by John Darer CLU ChFC CSSC RSP
Although many plaintiff lawyers today do collaborate with settlement planners or structured settlement consultants as part of their team, there remain a significant who do not. This serves as a clear reminder of why a lawyer should not operate independently when providing financial advice.
I was aroused from my slumber this morning, by an ELNY victim bearing questions concerning the ELNY Hardship Fund.
What was The ELNY Hardship Fund?
A hardship fund administered by JAMS was established with voluntary contributions from undisclosed insurance companies. The lengthy and complicated hardship application took hours to complete and applicants were told that funds will be distributed according to financial or medical need as determined by JAMS. Collectively the shortfall payees faced a loss of over $920 million and the $100 million hardship fund did not come close to covering the $920 million dollars the shortfall payees lost.
The ELNY victim received an Executive Life Insurance Company of New York structured settlement in 1985 as part of the resoluton of a wrongfil death lawsuit stemming from her husband’s death. I asked her why all of her settlement egg
s were placed in a single basket when it was widely known about Baldwin United and Charter National failures* in 1982 and 1983 as well as the increasing junk bond holdings of First Executive.
The widow, who is facing a 30% reduction in benefits, says she put 100% trust in her lawyer, who got her a great recovery on the one hand, but clearly did not follow the well worn adage of “not to put all ones eggs in the same basket” while he was “taking care of everything”.
Settlement Planning Experts would have helped
Unfortunately, that segment of the industry was neither developed nor widely recognized at the time the ELNY structured settlement annuities were placed.
- Although I was not involved in the structured settlement industry then, I was active in the life insurance industry, competed with Executive Life, and was well aware of the company’s reputation.
- Contemporary news reports available at the time should, in my professional and personal opinion, have given any financial professional pause.
- Mainstream coverage provided ample reasons for concern before the majority of the ELNY structured settlement annuities were issued.
Today Settlement planning experts offer both knowledge and compassion to survivors of those who have died as the result of an aviation disaster, auto accident, medical malpractice or other negligence.
John Darer is a Registered Settlement Planner and Certified Structured Settlement Consultant. For a settlement planning consultaton with John Darer please call 888-325-8640 toll-free in the USA.
* note that while these were the two prolific issuers of annuities at the time, these two companies were relatvely small and did not offer structured settlement annuities.
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