Litigation

I've said time and time sgain that here is no excuse for the inability of any settlement professional to articulate the BASICS. So Robert Risk and Structured Settlement Services are the target of this blast, AGAIN.

How badly does Risk misinform? Let us count the ways!

"Structured Settlement Services Misinformation-1"

Still confuses the financial concept of basis, and basics

"Structured Settlement Services Misinformation-2"

Answering the question "What is a structured settlement? ", Risk states "The term ?structured settlement,? according to new section 5891 of the Internal Revenue Code, means an arrangement....

Facts:

1. The definition found at IRC 5891 only applies to that code section as is expressly stated in the regulations.
2. IRC 5891 has solely to do with the imposition of an excise tax on the factoring discount embodied in structured settlement factoring transactions.
3. IRC 5891 was a creation of the Victims of Terrorism Tax Relief Act of 2001, effective January 2002.  Should one consider something that is 8-9 years old as "new"?

" Structured Settlement Services Misinformation--3"

In trying to overcome the disadvantages of an structured settlement Risk states:

"...Others, who have a tolerance for market risk, believe they can do better by taking a cash settlement and investing in potentially higher yielding equities. The recent IRS approval of the variable annuity as a qualified funding asset negates that argument.

Facts: 

1. IRC 130 governs qualified assignments. Part of the requirements to achieve the tax result under IRC 130 for the assignee,  states that payments must be "fixed and determinable". In  IRS Private Letter Ruling 199942001, issued in 1999, the IRS considered whether a qualified assignment with a variable annuity payment component, that was calculated pursuant to a specific investment formula, met the "fixed and determinable" requirement of IRC 130(C)(2)(A). The conclusion of the IRS was that "fixed" meant that the assignee's obligation to pay was fixed by the settlement agreement and that "determinable"  meant that there was an objective basis for calculating the amount and timing of the structured settlement payments.
2. In addition to the above there have been published articles on the subject such as David Cordell's  "Structured Settlements Meet the Modern Portfolio Theory", which appeared in the Journal of Financial Planning in May 2003.

Comments

1. In a world as dynamic as the financial services industry one has to be well read.
2. Should one seriously question how "well read" an individual is that refers to events in 1999 and  2001 as "recent" ? Or should we say that blindly slapping up what Daddy wrote 10 years ago and not reading before posting it is downright irresponsible.
3. This author has observed that the "look and feel" of the Structured Settlement Services website has changed more than 3 times in the last 5 years.

" Structured Settlement Services Misinformation--4"

In discussing who is allowed to make a qualified assignment Risk implies that IRC 130 permits a qualified settlement fund to make a qualified assignment. It doesn't

Fact

    The ability of a "QSF" to make a qualified assignment is set forth in Revenue Procedure 93-34

Comment

    Risk's Daddy supports this author's comment in a 2003 newsletter "Two Former Tax Policy Chiefs Endorse Single Claimant QSF" (see post on Risk Law Firm website page 3)