Frequently Asked Questions
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- What is a structured settlement
- What is age rating?
- What are daily rates?
- How can Evergreen help in reaching a settlement for my client?
- Can my fees be structured?
- Is there any advantage to having my own structured settlement consultant?
- Will Evergreen's services cost my client or myself anything?
What is a structured settlement?
A structured settlement is an alternative to a lump sum cash payment as a means of compensating injury victims. Congress enacted the Period Payment Settlement Ace of 1982, which promoted the use of structured settlements through Internal Revenue Code Section 104(a)(2), which provides that all structured payments (including interest generated) are tax-free to the recipient.
What is age rating?
Age rating is a technique through which we are able to maximize annuity payments to the injury victim. It involves submitting medical records to insurance carriers that issue structured settlements who review these files in order to come up with an "age-rated age" for the prospective annuitant. For instance, while the injury victim's biological age may be 12, actuaries at the insurance company may feel that due to the severity of injuries that they sustained, the life expectancy not of someone who is age 12 but rather of someone who is age 30, and thus they will offer to issue the annuity based on that "age-rated age." This translates into increased monthly payments to the annuitant, since the insurer has based the payments upon a shorter life expectancy.
What are daily rates?
Once the premium amount for a structured settlement is determined with certainty, we can engage the 9 carriers that offer structures in a bidding contest. The daily rate is an offer for a specific payment schedule that an insurance carrier holds open for only a single day. The daily rate is often higher than the insurance carrier's published rates because they are trying to attract business that they know will be placed with either themselves or one of their competitors. The bidding contest occurs when we solicit daily rates from each carrier, analyze each offer, and then choose the best rate available in the country, thus maximizing the value of the annuity payments to be made to the injured party.
How can Evergreen help me in reaching a settlement for my client?
There are a myriad of ways in which we can complement plaintiff's attorneys' efforts to settle claims on behalf of their clients. Two that are particularly useful are age rating and mediation consulting. Age rating, discussed above, can provide valuable insight regarding whether or not the defense is contemplating settlement. Specifically, when we receive age ratings on an injured party, we receive not only that person's "age-related age," but also a list of other structured settlement companies that have requested age ratings on that prospective client. This can provide valuable insight and leverage particularly when the defense attorney is stonewalling or otherwise indicating an aversion to settlement. Second, we are more than happy to assist in preparing for and attending mediations. This allows you to have an expert on your side, as we can both evaluate the opposition's proposals and create our own proposals as settlement negotiations unfold. Furthermore, while you are being a zealous advocate for your clients, we can assist in making sure they understand what is transpiring and help ensure that their needs are being met.
Can my fees be structured?
Yes. Attorney's fees can be used to purchase a structured settlement. While it is important to clarify that the annuity payments will be taxable, taxation occurs on a deferred basis, which can be particularly valuable when structuring large fees. In other words, rather than taking the fees immediately, which would be treated as a single taxable event on the entire amount, if you choose a structured settlement, the annuity payments are taxable as separate events, which can mitigate the tax implications greatly.
Is there any advantage to having my own structured settlement consultant?
Certainly. The field of structured settlements is one that was traditionally dominated by the defense. It was not until abuses of the system surfaced that structured settlement consultants began working with plaintiff's attorneys. Specifically, what often occurs when the defense controls the process is that they offer you a "menu" of options from which to choose. Since you are not privy to how the offers were calculated however, you may not realize that in many instances the defense has age rated the client and obtained a larger annuity payment schedule from the insurer than they are disclosing. Sadly, rather than passing this increase along to your client, they will keep it for themselves. For example, if the premium for the structure is $1,000,000, and without an age rating the premium would purchase $2,800 per month in benefits, the defense may find that it can fund the same payments of $2,800 per month with a premium of only $950,000 once the injured party's age rating is taken into consideration. Our goal is to protect against such abuse of the system and ensure that your client receives the entire age rated annuity.
Will Evergreen's services cost my client or myself anything?
No. Our services will not reduce the amount that your client receives or your fees. We are compensated by the insurance carriers with which we place the structured settlement. Furthermore, we do not charge any consultation or attendance fees whatsoever. Thus, we feel that our services can only add value to your representation of your client.