In a recent post on "Financial Freedom Awaits", a shill for Allsettlements.com attempts to write a scholarly post called "Taking Control of Your Structured Settlement" and instead leaves you wondering if it would be better titled "Dealing With Chronic Malapropism-One Man's Journey" In the United Kingdom, where I was this past week, the author's name "Jon Thomas'" is occasionally a euphemism for a certain male body part. Well any way, in this case his "material" comes up "limp". If companies engaging in structured settlement factoring transactions (the process defined under the Internal Revenue Code transfer of structured settlement payment rights (including portions of structured settlement payments) made for consideration by means of sale, assignment, pledge, or other form of encumbrance or alienation for consideration), like Allsettlements.com, can't do better than this then pack it in!
Financial Freedom Awaits Dreamland "What are these schemas called structured settlements? Why do they prevail and what are possible pros and downsides? Structured settlements are also defined as episodic payments. They are laws that the legislature has created where the defendants petition, and the plaintiff agrees, that some or all of the payments endowed by a judge or jury are paid to the injured consumer over a drawn out time frame, perhaps as long as 20 years!"
Structured Settlements 4Real Reality- Malaprop #1- According to Answers.com, a "schema" is
- A diagrammatic representation; an outline or model.
- Psychology. A pattern imposed on complex reality or experience to assist in explaining it, mediate perception, or guide response.
- Structured settlements don't prevail, however they certainly are prevalent and have been for some time.
- Pros and cons-it's an "if p then q" thing. Pro is to con as upside is to downside. I mean did this guy pass his Scholastic Aptitude Test (SAT) ?
- "Structured settlements also defined as episodic payments." Where? What is this a disease or chronic ailment? The only definition is in the Internal Revenue Code at IRC 5891 and there's only one "episode".
- Not all structured settlements require a petition. And when they do the Defendants don't petition for structured settlement, the plaintiffs do!
- Judge and Juries don't endow anything. They may make an award, but you cannot be awarded a structured settlement. In New York State there is a structured judgment, but from what I'm reading I don't think that is what JT Malaprop meant here
- "Perhaps as long as 20 Years." Doesn't JT know that some people prefer it, and can get it, (for much) longer than that?
Financial Freedom Awaits Dreamland This means that the injured may not acquire their settlement in a complete sum. There were some pluses to receiving the money this way. There were once unmistakable tax benefits that you obtained when you took periodical payments over a lump sum. You qualified for preferential benefits under Sections 104(a)2 and 130 of the Internal Revenue Code so you could pay less in taxes on your settlement.
Structured Settlements 4Real Reality
- You don't have to be injured to benefit from a structured settlement. Structured settlements can be paid to survivors in a wrongful death case.
- Periodical payments refer to United Kingdom based "periodic payments", but we'll let JT slide on that.
- There still are unmistakable tax benefits. Preferential (tax) benefits to individuals are under Sections 104(a)(1) and 104(a)(2) of the United States' Internal Revenue Code. These provide specific tax exemptions from income tax. So while it is true that you pay "less taxes" you actually pay "no taxes" on income that qualifies under these two sections. IRC Sec. 130 is part of "the mousetrap" but that is a benefit to the defendant, insurer and qualified assignee and, to the extent that the plaintiff can achieve his or her financial objectives as a result of a qualified assignment under IRC 130, he or she also benefits
Financial Freedom Awaits Dreamland The sale of the annuity allows you to gain immediate access to the full amount or a portion of the continuing payments instead of waiting years to get the absolute face amount. Selling your structured annuity allows you to do as you desire with the money, without the confinement imposed by the annuity itself.
Structured Settlements 4Real Reality
- Selling your annuity (actually it is selling your rights to receive the periodic annuity payments) does not give you immediate access. You must go through the process detailed in the Structured Settlement Protection Acts in your state. This requires a Court approval process to determine if such transfer is in your best interests.
- You will never get the full amount of your continuing payments because the buyer of your rights gets a big discount. In some cases that discount may be acceptable to you but you will never, I repeat NEVER get the full amount of your continuing payments if you sell your structured settlement (payment rights).
- Malaprop alert-confinement means imprisonment and you don't need to commit a crime to get a structured settlement. Surely restrictive might be a better word. The very ability provided by IRC 5891 essentially means there is no "confinement" (restriction).
Financial Freedom Awaits Dreamland While annuities do advance a material role and often meet the payees' requisites as originally planned, they are rigid and unequipped to help you resolve an unexpected crisis or help you meet future needs.
Structured Settlements 4Real Reality The very fact that you can sell your future structured settlement payment rights makes them less rigid. If they are unequipped to meet your future needs why do it in the first place? The whole point of a structured settlement is to assure that you have money to meet specific future needs.
Financial Freedom Awaits Dreamland At present, more than thirty state governments have predetermined that individuals should have recourse to this essential resource and now allow for transfers of the annuitant's rights to be paid out immediately as long as it is in their optimum interest. Individuals in all fifty states now have access to their structured annuity payments and can get cash for their structured settlement judgments, and you can, as well. There are accompanying tax benefits as well.
Structured Settlements 4Real Reality More than 30 states have signed into law Structured Settlement Protection Acts. These states didn't predetermine anything. Our country is a democracy. As with any law passed in the United States there is a process for the creation of a new law. Generally that involves submitting a bill, some investigation and research, lobbying, debate and a vote.
Financial Freedom Awaits Dreamland There are some situations where people need to negotiate their annuities and exchange them for liquid resources expeditiously. There are some companies that are legally chartered to provide these services and some situations where the judge will approve it for the consumer. For example, if you have a financial contingency and you need the money or part of the money in a hurry, the judge may allow you to liquidate some or all of your annuities.
Structured Settlements 4Real Reality
- Part of the problem is that the companies that buy periodic payment rights or structured settlement payments rights are not "legally chartered". While your stockbroker must comply with a myriad of state and federal rules, and your insurance agent/broker or structured settlement broker/settlement planner has to comply with state insurance rules, most companies in the business of structured settlement factoring generally do not. As I have previously written, some factoring companies solicit citizens of a particular state without a certificate of authority by the Secretary of State. This could hinder your ability to get jurisdiction in a lawsuit against the company in your home state if something goes wrong.
Financial Freedom Awaits Dreamland "If you are contemplating the transfer of your structured settlement, you need to search out legal and financial direction as regards this important affair."
Structured Settlements 4Real Reality
- Its the transfer of your structured settlement payment rights.
- It's "seek out" NOT "search out".
- It's "in regard to" NOT "as regards this"
CONCLUSION Jon Thomas' recent post is a classic example that highlights what inspired me to set up Dreck Culvert and Factor Fiction features of the Structured Settlement 4Real blog. To help our nation's consumers achieve greater financial literacy and self sufficiency, the information flow for the structured settlement industry and, if it shows any pride, the factoring industry, shouldn't be driven through a fog created by unskilled misinformed malapropists like Jon Thomas shilling for Allsettlements.com
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