Litigation

Sterling "Pounds" One Out for Structured Settlement Illiteracy

By John Darer

Jim Sterling's work on structured settlements is typical of non credentialed writers about structured settlements on the Internet. Non credentialed writers flood the Internet with content (much of it laughably inaccurate to those in the know) on websites built for Google Adsense (made for Adsense websites).

Examples leading to the "Sterling" credibility "devaluation":

Sterling  In your financial planning, structured settlements are utilized to pay out a large sum of money over time. Much the same way that you pay your credit card bill every month, a creditor uses a structured settlement to pay out what they owe to a person on a regular schedule. Most structured settlements are purchased annuities, paying out over time on an annual basis.

Comments

• Structured settlement payment designs are flexible and can accommodate multiple payment streams. The annual frequency is not the most popular.
• While structured settlements may pay a large cumulative sum over time, there are other reasons that make structured settlements compelling.

Sterling The most spectacular form of structured settlements are lottery payments.

Comments

• A lottery payment is not a structured settlement.
• Structured settlements ARE NOT spectacular. A structured settlement is a boring but flexible financial tool that simply provides the essential consistency to people who need it, the potential to have contractually guaranteed income that they cannot outlive (longevity insurance) and tax benefits which help leverage recovery dollars allocated to it. A structured settlement can be funded with annuities OR United States Treasury obligations. If you like standing in quicksand or are turned on by the United States stock market of late 2008-2009 then a structured settlement is probably not for you.

Sterling  A plaintiff wins a judgment in court for damages and the defendant will typically buy an annuity to pay out the damages on an annual basis, putting the payment schedule in the hands of the annuity holder.

Comments

1. Only in states where the laws provide for periodic payment of judgments (such as New York CPLR 50A and 50B) are annuities used in judgments.
2. Taking New York as an example the damages are actually paid out monthly not annually.

Sterling From a corporate tax purpose, purchasing the annuity is a one-time-charge and there are several advantages to doing this.

Comments

Purchasing an annuity is a one time expense (it's a single premium annuity) but from a tax standpoint the event triggering the tax benefit to the corporation occurs at the time of the qualified assignment when the novation occurs.

Full post as published by Structured Settlements 4Real on March 07, 2009 (boomark / email).