Structured Settlement Expert
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A structured settlement expert will probably be brought into a civil case when there is a large annuity that will be purchased by the defendant's insurance company to settle a judgment. Insurance companies are not fond of paying large lump sum payments that wreck the year end bottom line, so they purchase annuities that provide the monthly income that is ordered by the court to the injured party. A policy that an individual might buy from an insurance company that will provide monthly income for a specific period of time is called an annuity. When the annuity is purchased in the context of a civil litigation, it is called a structured settlement. All of this begins at the moment of the settlement conference or mediation session and this is where the structured settlement expert begins to shine.
When the judgment has been made for the plaintiff, the defendant's indemnity company will make an offer of settlement, always with an eye to protecting its own assets. In most cases, the plaintiff will be present with legal representation and will listen to the proposal made by the insurance company. The proposal will be one that may light up the eyes of the plaintiff in the case, but because the insurance company wants to limit its financial exposure, the proposal will be on the light side. Whether or not the lawyer for the plaintiff is ready to pose a counter proposal at that time is not important. What will be important is the testimony and reports that will be given and drawn up by the structured settlement expert for the injured party. The Psalmist extols the individual who has integrity at the heart of his being and then goes on further: "But his delight is in the law of the Lord: and in his law doth he meditate day and night and he shall be like a tree planted by the rivers of water that bringeth forth his fruit; his leaf also shall not wither and whatsoever he doeth shall prosper." (Psalm 1:2-3)
One of the areas of expertise that a settlement advisor will bring to the table is the evaluation of present cost value estimates for future medical treatment. Often when a person is permanently injured, a life time of medical surgeries, treatments and therapy await. In most cases, the initial proposal by the insurance company providing liability funding will not take that into consideration, and if it does, may ballpark estimates quite low. A structured settlement expert for the injured will be able to present a fair estimate of the cost of medical treatment far into the future, based on increased cost from past years. One of the areas in which a structured settlement expert can help the injured party is to delve into the cost of the annuity that insurance company is proposing.
Suppose a young plaintiff has received a judgment for five million dollars and is about to receive a proposal from the insurance company for a lifetime or beyond annuity for about ten thousand dollars a month for 40 years, or until the plaintiff dies. The insurance company has an annuity company within its corporate structure, so the insurance company gets a 14% discount on the cost of the annuity so it only costs the insurance company four million three hundred thousand dollars. But the judgment was for five million and the structured settlement expert can help the attorney of record for the injured to address that issue. That extra seven hundred thousand could get the plaintiff an extra fifteen hundred dollars a month during those forty years.
Should the settlement expert be prepared at that settlement or mediation meetings with a counter proposal that could easily be accomplished. His figure will be much different than the insurance company's figures and will be based on a true five million dollars being spent on an annuity, not a discounted rate. One of the issues that will be raised by the structured settlement expert will be the age on which the annuity was based. The company may have presented an annuity that is based on the life of the plaintiff and not on a specific number of years, or vice versa. In the counter proposal by the advisor, issues that are extremely important to the injured party are raised. These include questions about the strength of the annuity company, for many fail on a regular basis and the question may be raised about buying two different annuity contracts to distribute the risk factor. Of course as always, there are tax ramifications in large settlements so a structured settlement expert will be able to speak to the best plan for the injured party.
One of the most interested parties in the choice of the settlement advisor will be the plaintiff's attorney of record. In most cases, that person will be responsible for the selection of the advisor, but even an attorney should be careful and practice careful screening before recommending the advisor to his client. Most states have an association of trial lawyers and that agency should be consulted for recommendations. The background and references of the advisor should be thoroughly vetted. There is the National Structured Settlements Trade Association that the advisor should be a part of, but that membership is not a reference. And when choosing an expert, having that person sign a confidentiality agreement is an advised practice.
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