Litigation

Huver and Associates Structured Settlement FAQ #11

Q. Can some other entity besides the defendant purchase the tax-exempt settlement annuity?

A. Yes, under certain circumstances. If conditions exist pursuant to IRC Section 468B, a Qualified Settlement Fund could step in the shoes of the defendant and as a "party to the suit or agreement" purchase the settlement annuity and comply with the tax codes, including Section 130.

Huver Associates is incorrect for the following reasons:

1. It is not the settlement annuity that is tax exempt. It is the payment of damages, that are funded by the annuity, which are tax exempt. These payments represent damages that are excludable from income pursuant to IRC 104(a)(1) or 104(a)(2)
2. A Defendant would only purchase a structured settlement annuity if there is no qualified assignment AND they are self insured
3. It is very rare to see a structured settlement where there is no qualified assignment.
4. If there is a qualified assignment the settlement annuity is neither purchased by the Defendant nor its insurer (if insured). The structured settlement is purchased by the assignment company
5. This is just a big frickin DUH! "If conditions exist pursuant to IRC Section 468B, a Qualified Settlement Fund could step in the shoes of the defendant and as a "party to the suit or agreement" purchase the settlement annuity and comply with the tax codes, including Section 130".

• Huver has already assumed that Section 130 is being complied with which means there is a qualified assignment. The language "a party to the suit or agreement" is contained in IRC 130 and Rev. Proc 93-34 in reference to qualified assignments.
• If there is a qualified assignment THEN the settlement annuity is purchased by the qualified assignment company as a "qualified funding asset" pursuant to IRC 130(d)

I've said it before and I'll say it again those who hold themselves out as "advisors", "planners" or who display credentials such as CFP and possess the industry experience that the principals of Huver & Associates do, must be held to a higher standard.

There is just no excuse for promoting financial illiteracy by members of the settlement profession.

Affable tennis buff Joe Huver, a former NSSTA President and author of the 1992 text  Structured Settlements: Alternative Approach to the Settling of Claims is bound to be driven to be "pulling a John McEnroe" at the aforementioned display by his "errant offspring".