by Structured Settlement Watchdog®
Sovereign Ground has a few “bumps” in it which I hope to smooth out in this post. What I am referring to is the portion of Maryland based settlement rights purchaser Sovereign Funding Group, “rules” to be a “structured settlement glossary”.
The Sovereign Funding Group (SFG) website states that a qualified assignment is “an assignment of the obligation to make future settlement payments which satisfies the requirements of Internal Revenue Code for favorable tax treatment of a structured settlement. Typically, the insurance carrier for the defendant assigns its obligation to make the future payments called for in the settlement agreement to an assignee which takes on such obligations, often through the purchase of an annuity.
Structured Settlement Watchdog®
A qualified assignment is an assignment of an obligation to make future periodic payments. The purpose of qualified assignments is to enable a Defendant, Insurer or Qualified Settlement Fund to achieve a complete novation of the future periodic payment claim established by suit or agreement, through a substitution of obligors.
For the payee, a qualified assignment may provide protection against a potential future insolvency or financial impairment of the assignor*. With some qualified assignment companies, secured creditor protection may be available.
The assignee first takes on the obligation by way of the qualified assignment agreement AND THEN acquires a qualified funding asset which can be an annuity or an obligation of the United States government.
Sovereign Funding Group (SFG) states that a Settlement Agreement is ” the arrangement made between an insurer and a policy owner (or beneficiary) concerning the manner in which the insurer will pay the policy proceeds to the beneficiary”
Structured Settlement Watchdog®
Holy garbled Garibaldi! That’s not quite right.
- 1. A settlement agreement is a legal contract between parties to a claim or lawsuit that memorializes the terms of the compromise.
- 2. If a structured settlement is “in the mix”, then the settlement agreement will set forth the terms of the future periodic payments, and any applicable qualified assignment, non qualified assignment, reinsurance agreement, qualified funding assets and guarantees.
Sovereign Funding Group (SFG) states that Joint Annuitants mean “two or more recipients of the same monthly benefit payment or a joint and survivor option.
Structured Settlement Watchdog®
- The first part of their answer was correct. a joint annuity is where typically two people share an annuity payment for a period of years (e.g. payable to Jenny and Brad for 10 years).
- A joint and survivor annuity is another animal. Payments from a joint and survivor annuity is typically paid to one individual AND THEN, after primary annuitant dies, the survivor receives the same or a reduced percentage for a period of time defined in the annuity contract at the time of issue. A joint and survivor annuity beneficiaries can be named to cover the contingency of multiple deaths prior to the completion of the entire payment schedule.
- I’m sure I’m stating the obvious (and not implied by Sovereign), but a joint annuity IS NOT a lifetime flow of “reefer”, even though one “rumor” circulating out of Denver is that the security an annuitant gets from On Time Every Time® gives them a ‘Rocky Mountain high”. Maybe that was the late John Denver.
Sovereign Funding Group (SFG) states that Guaranteed Payments mean “payments made regardless of whether the annuitant is living or deceased.
Structured Settlement Watchdog® ALL payments from a structured settlement annuity are contractually guaranteed. Some may be life contingent. What Sovereign describes is properly labeled a “period certain”.
Footnotes
*notable exception is the Executive Life Insurance Company of New York (ELNY) where the assignee went belly up. Briefly, according to a class action lawsuit filed by certain annuitants, the company was solvent going into rehabilitation and the plaintiffs allege that the assets backing the obligations were wasted through mismanagement by the New York Liquidation Bureau and others.
Sovereign King photo credit Dedmazay/Dreamstime.
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