalent of financial suicide to a structured settlement owner.
So, be patient and persistent in the process of finding a buyer for your settlement. And remember, if you are willing to negotiate with a car dealer on the price you pay for a car, then there should be no reason in the world that you should not negotiate with a factoring company when you are looking for a buy-out of your settlement.
Payment Arrangements
When someone wins a court settlement (or if they settle the case beforehand), the insurance company often gives the winner a choice of taking a specified amount of money in a lump sum, or a bit more money if the insurance company can enter into a structured settlement arrangement. Of course, it is in the insurance companies best interest to pay the claimant in a structured settlement, because the insurance company can earn interest, during the structured payment cycle, on the full sum of money it would have paid in a lump sum.
The insurance company wins in the profit game, when they get to enter into a structured settlement. They will be able to invest the full sum of money owed, and they get to earn interest or dividends on the money in hand during the payment period.
Structured settlements are most often paid out in the form of an annuity over a period of time. An annuity is also legally classified as a financial instrument. Once again, the financial institution will gain an additional financial advantage, because they can collect interest or earn other kinds of income on the bulk amount, during the payment period.
Annuity & Structured Settlement Buyouts
Structured Settlements for a great deal of clients are the ideal solution. Payments spread out over a period of time allow clients to balance their finances and pay bills in the years to come. Some people get their settlement payments $300, $1000 or even more each month. Sometimes they may include lump sum payments many years in the future. This is fine as long as their life is humming along and their bills are being paid. Yet, circumstances sometimes get in the way, and people need the lump sum cash right away to solve some issue that has come up in their lives.
Because both annuities and structured payments are a legally-binding financial agreement, those items can potentially be transferred to another person under the terms of the laws that have been set up to manage these financial products. But, when faced with a serious financial crunch, some people hastily sell their annuities and structured settlements to the first company who would be willing to buy them for a lump sum amount. These companies who are willing to buy-out annuities and structured payments are commonly referred to as "Factoring" companies, because they use "Factors" to determine how much future payments are currently worth, and how much they should buy them for.
The Standard Method of Selling A Structured Settlement - Persistence and Patience (not always used)
We have all seen the countless ads on TV from a various companies, "Get Lump Sum Cash Now." For years, people have turned to factoring companies in their time of financial need. Smart consumers will learn from the insurance companies. Have you ever been involved in a car wreck? The insurance company requires for you to get three estimates and then they will pay the company that offers them the best deal.
The smart consumer will also invest a little bit more of his or her time to make sure they get the best deal for their annuity or structured settlement. They will call at least three factoring companies and get competitive bids from each. Then they will go back to the three aforementioned companies and see if any are willing to beat their best offer. It can be tiring and time-consuming to follow through in this process, but for the average person, it could be worth several thousand or even tens of thousands of dollars in one's bank account at the end of the process.
The Better Method of Selling a Structured Settlement - Open Marketplace Auction
A new service has been introduced by Quote Me A Price.com (QMAP). This website allows Structured Settlement owners the ability to list details of their payments, and receive cash bids directly from Top-Rated Funding firms. The process is relatively simple. Clients sign up for a free account and list the details of the payments they receive. Once an account is created and the details of the payment arrangement are known, Funding Firms can log in and make cash bids directly on the purchase of the settlement. Each firm can see the current highest cash offer, and if they wish to beat it with a higher cash price, they can do so. Sellers do not need to worry about being called countless times by salespeople because the contact information of the settlement owner is not shared. When a factoring company makes a cash bid on the settlement, QMAP notifies the settlement owner of the new bid via email. Having settlement buyers compete in an open marketplace lowers the profit margin for funding firms, and forces the lowest possible discount rates to be applied when funding companies compete to buy future payments. This in turn ensures that clients can get the maximum amount of money back from their settlement.
The Importance of Comparison Shopping (actual Quote Me A Price.com client)
Two siblings had been receiving separate, but identical annuity payouts in the form of a structured settlement from an accidental family member death. Sibling one got into a financial crunch. When this happened, sibling one called a "Factoring Company." She was offered a lump sum buyout, and although the offer was much lower than the value of the settlement, sibling number one didn't realize the importance of shopping the competition, and sold her settlement for $70,000. Sibling number two heard about the buyout and thought that it would be nice to have her cash now also. But, sibling number two was not as desperate for an immediate buyout. Sibling number two took the time to shop around for a better deal. Sibling two managed to uncover Quote Me A Price.com, and they helped to secure the best offer possible. Sibling number one got a $70,000 buyout and was initially happy with her cash buyout. Sibling number two came to QMAP with the same initial $70,000 buyout offer for the settlement. After working with QMAP, sibling number two got offered $100,000 for the same settlement sibling number one sold for $70,000. Sibling number two sold her settlement for $100,000 to JG Wentworth who is an auction partner in the QMAP service. While sibling number two did get the best possible deal, sibling number one unfortunately has to live with the fact knowing that she made a $30.000 mistake by not shopping the competition.
