Structured Settlement Expert
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.
Structured Settlement FactoringCompanies that offer structured settlement factoring services are willing to make a one time payment to owners of such assets in exchange for the rights to future payments. A structured settlement is a payment arrangement that may be awarded by an insurance company as a way of honoring a policy. Settlements can also result from a successful lawsuit or a winning participation in a jackpot or lottery contest. These funds may be disbursed either all at once or over an extended period of time. In some cases, an individual may have a choice as to how the money is disbursed and in other cases, structured payments may be the only option. If a decision was made to receive the payments over time, a day may come when this arrangement is not as convenient as was once anticipated. Unexpected expenses or a need for cash due to life changes could be the reasoning behind such a change in perspective. When this happens, structured settlement factoring may be a viable alternative. The possibility of finding a way out from under a mountain of debt can make such offers very tempting. However, a seller should take care and consider all options before making any final decisions . It may also be a good idea for a seller to consult an independent broker or a financial adviser during the process. Seeking qualified legal advice could be a good option as well since the laws that govern such transactions will vary from state to state.
Before choosing to participate in a structured settlement factoring transaction, there are a number of things that a seller should take into consideration. What are the reasons for selling this long term asset? Family finances can be strained for a variety of reasons and this could provide motivation for choosing a lump sum payment over payments that trickle in too slowly. If the settlement is the result of a personal injury lawsuit, it may be that the medical needs of the plaintiff have exceeded the monetary award. For this reason, a recipient may need to attain access to a large amount of cash at one time in order to pay off medical debts. Before selling, it is a good idea to figure out just how much money is needed. It may be that the entire sum is not required and an individual may only need to offer a part of this important asset. Investors will usually be willing to work with sellers to tailor a plan for the seller's specific needs. If a decision is made to move forward with a structured settlement factoring agreement, a financial professional can help a seller gather all of the needed facts and figures. The exact worth of such arrangements can be difficult to ascertain and professional help is frequently required. Before a contract can be finalized, it must go through the courts and be approved by a judge. A factoring company will usually handle these details on behalf of the client.
There can be some disadvantages associated with choosing to pursue a structured settlement factoring agreement. The amount of money that a seller will forfeit can be extremely high. If loosing up to fifty percent or more of the value of the original settlement sounds like too high a price to pay, a seller may wish to reconsider. Some financial experts will a advise a client that these assets should only be sold as a last resort. If there is another way to attain the funds that are needed, many counselors will encourage clients to choose an option other than the sale of these settlements. There are certain tax benefits that usually apply to structures settlements. Unfortunately, the sale of future payments will not carry the same benefits and the seller may end up having to pay a large amount of money in the form of taxes. Payments that are earmarked to cover the expenses incurred during retirement years should generally not be sold to structured settlement factoring companies. Additionally, if the funds were awarded to meet the long term expenses of a disabled individual, giving up this continuing source of income could be a very bad idea. Anyone who is in the process of considering this option should take the time to consult with legal or financial consultants who can explain all of the consequences and benefits of this important choice.
There can be a number of reasons that an individual might choose to pursue structured settlement factoring transactions. While the loss that a family experiences can never be paid back, there is a form of relief that these settlements can bring. Since selling the payments can give immediate financial benefits to recipients, there is no reason for a family to feel guilt or conflicting emotions over pursuing this alternative. Reputable brokers can help clients through every step of this process. The Bible extols the benefits of a good reputation. "A good name is better than precious ointment; and the day of death than the day of one's birth." (Ecclesiastes 7:1)
There many be settlement agreements that prohibit a recipient from selling their future payments in exchange for one lump sum. When this is the case, the services of a structured settlement factoring company will be of no use. A general rule of thumb to remember is that the value of these settlements over time will always be far greater than the short term benefits that are attained through selling. Of course the needs and concerns of each client will differ. What ever choice an individual might make, information and professional counsel is very important.