One of the most popular features on my website is the MICRA fee calculator. I’m now happy to announce that the calculator is available for your iPhone, iPad and Android devices.

The app can be downloaded from iTunes and Google Play Store or from the links below:

Download your FREE Apple App

Download your FREE Android App

In addition, the MicroCalc app contains my latest eblasts and articles on a variety of structured settlement issues.

I hope you find the app useful and would appreciate any feedback.

- Pat Farber

Preparing For College With A Settlement in the Mix

If the decision is made to take a lump sum settlement when an injured minor turns 18, the student must declare the entire settlement payout when filling out the Free Application for Federal Student Aid forms (FAFSA), which schools use to determine financial aid eligibility. If the amount is significant, it would be unlikely the student would qualify for financial support. Families can elect to spread out settlement payments (i.e., on the student’s 18, 19, 20 and 21 birthdays). This can greatly enhance the possibility of qualifying for more financial aid than receiving the funds in one lump sum. However, any portion of the settlement that is remaining in the settlement account must also be reported.

Delaying Receipt of Settlement Payments

Another option may prove to be the smartest strategy. It could be prudent for parents to defer the first payment of a structured settlement until after the student’s expected graduation. By not having to declare the settlement funds during the child’s college years, the chances for financial aid go up. In addition, the settlement funds are allowed to grow within the structure for a longer period. Payment taken after graduation can then be used to pay off any student loans. Insisting on addressing college finances during an injured child’s settlement negotiations may seem an unusual request, but by doing so, parents can make sure they have the financial ability to provide a solid education for their child.

For more information about financial aid options for an injured child’s college education, contact:
Paul Farber, 800-734-3910, paul@patrickfarber.com or go to structures and college tuition.

For any questions, please call or email me at pat@patrickfarber.com, 800-734-3910. www.patrickfarber.com

The normal life expectancy for a 65-year-old male is another 20 years. The normal life expectancy for a 65-year-old woman is an additional 22 years. About one out of every four 65-year-olds today will live past age 90 and one out of 10 will live past 95. (Source: Social Security Administration, 2012)

Even though many of us have a target age for retirement, an Employee Benefit Research Institute (EBRI) 2012 Retirement Confidence Survey found that 50 percent of retirees retired earlier than planned. This puts us at a greater risk of outliving our retirement savings. Retiring early and living longer means retirement planning is imperative.

For most, properly managing our money while we work will affect a good 20 to 30 years of our lives. Yet in a new 2013 EBRI survey, only 46 percent of those responding reported they have tried to calculate how much money they will need to save so that they can live comfortably in retirement.

Structuring Attorney Fees for Later Cash Flow

The Pacific Life brochure discusses structuring attorney’s fees to ensure cash flow later in life. It includes a comparison of after-tax cash flow from a structured attorney’s fee versus income from taxable investment accounts. The hypothetical comparison showed a higher net income from the structured fee method because the money compounds over the years and taxes are not due until the money is withdrawn.

Of course, there are timing issues to structuring fees. The settlement agreement on which the fees are based must be completed before the verdict is rendered. And for Pacific Life, only fees received for worker’s comp, personal injury or physical sickness qualify for structuring (other life companies have products to structure almost every type of contingent fee).

The brochure is a good reminder why structured attorney’s fees can be so attractive. To view the entire Pacific Life brochure online, go to Pacific Life Attorney’s Fees brochure.

For highlights of the 2013 EBRI survey, go to EBRI 2013 Retirement Confidence Survey.

Structured settlements have long been an attractive option when negotiating a personal injury case. When a structured settlement is used, all sides can benefit by its risk mitigation properties.

Structures are used in a variety of injury cases. The most common involve wrongful death, (especially if a surviving spouse or children need income), temporary or permanent disability and severe injuries with shortened life expectancy.

