Structured settlements expert John Darer reviews the latest structured settlements and settlement planning information and news, and provides expert opinion and highly regarded commentary. that is spicy, Informative, irreverent and effective for over 20 years.
The STRUCTURED SETTLEMENTS 4REAL® Blog is a highly regarded source for structured settlement news, information, and commentary, led by structured settlement and settlement planning subect mater expert John Darer CLU ChFC MSSC CeFT RSP CLTC. With two decades of operation, the blog and 4structures.com are recognized as comprehensive resources, offering detailed guides and specialized insights. Established in 2005, the blog caters to a broad audience, including legal professionals, injured individuals, families, and various stakeholders, providing reviews and opinions on settlement planning. John Darer, President of 4structures.com LLC, is a seasoned structured settlement expert with over 40 years of financial services experience and 31 years specializing in structured settlements. Based in Stamford, CT, he is a Certified Financial Transitionist and Registered Settlement Planner, holding insurance licenses in 45 states and the District of Columbia. John Darer is dedicated to transparency and advocacy, he emphasizes the importance of engaging trained and licensed professionals for settlement planning, offering valuable insights through his investigative journalism and professional commentary.
“An annuity is a contract in which an insurance company makes a series of income payments at regular intervals in return for a premium or premiums you have paid. Annuities are most often bought for future retirement income, and can pay an income that can be guaranteed to last as long as you live”. Source: Nevada Division of Insurance (nv.gov)
“SMA” is not listed as a type of annuity under Nevada Law
It is noteworthy that the definition of an annuity provided by the Nevada Department of Insurance does not include any reference to “Secondary Market Annuities” among the types of annuities listed.
Las Vegas Wealth Management Expert Flops on “SMAs”
A. Here is what John Stevenson said in an Article published on Annuity.com along with his bio on May 24, 2024 as well as Retirement Village (targeted at Retirement market):
“Investing in SMAs involves purchasing an existing annuity contract from the current owner. This process is often facilitated by intermediaries and may require court approval in some cases”
That was an outrageous misrepresentation by Stevenson.
The term SMA was slapped on to structured settlement receivables by marketers to financial advisors more than a decade ago so it would be an easier sell to retirees. Seniors will likely be more familiar with the term annuities than receivables.
Buying structured settlement receivables are not equivalent to buying annuity contracts. See National Association of Insurance Commissioners Statutory Issue Paper No. 160 (finalized April 6, 2019)
Structured settlement receivables are not insurance products. If you buy structured settlement receivables and the underlying annuity issuer goes insolvent there may be no safety net, reagrdless of when the receivable was purchased by you or who you bought it from. See Life & Health Guaranty Association Model Act (#520).
Some structured settlement receivables are marketed to retirees and other investors as SMAs after they have been to the “chop shop”. Think figuratively speaking, a company buys a used automobile that goes to a chop shop and is stripped for its parts which it then sells to investors. If you’re buying a chopped Toyota Corolla axle, you’re not buying a Toyota Corolla. You’re not buying a new or used automobile.
So, first you have a structured settlement factoring transaction in which future periodic payments are assigned to a transferree. Under Nevada law “Transfer” means any sale, assignment, pledge, hypothecation or other alienation or encumbrance by a payee for consideration of the right to receive payments pursuant to a structured settlement; and (j) “Transferee” means a party acquiring or proposing to acquire the right to payments pursuant to a structured settlement through a transfer. See Nevada Revised Statutes Title 3. Remedies; Special Actions and Proceedings – TITLE-3-REMEDIES-SPECIAL-ACTIONS-AND-PROCEEDINGS § 42.030 | FindLaw;and then the Transferee may sell the structured settlement receivable to an investor in whole or in part (chopped up auto analogy)
B. More gobbledegook from John Stevenson
“Secondary annuities offer a unique opportunity for investors to receive a lump sum payment in exchange for future annuity payments”. Isn’t it the other way around?
When stating, “In an SMA transaction, the current owner of an income annuity opts to trade their future income payments for a lump sum”, Stevenson is describing a structured settlement factoring transaction, which at IRC 5891(a) states “In general, the term “structured settlement factoring transaction” means a 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. Source: Legal Information Institute. Cornell Law School.
