“Structured Settlements”

That’s right!

The phrase “structured settlements” is the most expensive Google Adword in the solar system according to Harvard behavioral economist Sendhil Mullainathan.

On January 31, 2012, National Public Radio’s Marketplace segment featured a revealing conversation with Professor Mullainathan entitled “How Google searches are leading economic indicators.”

What is a structured settlement?

In a few words, a structured settlement is a method of compensation for a personal, physical injury claim whereby the aggrieved party receives his/her settlement over time as opposed to a single lump sum.

More simply, if it’s not a lump sum, it’s a structured settlement.

A structured settlement can be an excellent claims resolution option for everyone involved since the parties can match future dollars with future needs and any negotiated settlement can be specifically tailored to the injured party’s unique situation.

And because all future payments are 100% income tax-free if properly implemented by a licensed, appointed structured settlement expert specializing in these types of transactions, structured settlements continue to be tremendously popular with claimants, parents, courts, plaintiff attorneys, claims professionals, the United States Government and numerous disability advocacy groups.

The Finn Financial Group happens to be one such firm specializing in these transactions.

What is NOT a structured settlement?

Almost everything you see on the Internet when you do a Google search for “structured settlements.”

Over the years, the phrase “structured settlement” has lost its original meaning in the eyes of the public due to a secondary market that has emerged blurring the lines between what a structured settlement is and what a “factored” structured settlement is.

Without going into an inordinate amount of detail, there are companies who buy recipients’ structured settlements rights “at some ridiculous discount” according to Prof. Mullainathan and then re-package those payment rights and sell them to investors for a profit.

The Finn Financial Group does not buy structured settlement rights nor does it sell “re-packaged structured settlements.”

What is a Google Adword?

For a price, businesses can pay to have certain words and phrases rise to the top of the Google search engine.  Every time someone clicks on that website or Adword, Google makes money.

Supply and demand causes certain words and phrases to be more expensive than others.  These sites are easily distinguishable from the non-paying sites because they are highlighted at the top of Google page one.

Depending on the popularity of the topic, the price of Adwords may rise or fall.

Dr. Mullainathan maintains the popularity of Adwords can be used to gauge what’s going on in the economy.  Hence the term, leading economic indicators and the subject of the interview.

The Popularity of “Structured Settlements”

Which brings us full circle to the topic at hand.

As of yesterday, it costs $50.00 per click to buy “structured settlements” as an Adword, the most expensive one found to date by Dr. Mullainathan.

That’s $50.00 per click whether or not anything is ever purchased.

(Dr. Mullainathan and interviewer Kai Ryssdal even have some fun discussing what might happen if a bunch of people simply started clicking on these sites with no intention to purchase or sell anything)

Summary

Structured Settlements Are Leading The Way

In a major, if very odd and roundabout way, this completely validates the structured settlements industry.

For those currently receiving structured settlement benefits or those considering whether or not a structured settlement is a wise choice, you might want to ask yourself this:

“If someone is willing to pay this much money for a simple Adword to get their hands on my structured settlement, doesn’t that mean these things are really valuable and don’t they probably make a lot of money off of me?”

We believe the answer is a resounding “Yes.”

And just like it would never make sense to sell any asset below market value, clients are urged to think long and hard before forfeiting their valuable structured settlement rights.

Caveat vendor!

January 25, 2012 – Johnson & Johnson, parent company of DePuy Orthopedics, maker of the since recalled metal-on-metal ASR artificial hip systems, recently took quarterly charges of more than $3.0 Billion according to the New York Times.

As a structured settlement company with a personal interest in the litigation that has developed in light of problems associated with certain artificial hips, we have great interest in assisting those who are pursuing legal remedy for products liability lawsuits stemming from the hip recall.

For those affected, we have established a special website dedicated to the matter and encourage all prospective clients and their representatives to visit us there.  Please visit:

ASRHipSettlement.com

 We continue to follow the DePuy hip recall matter with great personal and professional interest and look forward to being of service to you.  Please let us know how we can help.

January 20, 2012  

Treasury Issues Final Regulations Under 104(a)(2)
Physical Injury Damages Exclusion  

Internal Revenue Code Section 104(a)(2) is the foundation upon which structured settlements, which provide guaranteed future periodic payments on an income tax-free basis for personal, physical injury claimants, is built.

On January 20, 2012, Treasury issued its FINAL regulations under the code.

And while they didn’t actually use the words I’ve chosen for this newsletter’s headline above, their persistent refusal to act on the request reinforces the structured settlement industry’s long-standing consensus opinion on the topic:

Single Claimant Qualified Settlement Funds (QSFs) conflict
with the spirit of the original intent of the code.

