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Is The Structured Settlement Process In Need Of Reform?

The issue: differences of opinion as to the difficulty (or ease) with which PI claimants should be able to sell part or all of their right to an income stream in exchange for a lump sum via a structured settlement factoring transaction. Industry stakeholders agree there are legitimate reasons for such transactions. claimants may, for example, need to pay for emergency medical expenses or other unanticipated financial obligations. For a discounted value of a claimants periodic payments, specialty finance companiesamong them J.G. Wentworth, Woodbridge Structured Funding and Peachtree Settlement Fundingare prepared to satisfy the liquidity need. IRC Section 5891 permits a court-approved sale; absent a judges http://www.usatoday.com/story/money/business/2014/02/17/ask-an-expert-small-business-risks/5552967/ blessing, the IRS will assess a 40% excise tax on the buyer. Upshot: nearly all sales of rights to periodic payments are now court-approved in the 47 states that have passed structured settlement protection acts based on a model law of the National Conference of Insurance Legislators or NCOIL. Despite the statutory and judicial protections, Hindert asserts that claimants are not being adequately educated about the availability of factoring transactions in settlement negotiations because of opposition by the primary market playersthe annuity providers. Rather than promoting factoring as a potential benefit, he contends, the life insurers criticize secondary market salesand indirectly undercut their own products.
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