Claimant Advantages
Structured settlements provide guaranteed, secure, predictable tax-free payments under IRC 104(a)(2), designed to meet the claimant’s needs over time. The structures are flexible to allow for funding for a claimant’s future expenses (i.e., schooling, new car or home purchases, retirement). Most claimants have limited investment or financial skills, especially when it comes to investing large sums of money. A structured settlement takes away the temptation to spend the funds on questionable investments or schemes that can deplete the funds and leave the clamant destitute.

While current interest rates on the securities found in structures are low, the structures offer competitive tax-free returns compared to taxable returns. The structured settlement program can be integrated with other asset management options and with a trust.

Insurer Advantages
For insurance companies and their legal counsel, structured settlements reduce administrative and legal expenses by eliminating the need for trial and appeals. Structures bridge the gap between the defense offer and the plaintiff’s demand and remove the potential for a future bad faith claim.

On the claimant’s side, structures are seen by plaintiff’s attorneys as a way to avoid the expenses, hazards and unknowns of trial and fulfill their professional duty of obtaining the best settlement for their client. It also gives plaintiff’s attorneys the opportunity to structure their own fees.

Life Care Plans
Often the largest component of economic damages in personal injury cases is the cost of future healthcare. Much  diligence is placed in creating detailed plans for the type of care that injured individuals will need for the rest of their lives. For example, a 64-year-old female with a chronic nervous system disease is found to need a structured life care plan that calls for once-a-year physical therapy evaluations, weekly physical therapy, occupational therapy and psychologist visits, 24 hour in-home nursing care for life as well as routine medical checkups.

Costs for this care (along with other living expenses) are outlined in a life care plan when determining the structured payments required by the injured party. These plans are a key element in settlement negotiations.

Medical Rated Age
Using a medical rated age for an injured party is common in cases where severe injuries shorten life expectancy. An injured party’s rated age plays an important role in determining settlement payouts.

For example, an injured male is 40, but because of his injuries or other factors, his medical rated age is 50. Using a medical rated age in his case reduces benefit costs for life companies because the injured party is not expected to live as long as a healthy person who is the same age. Thus, the income stream he will receive will be shorter.

For the severely injured claimant, he will receive increased benefit payments early on because the benefits are  calculated on their shorter rated age instead of the longer chronological age of a healthy individual. More money is available upfront to ensure injured individuals have the highest quality of life for their situation.

Inflation Component
Younger injured parties (under age 50) can often benefit from the use of an inflation-adjusting component in their structured settlement. This means their payouts gradually increase (typically at a 3 percent compounding rate). For older injured parties, however, an inflation component is counterproductive. The person’s life expectancy does not warrant it.

For example, if a 50-year-old male were awarded a $1 million annuity settlement, he would receive approximately $4,000 every month for 32 years (his life expectancy). When using a 3 percent inflation component, however, he would receive only $2,600 per month the first year, which would increase gradually, but not reach $4,000 per month until the 16th year. The approximately $1,400 difference each month over 16 years adds up to about $150,000 of tax-free income. In most cases, he could probably make better use of the larger monthly amount earlier in life—while he is in his 50s and 60s, or he could decide to invest or save the extra cash for use in his 70s and 80s. By deciding against the inflation component, he has more options for his money.

Whatever the level of injury or age of the claimant, a negotiated structured settlement can provide the financial security and peace of mind that many injured parties and their families are seeking.

Patrick C. Farber is a structured settlements broker in California. He specializes in settling medical malpractice, physical injury, non-physical injury, product liability, workers’ compensation, mass torts, punitive damages, employment and elder abuse cases with structured settlements in court hearings, arbitrations and settlement conferences. 800-734-3910, patr...@patrickfarber.com

If you’re like most Americans, what’s in your wallet isn’t nearly enough to get you through retirement.

According to the survey, three-fourths of middle-class Americans say they base how much money they’ll need for retirement on “some sort of guess.” And those guesses often appear way off the mark. For example, middle-class Americans surveyed said they believed the median cost of their out-of-pocket health care costs during retirement would be $47,000. In reality, the Center for Retirement Research estimates a typical couple at age 65 can expect to spend $260,000 or more over the rest of their lives.