What is a Qualified Settlement Fund? 

In non-legal terms, IRC Section 468B  is a section of the tax code that permits defendants to settle a claim when (typically) there are multiple defendants and/or claimants settling for an agreed sum but specific allocations are yet to be determined and/or defendant(s) need(s) to pay part of their obligation at some point in the future.

It addresses, among other things, timing of deductions.

When proper steps are followed (court order required, etc.), it permits the defendant to settle the case, pay the money owed (or give it time to arrange funds necessary to meet its obligation) and be done with the file.  A 468B Trust, or Qualified Settlement Fund (QSF), “stands in” for the settling defendant(s) and permits closure and certainty for the defendant.

Once this step is completed, the competing interests for the settlement dollars agreed to can proceed unencumbered by any defense intervention.

A QSF can be an excellent settlement tool for certain classes of cases.  Mass torts involving a large number of plaintiffs can be perfect candidates for QSFs.  In these instances, allocations can be arranged, plaintiffs have time to explore their post-settlement financial options, attorneys can be paid, liens can be resolved, etc. all in the time needed to accomplish these ends.

An exceptionally small minority of structured settlement practitioners believe the Code applies to single claimant transactions and asked, on more than one occasion, the Internal Revenue Service for clarity on the important doctrines of economic performance and constructive receipt.

The IRS has repeatedly chosen to pass on the request as they did again here citing that it was beyond the scope of the regulations.

Where We Stand

Our firm does NOT support the use of structured settlements flowing from a single claimant QSF for a variety of reasons.  Among them:

• Economic Benefit Most likely Triggered:  While this may be debated by some in our industry, we don’t care to expose our clients to unnecessary risk;  
• Limited Structured Settlement Options:  The vast majority of life markets offering structured settlements steadfastly refuse to accept a structured settlement funded by a single claimant QSF.  This seriously limits a plaintiff’s choice;
• We Don’t Push the Envelope with a Client’s Future:  We prefer to stick with the tried and true.  Properly crafted structured settlements, arranged in cooperation with all settling parties and their representatives, will normally achieve the best outcome;
• Time Value of Money:  Everything else being equal, funding a structured settlement annuity earlier rather than later puts more money in the client’s pocket;
• It’s Unnecessary:  Implementation of a QSF requires several court approval processes and usually involves trust management fees and other costs which can erode the plaintiff’s settlement.  All can be accomplished more easily and more cost effectively without the QSF.

Also 

Lest readers think we missed other important matters address in the regulations, there are two other areas upon which the IRS opined:

1. Treasury DID NOT ADOPT commentators’ requests to, among other things, define certain personal injuries as “physical” which would unequivocally qualify them for income tax-free treatment.  On this particular point, we are disappointed because it could have possibly clarified the tax-treatment of damages paid to exonerated prisoners among other classes of claimants; and,
2. Treasury DID NOT ADOPT one commentator’s request that elimination of the “tort like” test that has long been required in order for damages to flow tax-free to the plaintiff, would create confusion.  However, in this instance, not adopting was viewed as a plus since it broadens the scope of cases which may be eligible for special tax treatment.  The impact of this decision and its impact on the structured settlements remains to be seen.

If you have any questions on any of this or any other topic involving structured settlements, please don’t hesitate to call.  This was a long newsletter but we felt it was important enough to share with those who trust us to keep them abreast of important developments that impact their practices.

Thank you for the continued opportunity to be of service and best wishes for continued Struccess!

Because Your Longevity Risk is Increasing, That’s Why!

With apologies to our younger readers, remember the 1977 Dannon commercial that linked the high centenarian population of then-Soviet Georgia to eating yogurt?

What a difference a generation makes!

When Congress passed the Social Security Act in 1935, average life expectancy at birth was only 62.81 years.  By 2050, that number is projected to rise to 83.86 according to data360.org which is a small group of non-partisan, “just the facts, ma’am” folks who like crunching numbers.

Further, in its article last November entitled “Who’s Old?  More turn 90 in U.S., redefining aging,” USAToday, citing research from the National Institute on Aging, reports that there are currently nearly 2,000,000 Americans aged 90 or older, up threefold from just thirty years ago.

So what does this mean for you and me?

For those without pensions, it means that following the conventional wisdom of investing retirement funds and withdrawing at a fixed rate, your chances of running out of money have just gone up.

Put another way, you need to either:

Hope you don’t live as long
Save a bunch more money
Re-budget to a lower withdrawal rate
Hope for higher returns

Or, take the easier way out and:

Buy an annuity!

More specifically, buy an annuity that provides guaranteed income for life.  Effectively, you can create your own “personal pension” that assures income you can never outlive.