In Conclusion
Your structured settlement or annuity is the foundation of your financial future. If you find yourself in financial need now, you should at the very least give yourself a couple more weeks to shop your deal to the competition. You might be telling yourself that you cannot afford to wait, but the truth is that you cannot afford to take the first bid that you are offered. In some cases, jumping at the first offer could be the equivalent of financial suicide to a structured settlement owner.
So, be patient and persistent in the process of finding a buyer for your settlement. And remember, if you are willing to negotiate with a car dealer on the price you pay for a car, then there should be no reason in the world that you should not negotiate with a factoring company when you are looking for a buy-out of your settlement.
Monday, December 24, 2007
Questions To Ask A Structured Settlement Buyer
Choosing the right structured settlement buyer can seem like a daunting task but if you know the right questions to ask and the important information to obtain, this process can be relatively painless.
While the highest quote from any potential buyer may look tempting, you need to be comfortable with the company and its reputation before choosing a buyer. Selling a structured settlement can be a complicated legal process; you need to know the company can be successful in obtaining your money. Don't be afraid to question anything that appears suspicious. If they can't answer questions to your satisfaction, then it might be time to look at other buyers.
Remember it's your money!
Here is a list of questions to ask and items to know about any potential structured settlement buyer:
1) How long have they been in business?
2) Is their contact and business information verifiable?
3) Are they bonded or insured?
4) What is their underwriting criteria?
5) How is their Better Business Bureau rating?
6) Do they handle your type of structured settlement?
7) How many structured settlement purchases do they do a year?
8) Are they familiar with your local courts and state practices?
9) What is their success rate in obtaining structure settlement requests in your state?
10) How will they price your structured settlement?
11) What discount rate did they use in the quote?
12) Can they provide a time table for the process?
13) Do they use multiple financing sources for your quote?
14) Are they a principal or a broker?
15) Are they associated or member of a larger corporation?
16) Do they have a privacy policy?
17) Are they members of trade and professional organizations?
18) Are they professional in all communications and business presence?
* Please consult a lawyer, licensed insurance agent, securities broker, or other financial professional for advice regarding your personal situation.
While the highest quote from any potential buyer may look tempting, you need to be comfortable with the company and its reputation before choosing a buyer. Selling a structured settlement can be a complicated legal process; you need to know the company can be successful in obtaining your money. Don't be afraid to question anything that appears suspicious. If they can't answer questions to your satisfaction, then it might be time to look at other buyers.
Remember it's your money!
Here is a list of questions to ask and items to know about any potential structured settlement buyer:
1) How long have they been in business?
2) Is their contact and business information verifiable?
3) Are they bonded or insured?
4) What is their underwriting criteria?
5) How is their Better Business Bureau rating?
6) Do they handle your type of structured settlement?
7) How many structured settlement purchases do they do a year?
8) Are they familiar with your local courts and state practices?
9) What is their success rate in obtaining structure settlement requests in your state?
10) How will they price your structured settlement?
11) What discount rate did they use in the quote?
12) Can they provide a time table for the process?
13) Do they use multiple financing sources for your quote?
14) Are they a principal or a broker?
15) Are they associated or member of a larger corporation?
16) Do they have a privacy policy?
17) Are they members of trade and professional organizations?
18) Are they professional in all communications and business presence?
* Please consult a lawyer, licensed insurance agent, securities broker, or other financial professional for advice regarding your personal situation.
Sunday, December 16, 2007
Structured Settlement Company - Approved Lists And Why They Are Bad For The Plaintiff
Structured Settlement Approved Lists can be a very bad thing for the plaintiff and the plaintiff attorney. Often times a settlement will near the end, the plaintiff will agree on a settlement, and everything seems fine.
Then, the defense unveils that there are limitations placed on the plaintiff that will reduce the plaintiff's choices when it comes to choosing the company they work with for their Structured Settlement.
There are two types of structured settlement approved lists that you need to be aware of. In this article I will go over the first type.
The first structured settlement approved list is an:
Approved List of Annuity Brokers.
The approved list of brokers is bad for plaintiff attorneys and their client because it sets up a situation where the defense broker has perhaps an exclusive arrangement, or to make the approved list with the casualty company, has had to agree to help push that casualty companies agenda.
---> What agenda is that?
Casualty companies often like to try to turn this into a profit center. As a structured settlement works its way through a case, the casualty company would like to find some way to benefit from that.
---> How do they benefit?
It could be a direct kick-back or rebate, which is legal in California and Florida I believe, as long as the defense broker is offering the same rebate to all of his clients.
