Structured Settlements: Catastrophic Injuries

Structured Settlements: Catastrophic Injuries

Third in a series of blog posts dedicated to helping clients decide when a structured settlement should be considered

Today’s Installment: Catastrophic Injuries

May 10, 2019 – While structured settlements are useful in resolving a wide variety of liability disputes, those involving catastrophic injuries are especially well-suited to this method of claims resolution.

When an accident leaves a person tragically impaired requiring health care and living assistance extending well into the future, there are several reasons a structured settlement should always be the first choice when negotiating and finalizing these lawsuits or claims.

Reason 1: Certainty

Unlike cash settlement funds invested in the stock market which may rise and fall with market conditions and can even lose value, structured settlement payments are fully guaranteed ensuring funds will be there when needed.

Tax-free with no management fees or expenses, structured settlements enhance the value of these types of settlements by matching future needs with future dollars, often crafted to track with a professionally prepared life care plan.

Sure, market investing can also increase the value of a settlement, but increased returns are only possible by assuming more risk. And a positive outcome is far from guaranteed.

“Risk cannot be a factor in my son’s recovery.”

Roger Greene, on why he chose a structured settlement for his son, Kyle, who suffered a spinal cord injury in a motor vehicle accident.

Creating a series of guaranteed cash flows to meet costs of known and anticipated future care allows the injured party and their family to focus on the patient’s recovery.

Backed by some of the world’s largest and most solvent life insurance companies in a highly regulated industry, structured settlements eliminate the risk of running out of funds for needed medical and attendant care.

Reason 2: The Rated Age Pricing Advantage

Because some accidents leave the survivor with injuries severe enough to compromise their normal life expectancy, life companies offering structured settlements are often able to offer improved pricing on lifetime payments.

By insuring large pools of individual policyholders, life companies can better manage longevity risk than an individual can on their own. Some in the pool will live longer than expected while some will die sooner. But because the life companies have so many individuals under contract, mortality risk for any individual is shared by members of the pool.

This pricing advantage can increase the rate of return on lifetime monthly payout for any given funding sum at no additional cost. Monthly benefits can increase by 5% to 20% or more depending on the medical records reviewed.

Among the types of injuries eligible for rated age consideration: Spinal cord injuries, traumatic brain injuries, burns, lacerated organs, heart conditions, and other conditions even if unrelated to the accident such as hypertension, obesity, drug or alcohol dependency, etc.

Reason 3: Lifetime Security

When injuries require care for a lifetime, safeguarding settlement funds for as long as the individual lives becomes a paramount concern.

A life annuity structured settlement option can match future needs with future dollars safely and more effectively than any alternative investment strategy.

And it’s also a bargain! Compared to other options, especially when combined with their tax-free nature and fixed payout, nothing compares to a structured settlement.

“To achieve a similar riskless guarantee of income throughout one’s uncertain lifetime without life annuities would cost between 25% and 40% more.”

Rational Decumulation, David F. Babbel, Craig B. Merrill

Those with debilitating injuries often require care beyond the lives of their primary care givers. A structured settlement can establish a pattern of predictable funds to meet future life care needs.

When safety, security, superior comparative returns, and guaranteed lifetime income are goals, a structured settlement should always be a primary consideration for those involved in catastrophic injury lawsuits and claims.

For further information, be sure to check out this brochure from the National Structured Settlements Trade Association (NSSTA.com):

Structured Settlements: The Key to a Successful Financial Strategy

Photo by JAFAR AHMED on Unsplash

Structured Settlements: Fatalities

Second in a series of blog posts dedicated to helping clients decide when a structured settlement should be considered

Today’s Installment: Fatalities

May 7, 2019 – “Death is a crisis that all families encounter, and it is recognized as the most stressful life event families face . . .”

The preceding quote was excerpted from Chapter 4, “Death, Dying, and Grief in Families” (Murray, Toth & Clinkenbeard, 2005), of Families & Change: Coping with Stressful Events and Transitions, a best-selling text of compilation scholarly research on a topic most of us would sooner avoid.

No death can be minimized, but the unexpected, sudden death of a loved one leaves families feeling especially violated as they struggle for comfort that is too slow in arriving and acceptance of a new reality they never asked for.

The ensuing grief takes a significant emotional toll on psyches and many families fracture to the point of permanent dysfunction as a result.