And while rolling over your 401(k) proceeds into a lifetime annuity is a pretty good idea, those anticipating personal injury settlements have a unique opportunity to address their own longevity risk with guaranteed future cash flows that are 100% income tax-free!

Every week we’re helping people secure their futures with income tax-free structured settlements and pension rollovers.  It just makes so much sense for so many people.

Plus, many of the smartest attorneys I know routinely structure their attorney fees to address their own longevity risk on a  tax-deferred basis and are happier for their decisions.

We are passionate about this particular topic having found a plethora of evidence that leaves us little choice but to conclude that lifetime annuities are the absolute best way to ensure that any long life you live is a financially secure one.

For further reading, we hope you’ll find some of our past newsletters helpful:

Live Longer . . . Buy Annuities

A Paycheck for Life

Young Workers:  Make Mine Guaranteed

Income Floor Strategy for Retirement

Annuities Are The New Black

So here’s to a long life for you and yours!  Please let us know how we can help you create your own “personal pension.”

We’ll be here eating yogurt waiting for your call.

In its post Top 5 Causes of Accidental Death in the United States, list-oriented website Listosaur.com takes a look at some statistics that contribute to the rankings of a list we all strive to avoid being featured in.

Their blog suggests that if people would simply stop drinking, being distracted and being young while driving, maybe motor vehicle mishaps would not be the number on cause of accidental deaths in the United States.

Sure, there’d still be accidents but these factors contribute heavily to the fact that more people die from motor vehicle incidents than from any other type of accident.

Some frightening statistics to consider:

• Motor Vehicle Incidents is the No. 1 cause of accidental death in the USA;
• Accidents in general is the No. 5 cause of ALL deaths in the USA;
• Motor Vehicle Incidents is the No 1 cause of ALL deaths (USA) for those ages 1 to 42.

Rounding out the top five accidental life-takers are:

Poisoning            Falls          Fires          Choking

When deaths do occur from one of these or any other myriad of causes, it can leave a lifetime of scars in its wake for those left behind.  When negligence contributes to the loss and a lawsuit ensues, the grief for the survivors can be compounded.  In such circumstances, it’s reassuring to know there are caring claims professionals, attorneys and structured settlement professionals committed to helping them deal with their loss.

Be safe everyone!  Drive carefully and please be aware of steps you can take to increase your chances of becoming an unwitting statistic.

In a Congress that is often criticized for its inability to find common ground, today’s New York Times features an article which illustrates that bipartisanship is alive and well when it comes to medical implant device safety.

Titled “Bill Would Require More Monitoring of Implants,” the article describes efforts by key Senators to address what many believe to be a major flaw in the current implant approval process.

One of the sponsors of the legislation, Sen. Charles Grassley (R-Iowa), is also a supporter of structured settlements.  He was one of our industry’s featured speakers at the annual convention of the National Structured Settlements Trade Association in Washington, DC in 2009.

As part of their legislative effort, Sens. Grassley, Herb Kohl (D-Wisconsin) and Richard Blumenthal (D-Connecticut) also sent letters to several manufacturers requesting information on their tracking practices.  Johnson & Johnson, parent company of DePuy Orthopedics, maker of the now recalled ASR hip implants, was among the companies the Senators were seeking information from.

All patients affected by the recall of DePuy and other medical implant devices, are encouraged to visit our affiliated website, ASRHipSettlement, for information, including an informative video, on structured settlements as they apply to defective hip surgeries.

Our firm continues to follow this matter closely.

Canton (OH) Lehman High School Distinguished Alumni

It’s not often one finds himself mentioned in the same conversation with luminaries like one of the greatest New York Yankees of all time and one of rock ‘n’ roll’s most accomplished drummers ever.

But that’s exactly the situation I find myself in having recently been honored as Canton (OH) Lehman High School’s 2011 Distinguished Alumnus, Business Category.

I am honored and deeply moved to have been considered for this distinction and proud to represent my alma mater.  Especially knowing who some of the past inductees were.

Although Thurman Munson (2001 Distinguished Alumnus, Athletics) and Joe Vitale (2009 Distinguished Alumnus, Entertainment) graduated ten (10) and seven (7) years ahead of me respectively, we all lived within a few blocks of each other and our paths crossed on more than a few occasions, if only tangentially.

Thurman, a three sport high school star, would occasionally drop by our locker room as we were perennially vying for the boys state basketball championship in the 1970’s.  (Not a bad morale booster to have the MLB Rookie of the Year and future MVP rooting for you)  I remember how sad our city felt the afternoon when we learned of his tragic, untimely death.