When asked how much they should withdraw from their retirement savings each year, middle-class Americans said the magic number was 10 percent. Most experts, however, recommend 3 to 4 percent in annual withdrawals.

What’s even more troubling, the survey says that middle-class Americans, on average, have saved only $25,000 for retirement.

My eblasts lately have been pounding home the fact that left to our own resources, most of us, including those who have been injured, have little idea how to manage money for the long term. Many Americans are worried about just meeting day-to-day expenses. This makes setting up a structured payment plan for injured parties that much more critical. With a lifelong income stream, injured parties do not have to guess how much they will have to live on in their later years–they’ll know.

For more details from the survey, go to Wells Fargo Middle Class Retirement Survey.

An excellent overview of the act was prepared by MEDVAL, a company that provides pre-settlement and post-settlement services for liability claims that involve protecting Medicare’s interests. Here are the highlights.

Timeline

• 60 days: CMS shall solicit public comments in Federal Register regarding creation of regulations for reporting penalties.
• July 2013: Reporting penalty discretionary & US limited to 3 year SOL if pursuing private cause of action under 1395y(b)(2)(B)(iii) in recovery of reported NGHP TPOCs.
• October 2013: Conditional payment final determinations may be made through web portal & appeal available to NGHPs.
• November 15, 2013: CMS must determine recovery exemption, obtain review of Comptroller General & report to Congress by this date.
• 2014: MSP recovery exemption available.
• July 2014: CMS deadline to find SS# alternative (possibility of 1 year extensions).

Social Security Numbers Implementation: TBD

The Secretary of The Department of Health and Human Services has 18 months to propose an alternative method to the use of Social Security numbers for purposes of mandatory insurer reporting. This period may be extended by one or more periods of up to a year if the Secretary notifies Congress that absent such an extension that patient privacy or integrity of the MSP program is threatened. Until such a time as a viable alternative is established, RREs shall continue to use Social Security or health insurance claim numbers (HICNs) in their quarterly reporting.

For questions about the SMART Act, contact Jon Gunter, Medval’s West Coast executive vice-president, at jgun...@medval.com, 888-738-2743.

Plaintiffs often come to litigation while receiving public benefits such as Medi-Cal and or Supplemental Security Income (SSI), while others become eligible as a direct result of their injuries. Still, others require a Medicare Set-aside (MSA), further complicating the settlement process. Attorneys know, with proper planning, preserving these benefits significantly extends the value and the life of a plaintiff’s settlement funds. However, plaintiffs who are eligible for Medi-Cal or SSI, and receive settlement funds directly, run the risk of losing these public benefits. Benefits may be lost if monthly resources (income or assets) exceed $2,000 for an individual or $3,000 for a couple. This concern, however, will play a much smaller role in settling cases once the Affordable Care Act (ACA) also known as Obamacare takes effect on January 1, 2014. In fact, many features of the ACA are already in place and available to plaintiffs now.

The most common way for a plaintiff to continue to receive Medi-Cal and SSI while also receiving settlement funds is to establish a first party individual Special Needs Trust (SNT) or enroll in a Pooled Special Needs Trust (Pooled SNT) also known as a Pooled Trust, PSNT or Master Trust. Pooled SNTs are run by charitable organizations who serve as the trustee, rather than by an individual or corporate trustee.

Affordable Care Act Impact

Once the ACA takes effect in 2014, those who with the economic means will have an “individual mandate” that requires them to buy their health insurance. Currently, anyone who has a preexisting condition or is determined to be disabled according to the Social Security Association (SSA) is forced to meet eligibility requirements in order to receive Medicare, Medi-Cal and SSI. The ACA allows disabled individuals with a pre-existing condition a choice between public or private health insurance coverage.

Whether or not a state elects to expand its Medicaid program, the ACA forces the insurance industry to open private insurance to all persons regardless of a disability or pre-existing condition. The significance of this provision is that Medicaid Medi-Cal coverage and the scope of services it provides will be expanded in those states that choose to expand Medicaid. Medi-Cal programs will be required to offer higher standards of care and services to get additional Medicaid funding. Protecting Medi-Cal eligibility for the seriously injured plaintiff may provide a significant cost savings over their lifetime.

