Frank C. Kilcoyne, CSSC
Volume 17 | August 2007

“Dear Lord – send us another windfall and we promise not to blow it . . .

the next time.”

I actually saw this prayer on a T-shirt while walking the streets of New York last week; its plaintive tone reminded me of several plaintiffs I have known.   Over the past few months, we’ve shared stories of people who have made good decisions and bad decisions regarding their settlements.  What we have not discussed are those people who make catastrophically bad decisions about their settlement proceeds.

For some reason, I just can’t shake the story of the Andersons*.  After many years as a hotel waiter, 45-year-old Percy Anderson was ecstatic.  He had finally saved up enough money to buy a small two-bedroom house.  But less than a week after they moved in, Percy and his son Richard were horribly burned when a defective propane canister burst into flames.  Percy’s wife and other children escaped injury, but Percy was badly burned on his arms, face, and chest.  But he was lucky compared to Richard.  Poor Richard suffered third degree burns over 75 percent of his body.  Most doctors who saw Richard after the fire believed he would not survive.  Richard asked for a mirror; they brought him a psychiatrist instead.

When Percy left the hospital, people stared at his scarred arms and face and turned away; his career as a waiter was over.  The family struggled to make ends meet, the only income was from Percy’s wife who worked in a pastry shop.  Richard was a student at the time of the fire.  Still horribly disfigured after 39 operations (no, that’s not a typo) he neither graduated nor was he able to work.  Percy found an attorney and brought suit.

Three years later, the gas company made the Andersons a settlement offer.  Percy was to receive $650,000 in cash at settlement and $4,100 per month increasing by 4% per year for 15 years certain and life thereafter. Richard was to receive $300,000 in cash at settlement and $14,000 per month increasing by 4% per year for 15 years certain and life thereafter.    Percy’s wife and other two children were to split $200,000 and the remaining $4,000,000 would go to cover attorney fees, expenses and liens.  

Percy and Richard Anderson didn’t favor receiving their money in a steady, dependable stream.  One large lump sum of cash sounded much better.  The final cash settlement of $8.26 million dollars broke down as follows: attorney fees, expenses and liens – $3,999,000; Percy $1,150,000; Richard $2,900,000; Mrs. Anderson and their other two children $200,000. 

When the money came in, Richard bought a Ferrari and several big houses.  The Ferrari went, more cars came. Richard bought and sold houses in short order, usually losing money on the deals. No longer was he the scarred young man people shied away from.  Richard’s new wealth and generosity to his school and with old friends earned him a surprising number of new friends.  Richard was suddenly popular.

Percy purchased a mail order franchise, bought computers, opened up an office, and promptly went broke. Other investments turned bad including some rental properties.  Percy, his wife and three children and four grandchildren eventually wound up living in a four bedroom house in Florida - until a hurricane blew through, ripping off the roof and the whole back side of the house.  Thankfully, their last vestige of wealth, the big green Mercedes, somehow survived with little damage. 

Unfortunately, shortly after the storm, the family discovered that their homeowners insurance had been cancelled for non-payment of premium.  That left them with nothing but the one Mercedes to show for their brief period of wealth – until Richard’s brother took the car out for a spin (literally) and wrecked it. 

The demise of the Anderson family’s “fortune” took less than five years to complete.  Now Richard, whose gnarled hands make it impossible to do physical work, spends most of his time sitting alone in a darkened room, understandably depressed.  Percy filed for bankruptcy. 

If there were anyone who needs that prayer I saw so emblazoned on that t-shirt it would be the Andersons.  You might think it impossible for a family to blow over $4 million dollars in so many years, but the story is sad –and true. 

Having miraculously survived their physical burns, a structured settlement may have protected the Andersons from an equally devastating financial burn.  Rather than being destitute, they could right now be living on more than $20,000 guaranteed tax free dollars a month. 

I truly feel terrible for the Andersons and any families like them who believe that big amounts of cash will last forever and that maintaining wealth is easy.  The sad fact is, it does not and is not.  A structured settlement is one of the few things that would have given them exactly what they wanted—financial security—had they only had the wisdom to accept one.    Do you have a case that cries out for a structure?  Call Frank C. Kilcoyne CSSC at 800-544-5533 I am here to help.

*Originally reported by John Dorschner in the Miami Herald on September 20, 1992