Settlements To Last a Lifetime
Prior Articles
Kids think they are so clever; my kids especially. We’ve always joked and kidded in our household, but ever since they headed off to college, my kids have really stepped up their game. Their latest fun takes the form of sending Dad smart phone videos from various landmarks around the country of a crowd of college kids chanting “It’s our money! We want it now!”
Where’s the humor in this? Well, it’s always fun to rib Dad and they know how much those TV commercials upset me. They do. Always have and always will. The reason those commercials bother me is that alienating vulnerable people from what is often their only financially secure resource is no laughing matter.
Over the last few months in this newsletter, we have written about the complexities of properly crafting modern day settlements. How do you responsibly fund future medical care? How do you intelligently weave together the various public assistance programs into the overall settlement plan to maximize value while holding down cost? It can be done, provided a professional is willing to put in the proper effort. Then these late-night TV jerks come along employing every enticement they can to undo everything we’ve worked to protect. Grrr.
The legitimacy of these activities, however, might finally be coming under meaningful scrutiny. On March 23, 2015 Wall Street Journal insurance reporter Leslie Scism wrote an excellent article entitled: “Firms Help Settlement Holders Cash Out Payments Meant For Life.” In the article, Scism discusses the fate of two people who, after suffering serious physical injuries and losses, then fell victim to additional tragedy at the hands of these firms.
One victim lost a leg and many fingers as a result of being severely burned as a child. Mr. Terrence Taylor was well represented, and his lawyers secured a multi-million dollar settlement designed to provide him with guaranteed income to cover future medical care for life. The carefully crafted plan worked great for a while, until he reached age 30 and moved out of his parents’ home.
With his newfound freedom, Mr. Taylor took charge of his own finances and decided he would open a cellphone and a vending machine business, purportedly to help other burn victims. In order to finance these ventures, he completed 11 rapid-fire transactions in which he sold three decades of future settlement annuity benefits for hundreds of thousands of dollars in cash. Not surprisingly, neither business nor philanthropy ever emerged. In reality, he spent “lavish sums of money on women and gambling”.
After signing away the rights to all his future payments, Taylor was subsequently forced to move back in with his parents. Now, they struggle to pay his medical bills, and the Taylors have filed suit against the companies that “bought” his structured settlement.
Ms. Scism then relates the saga of New York resident Michael Lafontant. This gentleman began receiving regular monthly settlement annuity payments as a result of his mother’s wrongful death during his infancy. The payments supported his care and maintenance throughout childhood. Then, when Mr. Lafontant a New York resident attained the ripe old age of 20 decided he wanted to “sell” his future payments for a lump sum of cash to fund a hip-hop artist representation business.
Mr. Lafontant failed to consider New York State’s stiff standards which govern the “selling” of settlement annuity benefits. In July 2002 New York State enacted the New York Structured Settlement Protection Act, N.Y. Gen. Obligation. Law §§ 5-1701-1709. One of the primary provisions of the Act is that the transfer or sale of settlement annuity benefits must be approved by a local court judge, meaning the seller must appear in court and convince a Judge this transaction is warranted and in the seller’s best interests. The court did not approve of Mr. Lafontant’ s idea to sacrifice the value of his settlement annuity benefits for the purpose of financing a hip-hop business and rejected his application. Financial tragedy averted?
Almost. It seems that the company that wished to buy Mr. Lafontant’ s settlement annuity benefits devised a way to help him thwart the judgment of the New York court. Mr. Lafontant was allegedly advised to fraudulently change his residency from New York to Florida. After going along with this proposal, Mr. Lafontant gained approval to sell his settlement annuity benefits from a Judge in Sumter County, Florida where no court appearance is required. With “court approval” in hand, Mr. Lafontant quickly spent some of the money he received from the sale of his settlement annuity on his hip-hop business. However, he also bought a Maserati and a house in Davie, Florida. Michael Lafontant has since been forced to sell the Maserati and house at a loss.
The very idea of selling the benefits of a structured settlement is contrary to everything I stand for, I believe that through the efforts of professional structured settlement consultants, a great deal of good can come to those that have suffered serious and sometimes catastrophic injuries through no fault of their own. The disastrous consequences that voiding such a plan is nearly incalculable for many.
These settlements are designed to last a lifetime, and greater than 9-out-of-10 structure recipients keep their structures and do not sell them. Still, with these late-night creeps relentlessly trolling the airwaves, it seems you cannot completely protect an emancipated adult from their own stupidity. But we’re still working on it.
Do you have a case where the claimant could benefit from a stream of guaranteed tax-free income designed to last a lifetime? And if they need “cash now”, want a better place to get that than from some singing Viking on a bus? Contact Frank C. Kilcoyne, CSSC, via e mail frank.kilcoyne@jmwsettlements.com or 800-544-5533. I am here to help.