Under the ACA, policies will no longer have lifetime caps. Policies will be prohibited from the use of cost-containment ceilings that are a significant barrier to access for private medical care. Policies cannot have a rescission of policy or non-renewability for any reason. Insurance providers will not be able to charge higher premiums for a pre-existing conditions or disability. These changes greatly enhance the ability of a recipient of a modest settlement to secure high quality insurance on their own.

Individual Special Needs Trust (D)(4)(A)

As a result of the ACA, the use of Individual SNTs will be reduced. There are several reasons why: 1) the cost to establish and administer an Individual SNT over the life of the trust is significant, 2) court congestion delays their creation and 3) there are barriers to accessing the assets that are held in an SNT. Since there will be no restrictions on settlement proceeds when a plaintiff does not use an SNT, under the ACA, many injured parties might choose to buy their own insurance rather than go through the hassle of establishing an Individual SNT

From a cost standpoint, it is not uncommon for Individual SNT fees on a $1 million to exceed $15,000 annually. These additional costs accelerate the loss of the plaintiff’s settlement funds, and limit the ability to structure the funds for long-term security. Non-structured Individual SNTs are often spent down within just a few years. This can leave the injured party financially vulnerable. Individual SNTs also require that the injured party be under age 65, and require that a parent, grandparent, guardian or the court establish the trust. Court closures and budgetary issues faced by the state judicial have further delayed attorneys’ ability to settle cases and establish Individual SNTs for their clients.

Paying for private insurance gets around these issues. Choosing to purchase private health insurance allows plaintiffs to have direct control over their settlement proceeds because they are not constrained by all the limitations of an Individual SNT. Choosing private healthcare insurance also remove the restrictions associated with sharing the settlement proceeds with spouses, children or family members. In effect, there will be no restrictions on settlement proceeds if a plaintiff chooses to purchase private health insurance. Add to that the elimination of high annual trustee fees, the state payback and sole benefit limitations and there are plenty of reasons to deter injured parties from signing up for the Individual SNT option.

Undoubtedly, there will be some circumstances where an Individual SNT will be applicable.. One example would be a plaintiff under the age 65, who needs to have long-term nursing home care. The plaintiff would need a SNT to defray the cost to Medi-Cal.

Pooled Special Needs Trust (D)(4)(C)

While a Pooled SNT also protects Medi-Cal and SSI, it has a number of features that make it more attractive than an individual SNT. The first is its cost. The trust setup costs are between $1,500 and $2,000 with annual trust administration fees as low as $1,000. In addition, most Pooled SNT providers do not have a minimum funding amount requirement. With a Pooled SNT, the plaintiff can establish the trust directly, without a parent, grandparent, guardian or the court. These trusts can be setup in days rather than months, thus avoiding the need to navigate the congested California legal system.

Pooled SNT providers are charitable organizations that act as the trustee rather than an individual or corporate trustee. The federal statute that gives authority for a charitable organization to act as a trustee also provides an exception that allows them to enroll plaintiffs of any age, even those over age 65, whereas a private trustee or corporate trustee cannot establish a Special Needs Trust for a plaintiff over 65.

Pooled SNTs can be a valuable settlement planning strategy under a number of circumstances including those in these examples.

• Plaintiff is incapacitated so a court supervised Pooled SNT may be required.
• Plaintiff is already receiving Medi-Cal and/or SSI, and the net settlement is insufficient to afford private health insurance premiums.
• Plaintiff has an MSA and is receiving Medi-Cal. The MSA needs to be held and administered within the trust for assets to be considered uncountable to the Social Security Association.
• Plaintiff is over age 65.
• Plaintiff needs long-term nursing home care or an alternative and wants to shift cost to Medi-Cal.
• Plaintiff has elected to use a structured settlement

Pooled SNTs and Structured Settlements

If plaintiffs have structured settlement funds distributed to a Pooled SNT, they will maintain eligibility for Medi-Cal for the entire life of the structure. If plaintiffs are unable to pay premiums in the future they will still be eligible for Medi-Cal. Conversely, if the structured settlement payments are distributed outside a Pooled SNT, they are considered income by the Social Security Administration, making the plaintiff ineligible for Medi-Cal for the life of the structure. One cannot irrevocably assign a structured settlement to a Pooled SNT once is has been established.