The other way they can benefit is if they have an internal program that says, "We have a wholly owned affiliate, life insurance company that issues annuities and we want the claimant to place their structured settlement annuity with our wholly owned affiliate or a very limited list of other carriers."
I'll give you some examples shortly, but going back to the approved list of brokers, when a defense-oriented structured settlement broker has agreed to represent the casualty company's interests, he's agreed to their agenda whatever it may be. If their agenda includes a rebate or kick-back, whether disclosed or not, the broker is essentially agreeing to that agenda.
Many of you that work with me know that I'm big on getting the defense brokers, that I'm asked to work with in putting a structure together for a client, to disclose to us whether there is a rebate or kick-back.
---> Why do I think that's important?
Because no one likes to give money away and I don't think these defense brokers are any different than I am. They don't like the fact that they've got to give whatever percentage of earnings off the placement of the funding vehicles in one of these cases, they're not happy to give that money to a casualty company. I think it sets up a situation potentially for a defense broker to look for a way that he can get that rebate or kick-back back to the client without it coming out of his commission.
---> How can he do that?
He might be able to do it by creating a savings on the annuity through an interest rate arbitrage. In other words, committing the annuity with the personal injury claimant before they've actually locked in the price, and in the interim of time that occurs between the date the plaintiff agrees to a set of payments and the dates that this other agreement is executed, there might be interest rate changes.
If there are interest rate changes that are interest rate improvements, which would lower the cost of the annuity... meaning instead of requesting $100,000 or $1,000,000 to fund an annuity package, maybe the defense broker only needs to request $90,000, $900,000 or $950,000.
Those are probably extreme examples, but you get the picture.
I'm maintaining that it is possible that the defense broker could point to that savings to the client and say, "there's your rebate or kick-back".
We maintain at SPI that those types of savings should adhere to the benefit of the injured party. After all, the tax code that creates this exemption for these payments doesn't mention casualty companies. It mentions us, the taxpayers.
When we get injured we get an exemption from income for these payments, and I believe rightfully so it should benefit the injured party.
So, how do you navigate around approved broker lists in Structured Settlements?
As a plaintiff attorney, you should have an experienced Plaintiff Loyal Structured Settlement Planner on your side who has vast experience in protecting the rights of the plaintiff and attorney.
Plaintiff Loyal Structured Settlement Planners are just like they sound... they work ONLY for the plaintiff side... and do not represent the defense in any case. Having a Plaintiff Loyal Structured Settlement Planner on your team is important because we have been through hundreds... if not thousands or negotiations and mediations for injury victims. These types of Plaintiff Loyal planners know the sticking points in these transactions and know how to turn the tides from the defense to the plaintiff.
Clause Work Required
There is a certain set of clause work that should be included in the negotiations of a settlement. This clause work sets the stage so you can take more control of the financial aspects of the settlement.
The clause work should outline specific actions that need to be taken and outline certain conditions. Among the conditions are that the defense will not limit the companies which the plaintiff can work with to seek structured settlement bids.
Then, the defense unveils that there are limitations placed on the plaintiff that will reduce the plaintiff's choices when it comes to choosing the company they work with for their Structured Settlement.
There are two types of structured settlement approved lists that you need to be aware of. In this article I will go over the first type.
The first structured settlement approved list is an:
Approved List of Annuity Brokers.
The approved list of brokers is bad for plaintiff attorneys and their client because it sets up a situation where the defense broker has perhaps an exclusive arrangement, or to make the approved list with the casualty company, has had to agree to help push that casualty companies agenda.
---> What agenda is that?
Casualty companies often like to try to turn this into a profit center. As a structured settlement works its way through a case, the casualty company would like to find some way to benefit from that.
---> How do they benefit?
It could be a direct kick-back or rebate, which is legal in California and Florida I believe, as long as the defense broker is offering the same rebate to all of his clients.
The other way they can benefit is if they have an internal program that says, "We have a wholly owned affiliate, life insurance company that issues annuities and we want the claimant to place their structured settlement annuity with our wholly owned affiliate or a very limited list of other carriers."
I'll give you some examples shortly, but going back to the approved list of brokers, when a defense-oriented structured settlement broker has agreed to represent the casualty company's interests, he's agreed to their agenda whatever it may be. If their agenda includes a rebate or kick-back, whether disclosed or not, the broker is essentially agreeing to that agenda.
Many of you that work with me know that I'm big on getting the defense brokers, that I'm asked to work with in putting a structure together for a client, to disclose to us whether there is a rebate or kick-back.
---> Why do I think that's important?
