Litigation

If You're A Part TImer And You Know It Clap Your Hands

By John Darer

Lori Forthmann of Los Angeles, CA incorrectly states that the "preferential tax treatment for those injured in personal injury and workers compensation case is now a government benefit guaranteed by IRC 5891 as if it just happened".

If Ms. Forthmann had actually read IRC 5891, she'd see that at IRC 5891(c)(1)(A) (i) and (ii) that the income tax exclusion for periodic payment of damages in personal injury compensation is long standing (more than a quarter of a century!)  in IRC 104(a)(2). The exclusion for compensation for workers' compensation is long standing in IRC 104(a)(1). IRC 5891 has only been effective for 7 years and its purpose is to impose an excise tax, with certain exceptions therein stated. Those exceptions apply to structured settlement factoring transactions where the rights to receive structured settlement payments are transferred.

Lori Forthmann, who is neither a member of the National Structured Settlement Trade Association nor the Society of Settlement Planners (according to their websites), but states she is part of Delta Group,  has also incorrectly stated the following among the advantages of using structured settlements to self insured companies:

"Secure the release of liability and assign future obligations to a highly rated and secure assignment company".

Let's see, shall we?

• Allstate Life  shell qualified assignee, guaranteed by annuity issuer

• American General Life Insurance Company, shell qualified assignee guaranteed by up stream holding company

• John Hancock Life Insurance Company, shell qualified assignee guaranteed by annuity issuer

• New York Life Insurance Company, highly rated insurance company as qualified assignee, guaranteed by annuity issuer

• Pacific Life and Annuity Company, shell qualified assignment company, guaranteed by holding company

• The Prudential Insurance Company of America, shell qualified assignment company guaranteed by annuity issuer

• Hartford Life Insurance Company, special purpose company guaranteed by annuity issuer and up stream holding company

• Liberty Life Assurance of Boston, assignee backed by annuity issuer

Unless Ms. Forthmann was speaking solely about New York Life (and that is doubtful), her statement is false. None of the shell companies are rated.

The structured settlement, settlement planning, litigation recovery management space IS NOT for part timers. Is it not a reasonable expectation of those that seek financial advice for those that dispense the advice to be financially literate in the subject matter?

Full post as published by Structured Settlements 4Real on January 31, 2009 (boomark / email).