A few months ago, a young mother contacted Strategic Capital to sell some of her structured settlement payments. This disabled mother needed to raise money in order to pay for a deck entrance to her house to make it wheelchair accessible. Strategic Capital processed her legal documents and started the process of obtaining a hearing date and court approval.

At the court hearing, even though the mother is the owner of the payments she was selling, and she was selling the payments for a valid reason, the judge refused to approve the transfer without a second opinion.  So, the judge required that a guardian ad litem be appointed to safeguard the interests of her young child.  Strategic Capital decided to pay for the cost of the guardian ad litem so that the mother would receive enough money from the sale to do what she needed to do.

After the guardian ad litem reviewed the transaction and spoke to the mother, she agreed that the transaction was in the best interests of both the mother and the child, and recommended that the judge approve the sale of the payments.

At the next court hearing the judge approved the sale of the payments.  However, because the transaction and court approval had taken so long, the client had already received some of the payments that she had agreed to sell to us, and so the judge asked us if we would consider adjusting the price to the mother so that it would be the same price as if it had been calculated without the delay and without adjusting for the already paid payments.  After looking at the transaction and considering the impact on the client, we agreed to adjust the price for the benefit of the client.

So, not only did we pay for the guardian ad litem, but we also increased the price to adjust for the long delay required by the court!

This was a win, win, win.  We were satisfied with the purchase of the payments, the judge was satisfied that the transfer was in the client’s best interest and the mother was thrilled with the service she received from us.

Strategic Capital is here to help annuitants deal with life’s changes. Please call to speak to our experts should you have any questions 1-866-256-0088

Author: Cam Mears, Jr.

This blog post was contributed by Cam Mears, Jr., Vice President, Strategic Capital. Cam has over 18 years of structured settlement and insurance claims experience. Prior to joining us, he served in structured settlement sales and management capacities at leading firms in the structured settlement industry, including Chartis Insurance (formerly AIG), Cambridge Galaher Settlements, and Crowe Paradis Services Corporation.

Cam is a CPA and he also earned his Certified Structured Settlement Consultant designation (CSSC) from the National Structured Settlement Trade Association (NSSTA) at the University of Notre Dame.  He is also a former co-chair of both the NSSTA Marketing Committee and the NSSTA Technology Committee.

If you’re selling structured settlement payments or taxable annuity payments, make sure the company you’re dealing with is upfront with you about the costs and expenses involved.  In an annuity sales transaction, there can be thousands of dollars in costs required to get the deal done, including legal fees relating to court approval and fees charged by the life insurance company.  Since these expenses have a significant effect on the interest rate and cash offered for your annuity, some firms do not include them in their quotes, as a way to make the deal they are offering look better than it actually is.

When you get a quote for the sale of your structured settlement or taxable annuity payments, make sure to ask whether there are any expenses that will be deducted from the quoted amount when your transaction is funded.  If the answer is yes, find out what and how much.  If the answer is no, carefully review your contract documents to verify that there are indeed no hidden fees.

When you work with Strategic Capital, you can rest assured that all of our quotes include the legal fees required to get your transaction approved and any and all fees charged by the life insurance company.  If there are additional non-routine costs, such as when independent professional advice is required or a guardian ad litem is required when a minor’s payments are being sold, we will advise you about why these costs are required and how they are to be paid.

“In November 2010, I gave birth to a beautiful, preterm baby girl. Due to a heart condition, my pregnancy was high risk, requiring me to go to specialists. A few weeks after having her, we found out that our insurance company wouldn’t cover the charges due to us being “out of network.” The doctor and hospital bills were outrageous and compounding! So, I turned to Strategic Capital to help me.

From day one, they were professional, helpful, informative and quick! While waiting for my court date, I had an unfortunate event happen; my daughter became very sick and had to be hospitalized. In order for her to come home, she had to be on an antibiotic that our insurance wouldn’t cover. It was so expensive, my husband and I couldn’t afford it. Again, I turned to Strategic Capital. Again, they understood, empathetic, polite and quick! They were able to advance me and transfer me the funds the very next day; my daughter was able to come home to fully recover.

