Structured Settlement, Annuity, Life Insurance Conversions to Lump Sum Cash Payments
Hollander and Associates, LLC
One Biscayne Tower, Suite 1650
2 South Biscayne Boulevard
Miami, Florida 33131-1808
Telephone: (305) 373-9999
Toll Free: (800) 966-4041
Telefax: (305) 373-7777
Transfers of structured settlement payment rights.
What is a structured settlement?
When a plaintiff brings a personal injury action against a defendant for damages and the parties decide to settle the case, they may enter into a structured settlement to compensate the plaintiff for his injury. Structured settlements are monetary awards for damages that are paid in installments over a period of time. They are frequently used to settle tort cases involving severe injuries in which large damages are sought (e.g., products liability, medical malpractice, and wrongful death cases) because of the defendant's inability to pay the amount in one lump sum. Astructured settlement is a completely voluntary agreement between the injured victim and the defendant. Under a structured settlement, an injured victim doesn't receive compensation for his or her injuries in one lump sum. They will receive a stream of payments tailored to meet future medical expenses and basic living needs. A structured settlement may be agreed to privately (for example, in a pre-trial settlement) or it may be required by a court order, which often happens in judgments involving minors and incapacitated adults.
Why do a Structured Settlement?
A structured settlement’s most important advantage is security. The structured settlement provides long term payments that are guaranteed by a life insurance company.
The structured settlement allows the injured party to tailor payments over his or her life. There is no need to meet periodically with an investment or tax advisor. Payments are decided during the initial settlement and then are directed to the injured victim. It gives peace of mind, security, and confidence over the long term.
How a structured settlement works
Typically, in a structured settlement, a defendant pays one premium to purchase a life insurance contract. The life insurance company then disburses a lump sum and periodic payments to the plaintiff for a certain number of years. An annuity is generally used to fund the structured settlement award.
The settlement usually contains a lump-sum cash payment for past expenses incurred by the plaintiff, including lost earnings and medical expenses arising from the plaintiff's injury. It also provides funds for the plaintiff's current treatment. Annuities are then designed to provide future payments for items such as ongoing medical care, diminished earning capacity, educational needs of the plaintiff's children, and loss of a decedent's support. In determining the amounts for the future payments, both present value and inflation must be considered.
Converting a structured settlement to a lump sum cash payment
Before you may convert a structured settlement into a lump sum cash payment, you will have to have an attorney petition the Court where you reside under the Florida Structured Settlement Act. Either you must hire an attorney to provide you with an independent professional advice letter, called an "IPA" for independent legal representation and advice or the annuity-for-cash, or structured settlement-for-cash purchase companies will provide you with a written waiver form to allow you to waive the IPA requirement, as allowed by the Florida Structured Settlement Statute, 626.99296, subsection(3)(a)(4). The attorney also should advise you and investigate the possibility, feasibility and parameters of attempting to convert the structured settlement annuity into a lump sum payment. A consultation to ascertain whether it is possible to sell not only the guaranteed payments but also the annual life contingency payments will be needed and also to investigate a variety of structured settlement companies to obtain the best result, most importantly to negotiate the highest pay-out to you. We strive for 89% of the disclosed present value.
A General Guide about selling a structured settlement:
1) First you should determine your current and future cash needs and financial condition. It is recommended that you consult a lawyer.
2) Contact your payment provider, usually an insurance company, to determine the amount, number payments remaining , and terms of your structured settlement. It is a good idea to get all contract information from your provider. You will need this information to give to your lawyer.
3) The information gathering process can include:
-Settlement Agreement/Court Judgment/Release
-Annuity policy/contract - from the insurance company
4) When the underwriting is complete, the settlement will be submitted to the court for approval. A judge will review the settlement and determine if it is in the your best interest to sell the settlement. You are under no obligation to appear in court.
Please note: these are general guidelines, all situations are unique and vary by state and company.
A structured settlement is a method of paying damages to an injured party over a period of time when a lawsuit is settled. It usually results from personal injury cases such as automobile accidents, medical malpractice, wrongful death or product liability. In those cases, the parties involved often agree to have damages paid monthly or annually over a period of years rather than with one lump-sum. The damages are usually funded in the form of an annuity contract issued by an insurance company.
The annuity itself is not assignable by the annuitant because he or she does not own it. It is typically owned by a subsidiary of the life insurance company that issued the annuity. What the annuitant has is the "right to receive the payments" under the settlement. That right is personal property which can be assigned.
Most states have enacted transfer statutes requiring either a court order and/or certain disclosures before a structured settlement recipient can sell their annuity payments.
For a free consultation, and legal assistance, call (305) 373-9999 for an appointment or call toll free 1 (800) 966-4041 for a free out-of-town telephone consultation.
Berkshire Hathaway Life Insurance of Nebraska