It was rare to walk past the Vitale household and not hear percussion sounds emerging from inside.  A local legend with The Chylds, Joe went on to record, perform and tour with some of rock ‘n’ roll’s most enduring acts including Crosby, Stills, Nash & Young, Buffalo Springfield, The Eagles, Ted Nugent and Joe Walsh among others.  He’s still rockin’ strong and passed the talent along to his son, Joe Jr., who is carrying on the family tradition quite nicely in his own right.

Although I could never carry a pine tar rag for Thurman Munson or a Sabian cymbal for Joe Vitale, I am proud to share this distinction with two of my high school’s most celebrated graduates.

To the Board of Directors of the Canton Lehman High School Alumni Association, to friend Terry Reed who nominated me and to friend, teammate, SuperLawyer and fellow two-time inductee Rich Milligan* who gave my induction, I publicly profess my most utmost appreciation for this high honor.

           “Memories sweet, joys complete, these will never die . . .

. . . Though far we roam, thy halls are home Lehman High”            

Happy Thanksgiving Everyone!  I am certainly thankful for this great honor.

Dan

* NOTE:   Rich Milligan (2010 Distinguished Alumnus, Civic/Community Category) and I were also honored as 2008 Distinguished Alumni, Athletics as members of the 1971 Boys Basketball State Championship team, Canton’s first ever.

Read Our Latest E-Guide

In an effort to help clients make more informed decisions about structured settlements in these tumultuous economic times, we created this mini e-guide to help them make wiser choices about their futures.

There’s plenty of reading inside so we’ll keep it short here.

To learn why structured settlements remain a beacon of stability amid a sea of financial uncertainty,

[Click Here]

to transfer to the e-guide page where we poke holes in four of the most common misperceptions circulating about structured settlements today.

I hope you enjoy the efforts of our research. Let us know what you think and don’t hesitate to contact us anytime you require structured settlement expertise.

Thank you for the continued opportunity to be of service and best wishes for continued Struccess!

(Re-posted from our firm’s e-newsletter)

(NOTE: Some blogs simply cannot be improved upon.  Here’s one we couldn’t have said better ourselves.  The following is reprinted in its entirety with permission from The National Structured Settlements Trade Association)

Some structured settlements may offer significant advantages

Kudos to CBS News financial writers Larry Swedroe and Tiya Lim for today’s CBS News’ post on structured settlements.  Swedroe is a principal at Buckingham Asset Management in St. Louis and Ms. Lim is the firm’s director of Institutional Advisory Services.

Here’s an excerpt:

A structured settlement offers advantages that you can’t get anywhere else. Let’s start with the tax benefits. All income from your annuity is exempt — not deferred but completely exempt — from federal and state taxes. Your payments are also exempt from taxes on interest, dividends, capital gains and the dreaded AMT.

With taxes almost certain to rise in coming years, that’s not a bad place to be.

A lawsuit settlement may be your one-time chance to protect your finances for years or even decades. The IRS makes structured settlements very attractive. Consider taking the agency up on its offer.

Swedroe’s analysis goes on to explain how an accident victim can potentially maintain eligibility for private and government needs-based programs by irrevocably funding a special needs trust with payments from a structured settlement.  For a free NSSTA handout explaining this in more detail, please click here.

This commentary is a timely reminder about the importance that accident survivors should attach to financial security and guaranteed regular payment streams.  Wild swings in the stock market can make long-term planning more difficult (see here), especially when payments continue to be deducted during depressed times.  By contrast, a structured settlement offers the security of a tailored future payment stream that is not subject to reductions due to interest rate or stock market changes.

(Reprinted from Finn Financial Group E-Newsletter)

Claims Journal

Article Touts Advantages of Structured Settlements
During Claims Negotiations

I was recently interviewed, in my capacity as President of the National Structured Settlements Trade Association (NSSTA), for an article which appears in the October 31 issue of Claims Journal.

Entitled “Benefits of Using Structured Settlements in Claims Negotiations,” the article highlights the use of structured settlements from a defense perspective.

The benefits of structured settlements to an injured party anticipating a physical injury settlement are widely accepted:

• Income tax-free future cash flows
• Competitive rates of return
• Safety
• Security
• Conservation of settlement proceeds

But defendant carriers routinely incorporate structured settlements into their evaluation and negotiation strategy for a host of reasons beyond those most professionals assume.

The author also interviewed Jim Martin, Vice President, Commercial Liability Claims at CNA and Ismael Acevedo, Vice President, Structured Settlements for Chartis who shared their perspectives.

Used properly, a structured settlement can be a helpful and effective tool that benefits defendant and plaintiff alike in their quest to bring about a fair and equitable resolution to an injury claim dispute.

I hope you enjoy the article!

Thank you for the continued opportunity to be of service and best wishes for continued Struccess!