As a planning strategy, only the assets in the Pooled SNT are subject to state lien payback. Funding the Pooled SNT with a structured settlement annuity maximizes funds to heirs and extends the life of the trust. In addition, the annual trust administration fees are paid directly from the annuity’s life insurance company.

If plaintiffs structure their settlement, they can still be eligible for Medi-Cal. This would negate the need to purchase private health insurance or it can be used in tandem with private insurance. This strategy can save the plaintiff thousands of dollars annually and tens of thousands of dollars over the life of the trust. Since the ACA mandates increased standards of care and broadens the scope of services of Medi-Cal, Medi-Cal could be comparable to existing health care plans.

While both Individual SNTs and Pooled SNTs protect Medi-Cal and SSI benefits, using a Pooled SNT maximizes the value and life of settlement funds for plaintiffs eligible for Medi-Cal and SSI benefits. Pooled SNTs also do not have age restrictions or limits on the size of the settlement.

A quick note: when settlement planning, it is not necessary to establish a SNT if the plaintiff is already receiving Social Security checks or Supplemental Security Disability Income (SSDI). Social Security and SSDI government benefit programs are entitlements, therefore they are not means tested; asset and income limits do not apply; settlement proceeds will not impact eligibility. However, Medi-Cal and SSI are means tested, client assets, income and future medical costs do impact eligibility.

Evaluating a Pooled Trust Provider

Not all Pooled SNT providers offer the full scope of services that are sometimes required. Of the nine programs available in California, only two accept court-supervised cases. The Pooled SNT is a state approved Master Trust document that an injured party joins via a “Joinder Agreement.” The Pooled SNT provider does not generate a new trust documents for each new plaintiff/enrollee.

In order for a Pooled SNT provider in California to accept a court supervised case, it must have a master trust that is probate compliant. Also, court supervised cases in California require a corporate trustee with the charitable organization as the trust administrator. Avoid Pooled SNT programs that have an individual as the trustee rather than a corporate trustee for court-supervised cases, or the charitable organization as the trustee for court ordered or self-established trust accounts.

Establishing a Pooled SNT

There are two steps plaintiff attorneys should complete to ensure that establishing a Pooled SNT goes smoothly. First, as with any SNT, the plaintiff attorney should provide counsel and disclosure of the limitation associated with the trust. It is advisable to have the plaintiff sign a disclosure letter as evidence of proper counsel. The second step should be to provide notification to the appropriate state agency via registered mail that funds have been placed in a Pooled SNT making the assets uncountable for Medi-Cal and SSI eligibility. Most Pooled SNT providers should be able to supply the plaintiff attorney with these notification letters.

Individual SNTs and Pooled SNTs are important tools to protect plaintiffs’ Medi-Cal and SSI eligibility. The There is no doubt the ACA will impact an injured parties’ use of SNTs. It is up to the plaintiffs’ attorneys to make sure their clients understand the financial ramifications when determining which trust is right for them. Careful consideration should be given especially to health insurance premium costs. Whether an Individual SNT or Pooled SNT, these trusts should be established and administered at the time of settlement to prevent accidental loss of public benefits.

Patrick C. Farber is a structured settlements broker in California. He specializes in settling medical malpractice, physical injury, non-physical injury, product liability, workers’ compensation, mass torts, punitive damages, employment and elder abuse cases with structured settlements in court hearings, arbitrations and settlement conferences. 800-734-3910, patr...@patrickfarber.com

William E. Lindahl, MBA, CLPF is the national enrollment director for CPT Special Needs Trusts providing pooled trusts in AZ, CA, OH, NJ & FL. He is a California Licensed Professional Fiduciary with 25 years experience meeting the needs of the disabled. He has developed Pooled Trust programs nationwide and online trust administration systems. He has spoken nationally on trust administration, Medicare and Medicaid fraud. 877-695-6444, w...@snthelp.com.