This is not my first transaction with them! each time, they have impressed me; by not only sticking to their word, beating all other quotes I have ever received (I did my homework) and being quick and efficient, but they also checked in with me regularly to see if I had any questions, and were sincere throughout the entire process! Special and heartfelt Thanks to Ric Perez and the Strategic Capital Team! You guys are truly The Best in the Business! – Micheal (Michelle)”

Recently, Strategic Capital purchased structured settlement payments from an annuitant who was going through bankruptcy proceedings.

This annuitant is one of many Americans who experienced a financial crisis during the Great Recession of the last 3 years.  Unfortunately for the annuitant, time ran out for him to put his financial house in order.  And even more unfortunately, the expense of the bankruptcy means that he will see none of the sale proceeds of his annuity payments.  On the other hand, his creditors got all the money from the sale – maybe they were even made whole!

We were surprised to see copies of letters between the annuitant’s lawyer and the annuity issuer.  The lawyer had asked the annuity issuer whether there was any way for the annuitant to access money from the structured settlement annuity before the next payment came due in 2020.  This question was asked three years ago, at which time IRC Section 5891 as well as the annuitant’s state’s Structured Settlement Protection Act already allowed the sale of structured settlement annuity payments, provided the state court found that the sale was in the “best interests” of the annuitant.  Surely, this was a very good case where the “best interests” of the annuitant would be to sell a future payment in order to avoid the emotional, mental and financial cost of a bankruptcy filing!

BUT, the annuity issuer wrote a reply to the lawyer advising him that the future structured settlement payment could not be accelerated or sold!  Which was wrong!  And adding insult to injury, the annuitant’s lawyer accepted this advice without independently verifying if it was true – which it wasn’t!  So, the annuitant was let down by two parties, all to his detriment.  Now, his payment is being sold, but he’s not getting any benefit of it.  Was it in his best interest not to sell or would it rather have been better to sell??

Sometimes, we all need some ready cash in order to get out of a financial bind.  And having all the future assets in the world doesn’t help at all.  Remember, during the financial crisis in 2008 and 2009, when the biggest banks in the country were desperate for cash to meet their obligations?  And the federal government, through the Federal Reserve, provided them with cash by way of emergency loans.  Without this emergency cash, all those banks would have collapsed.  And now, 2 or 3 years later, the crisis has passed, the banks have been able to stabilize and many of them are in good shape and have been able to repay all of their emergency loans.  All because they were able to access cash when they needed it.

We individuals are the same.  Sometimes, through no fault of our own, we need to access cash from our assets for an emergency.  And with that cash, we can deal with the emergency, and we can get through our problems.  BUT, without the emergency cash, we may suffer irreversible consequences that will impact us for the rest of our lives.  So, what is in our best interests – to sell or not to sell?

If this annuitant had been better informed about his rights with respect to his structured settlement payments, he may not have had to file for bankruptcy. He could have raised cash by selling his structured settlement payments.  And he could have avoided the emotional, mental and financial cost of bankruptcy now, and the consequences that has for his future.

It is important for lawyers, and settlement brokers to keep their annuitants well informed about their options. Selling structured settlement payments should be used as a last resort, but in reality, things change and in today’s economy many people have to access cash – and annuitants can do that by selling a part of their structure. If annuitants need money, they will do whatever they have to in order to raise the money required, including selling structured settlement payments, even if it’s a bad deal at a low price.

If you are looking to sell your structured settlement payments, make sure to always ask as many questions as you can from your lawyer, settlement broker, or your financial advisor. And talk to experts to discuss your options.  You can contact us at Strategic Capital for FREE no obligation options. Our structured settlement experts will answer any questions you may have about selling your structured settlement payments and the process involved – 1-866-256-0088.