by John Darer® CLU ChFC MSSC CeFT® RSP CLTC
One structured settlement factoring company website has featured a video of its CEO explaining how he used to be a trial lawyer and saw how people were forced into structured settlements. And of course he pitches how the factorring company "can help" [by purchasing future structured settlement payment rights at discounted prices].
What is "Over Structuring?"
Settlement planners utilize the term "over-structuring", to refer to:
- avoid putting so much of your settlement into a structure that you fail to address immediate or reasonably foreseeable future liquidity needs, or
- to attempt to justify a "mop up", when circumstances change down the road, that may include selling structured settlement payment rights.
The "Pantomime Villain" is Created
When I was a growing up in London we would occasionally go to see a pantomime, typically around the holidays. Pantomimes are notable for audience oohs and ahhs, choreographed cheers for the protagonist and choreographed boos for the villains. In the Roman times they simply bayed for blood.
The use of the term "over-structuring" creates a "pantomime villain" for the annuitant and the settlement planner and/or cash now pusher to attack, even if the claims may be baseless in that the villain is molded by the annuitant's own profligate spending or bad investments. Classic "Sales 101".-create a disturbing thought.
In some cases liquidity issues arise that are not predictable and selling structured settlement payment rights may be in the annuitant's best interest, provided other sources have been explored and exhausted. Selling a structured settlement is an expensive cost of money. You give up a certain amount of stable income forever for cash now.
A structured settlement is the part of a negotiated compromise. Work with a credentialed structured settlement or settlement planning professional at the outset.