——————————————————————————————————
[1] 20 C.F.R. §416.1205(C)(SSI), 22 Cal Code Regs §§50419-50419-50420 Medi-Cal
[2] www.healthcare.gov/law/full/index.html also see www.dol.gov/ebsa/healthreform
[3] 42 U.S.C. §1396p(d)(4)(A)&(C) allowing first party Special Needs Trust’s
[4] 42 U.S.C. §1396p(d)(4)(A)
[5] 42 U.S.C. §1396p(d)(4)(C)

It’s hard to imagine, but before Judge Knight, private ADR was rarely considered as a remedy to settle disputes. Instead, cases would wind their way through a clogged judiciary system with resolution typically years away. Because of his hard work, congenial spirit and remarkable dedication, ADR soon became what it is today: a cost effective, efficient means to resolve disputes.

A moving tribute to Judge Knight appears on the JAMS website. Take a moment to read about the man, his life and the wonderful legacy he leaves behind. We will miss him.

Let’s look at what’s in store for the winners. First, we have to give nod of acknowledgement to the two. The odds of winning the jackpot were less than one in 175 million (the chance of getting hit by lighting during your lifetime is 1 in 10,000).

Now comes the tricky question–what to do with the money? Unfortunately, many lottery winners, just like large-sum settlement recipients, have little knowledge of how to invest or manage their newfound wealth.

Don McNay, author of a book on what to do with lottery winnings, says nine out of 10 winners go through their money in five years or less.

Jackpot winners and settlement recipients are faced with the same question: take a lump sum payout or spread payments over time. In both cases, it usually makes sense to receive the majority of cash in installments. It’s one way to keep long lost relatives, every friend they’ve ever known and con artists from cleaning out their bank accounts. It also gives winners and settlement recipients self-discipline at a time when they can pretty much do whatever they want with the cash. For the jackpot winners they have 60 days to make this crucial decision.

Injured parties have it a little easier. They have legal counsel they can trust to guide them through the process and financial and annuity advisors to make sure the numbers make sense.

Human nature the way it is, jackpot winners and settlement recipients will always find a way to recklessly spend their funds if they truly want to. But for most who choose the installment route, they can ensure that their families, kids, grandkids and generations to come will have a financially secure future.A

Of those surveyed, 80% had not been involved in a personal injury case, while 20% said they or a family member had been. All were asked to read injury scenarios (a car accident, a spouse killed on the job) and respond. Those with personal injury case experience were also asked to answer questions about their real-life experiences.

After reading the car accident scenario and given the option of choosing a lump-sum settlement or structured payments, 65% of those surveyed chose a lump sum. Forty-nine percent of the respondents said they could make their own financial decisions and plans.

Click image for larger view

These percentages are particularly unsettling when looking at the responses to another survey question. Of the 20% surveyed who said they or a family member had been involved in a personal injury case, some took lump-sum settlements instead of structured payments. When these individuals were asked how much of the settlement remained, 57% said the entire lump sum had been depleted. Another 10% said less than 25% remained.

Click image for larger view

Three-fourths of middle-class Americans say their estimate of what they’ll need to live on in retirement is based on “some sort of guess,” the survey finds.

With a study by the National Bureau of Economic Research showing that 46% of American retirees have just $10,000 when they die, the results of the American General survey aren’t surprising. The reality is, most people have little knowledge about how to make their money last. In stressful situations, such as settlement negotiations, injured parties need information to make sound choices–choices that will give them a secure financial future.

For any questions, please call or email me at pat@patrickfarber.com, 800-734-3910. http://www.patrickfarber.com

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MADD estimates that more than 27,000 lives have been saved in the U.S. since the Minimum Legal Drinking Age was raised to 21 in 1975. Still, here are some sobering MADD statistics:

An estimated 5.8 percent of 16 or 17 year olds and 15.1 percent of 18 to 20 year olds reported driving under the influence of alcohol in the past year.