When survivors file insurance claims and wrongful death lawsuits due to negligence alleged to have caused a fatality, they experience a new set of stressors inherent in the litigation process which can prolong their suffering and worsen their already-fragile sense of being.

And that’s just the emotional toll.

Why Structured Settlements for Fatalities?

When the decedent was the family’s contributory wage earner, the loss of their steady income adds yet another layer of vexing complexity to the survivor responsible for keeping the family together.

Life insurance will help, but the ongoing cost of raising a family, particularly when young children are left behind, can remain long after life insurance proceeds are spent.

Few cases cry out for structured settlements as loudly as those involving fatalities. Especially when a principal wage earner leaves small children behind.

Because a structured settlement can be crafted to replicate lost future income, structuring that portion of the claim serves the family better than a single lump sum of cash ever could. It stabilizes their financial situation and eliminates daunting decision making.

In fact, an argument can be made that attorneys and claims associates do the family a grave disservice when they don’t structure the settlement. Given the unpredictability of the stock market and most people’s inexperience in managing large sums of money effectively, a lump sum simply fails to adequately meet the needs of the family over time.

Structured settlements offer secure, guaranteed, tax-free future income at rates superior to anything else of commensurate risk.

No other investment strategy can legitimately make a similar claim.

In Addition to Wage Loss

Structuring the decedent’s wage loss to help ease the financial stress for surviving family members should be considered the minimum “do the right thing” moment when resolving a wrongful death claim.

And because, unlike wages, structured settlement benefits flow 100% income tax-free for wrongful death claims, net income can be replaced for less money than would be possible absent the structured settlement.

In addition to lost wages through the date of retirement, the decedent likely would have still been earning pension credits or contributing to Social Security and/or a defined benefit retirement plan. For this reason, many structured settlement plans include spousal income for life to help make up the shortfall.

Also, reserving some general damage funds for the kids’ college education is often a sensible component of any litigation outcome. Especially if the case requires court approval, attorneys will find that structured settlements make for a better end result on minors’ cases and help ensure a smooth court approval process. (See Structured Settlements; Minors)

Idea: When a child is lost, we’ve even seen families structure annual scholarship funds as a way to help keep their offspring’s memory alive.

An annual contribution to MADD, the high school wrestling team or charity of the family’s choice ensures a continuing legacy versus a single lump sum which can be forgotten after a one-time donation is made. 

Predator protection

Another advantage of structuring wrongful death claims is the protection it affords the surviving spouse and children.

Some widows/widowers inadvisably jump into new marriages before they are emotionally ready. Some become easy targets for “Dirty Johns” who troll the obituaries looking for vulnerable prey and newfound benefactors.

Structured settlement contracts established prior to the new marriage remain premarital property generally exempt from divorce settlement consideration should the new marriage eventually sour.

While it’s true cash personal injury settlements would also be considered premarital property, it’s much easier to lose track of those assets if commingled with other funds or purchases.

Conclusion

Sudden death is hard enough to deal with emotionally without added financial stress. Structured settlements can’t bring a loved one back to life. But they can help ensure the financial aspects of dealing with grief are eased and should be strongly considered on wrongful death claims.

Recommended reading and additional resource:

“Surviving Sudden Loss: Stories from those who have lived it”

Collected personal accounts of people who have lost loved ones unexpectedly through air disasters, 9/11, SIDS, and auto and construction accidents. Written by friend of our firm, Heidi Snow, whose fiancé died in the TWA Flight 800 crash off Long Island in 1996 and whose grief mentoring nonprofit helps those who are left behind in the wake of air disasters.

Photo by dylan nolte on Unsplash

First DePuy Trial To Begin

January 4, 2013 – According to various sources, the first state trial in the United States involving the much maligned DePuy ASR artificial hip is scheduled to go out on Monday, January 7, 2013 in Prince George County, Maryland.

Hip ImplantWhile industry insiders will be watching this state trial with great interest, more interest will likely be paid to the first federal trials stemming from the lawsuits consolidated in the Ohio multidistrict litigation against DePuy directly.

Two trials are tentatively scheduled for May 6, 2013 and July 8, 2013.

Those involved in any litigation stemming from the DePuy ASR litigation are invited to visit our firm’s companion site, ASRHipSettlement.com, to learn more about how they may benefit from choosing a structured settlement for all or part of any post-settlement proceeds they may be awarded.