Because no one likes to give money away and I don't think these defense brokers are any different than I am. They don't like the fact that they've got to give whatever percentage of earnings off the placement of the funding vehicles in one of these cases, they're not happy to give that money to a casualty company. I think it sets up a situation potentially for a defense broker to look for a way that he can get that rebate or kick-back back to the client without it coming out of his commission.
---> How can he do that?
He might be able to do it by creating a savings on the annuity through an interest rate arbitrage. In other words, committing the annuity with the personal injury claimant before they've actually locked in the price, and in the interim of time that occurs between the date the plaintiff agrees to a set of payments and the dates that this other agreement is executed, there might be interest rate changes.
If there are interest rate changes that are interest rate improvements, which would lower the cost of the annuity... meaning instead of requesting $100,000 or $1,000,000 to fund an annuity package, maybe the defense broker only needs to request $90,000, $900,000 or $950,000.
Those are probably extreme examples, but you get the picture.
I'm maintaining that it is possible that the defense broker could point to that savings to the client and say, "there's your rebate or kick-back".
We maintain at SPI that those types of savings should adhere to the benefit of the injured party. After all, the tax code that creates this exemption for these payments doesn't mention casualty companies. It mentions us, the taxpayers.
When we get injured we get an exemption from income for these payments, and I believe rightfully so it should benefit the injured party.
So, how do you navigate around approved broker lists in Structured Settlements?
As a plaintiff attorney, you should have an experienced Plaintiff Loyal Structured Settlement Planner on your side who has vast experience in protecting the rights of the plaintiff and attorney.
Plaintiff Loyal Structured Settlement Planners are just like they sound... they work ONLY for the plaintiff side... and do not represent the defense in any case. Having a Plaintiff Loyal Structured Settlement Planner on your team is important because we have been through hundreds... if not thousands or negotiations and mediations for injury victims. These types of Plaintiff Loyal planners know the sticking points in these transactions and know how to turn the tides from the defense to the plaintiff.
Clause Work Required
There is a certain set of clause work that should be included in the negotiations of a settlement. This clause work sets the stage so you can take more control of the financial aspects of the settlement.
The clause work should outline specific actions that need to be taken and outline certain conditions. Among the conditions are that the defense will not limit the companies which the plaintiff can work with to seek structured settlement bids.
Sunday, December 9, 2007
Pros and Cons of Structured Settlements
Structured settlements have many benefits to it. With a structured settlement, tax is avoided. Because of an appropriate and educated setup, a structured settlement is also able to reduce the plaintiff's tax obligations and may sometimes be tax-free.
A structured settlement can be a good way to preserve the plaintiff's settlement funds, preparing him for necessary future payments. Most of the time, a structured settlement serves as a protection from the plaintiff himself and limits his money use. A lot of people are simply not good with money, or could not just say "no" to relatives and friends who want to "taste" their wealth. For these types of people, a large settlement can immediately go to waste and disappear.
Structured settlements are also advantageous for minors as well for they can be used to provide payments through their lifetime--personal costs during their adolescence, additional disbursements for college and other academic expenses, and other disbursements during adulthood.
A person who is injured and needs long-term special treatments and services benefits from this as well. Having periodic lump sums will give him the financial capability to purchase medicines, medical equipments, or modified vehicles that he may need.
The downside
Some people feel limited by the periodic payments in a structured settlement. They may want to buy a new car, get a housing loan, or pay for other expensive items and services but this will be impossible with the structured settlements because they are not allowed to borrow against payments for the future under their agreement. So for some people, accepting a lump sum settlement is the better option. They will be the ones to invest it and plan for their future. For them, other standard investments seem to give a better long-term return than the annual payments there is in structured settlements.
A structured settlement can be a good way to preserve the plaintiff's settlement funds, preparing him for necessary future payments. Most of the time, a structured settlement serves as a protection from the plaintiff himself and limits his money use. A lot of people are simply not good with money, or could not just say "no" to relatives and friends who want to "taste" their wealth. For these types of people, a large settlement can immediately go to waste and disappear.
Structured settlements are also advantageous for minors as well for they can be used to provide payments through their lifetime--personal costs during their adolescence, additional disbursements for college and other academic expenses, and other disbursements during adulthood.
A person who is injured and needs long-term special treatments and services benefits from this as well. Having periodic lump sums will give him the financial capability to purchase medicines, medical equipments, or modified vehicles that he may need.
The downside
Some people feel limited by the periodic payments in a structured settlement. They may want to buy a new car, get a housing loan, or pay for other expensive items and services but this will be impossible with the structured settlements because they are not allowed to borrow against payments for the future under their agreement. So for some people, accepting a lump sum settlement is the better option. They will be the ones to invest it and plan for their future. For them, other standard investments seem to give a better long-term return than the annual payments there is in structured settlements.
Subscribe to:
Posts (Atom)
Sites You might like to visit