Car crashes are the leading cause of death for teens, and about one-third of those are alcohol related.

Teen alcohol use kills about 6,000 people each year, more than all illegal drugs combined.

Kids who start drinking young are seven times more likely to be in an alcohol-related crash.

One in five teens binge drink. Only 1 in 100 parents believes his or her teen binge drinks.

High school students who use alcohol or other substances are five times more likely to drop out of school or believe good grades are not important.
MADD will be unveiling its Power of You(th) booklet during this year’s Red Ribbon Week. MADD is hoping the booklet will help teens understand that the dangers of underage drinking are not worth the risks. The booklet is free and is for teens, parents and educators.
You can request the booklet directly from MADD (it will be emailed to your inbox) by going to: Power of You(th).

• By the time they have retired for two years, 78% of former NFL players have gone bankrupt or are under financial stress because of joblessness or divorce.

• Within five years of retirement, an estimated 60% of former NBA players are broke.

Most lost their millions because they listened to (and took) bad financial advice, trusted untrustworthy “friends” with their money and lacked the discipline and knowledge to make informed decisions about their current and future financial needs. The SI article paints a bleak picture. It likened professional athletes to those individuals who win the lottery. Suddenly faced with more money than they could ever have imagined, many make bad decisions that will affect them for the rest of their lives.

What could help athletes is what’s helping personal injury victims–investing in safe and secure investments with structured payouts. Despite today’s low interest rates, this strategy offers the most stable way to keep large sums of money (whether from a settlement, lottery winnings or large athletic contract) safe and away from unsavory investment schemes.

For the SI article, go to How And Why Athletes Go Broke.

For example, if a 52-year-old woman were awarded a$1 million annuity settlement, she would receive approximately $4,500 a month for 34 years (her life expectancy). With a 3 percent inflation component, she would receive $2,516 per month the first year, which would increase but not reach $4,500 per month until the 21st year. The $1,984 difference each month over the 21 years adds up to$500,000 tax-free. In most cases, she could probably make better use of the larger monthly amount while she is in her 50s and 60s, or she could decide to invest or save the extra cash she does not use for later in life. By eliminating the inflation factor, she has many more options for her money.

A similar analogy could be made for Social Security payouts. Many people are tempted to postpone collecting their Social Security benefits until they can receive the maximum payout at age 70 instead of collecting at age 66, when you are not restricted by how much you can earn each year. Factoring the income lost over the four years between ages 66 and 70 can be sizable and should not be dismissed.

While younger injured parties often require long-term planning for inflation as well as for education and other milestone expenses, for older clients, attorneys should strive to arrange for a sufficient stream of income to meet the financial needs throughout the life of their client.

A recent article posted on MarketWatch cites a study by the National Bureau of Economic Research showing that 46% of American retirees have just $10,000 when they die. While people can live with limited savings, the study’s findings are a reminder of how fragile our economic conditions are if a financial emergency occurs. A structured settlement that prepares for unforeseen medical and other uncertainties during retirement means injured parties can enjoy financial peace of mind when it matters most.

For the full article, visit Yahoo Finance.
National Bureau of Economic Research Study: Here

Over the past 20 years, more than 50 percent of the structured settlements facilitated by Ringler Associates were less than $50,000. Another approximately 17 percent were between $50,000 and $100,000. These figures are typical of most annuity brokerage firms.

In fact, during the first three quarters of 2011, 21,846 cases were structured with the average case size of about $166,000. These figures are based on data released by 11 life insurance companies that issue structured settlement annuities.

Structuring a settlement can make sense for a settlement as small as $10,000. For further information on small structures, go to www.PatrickFarber.com and read “Benefits of Small Dollar Structured Settlements,” an article I co-wrote with attorney Patrick E. Stockalper for ASCDC’s Verdict magazine.