How does it work?
The defendant agrees with the victim on a stream of periodic
damage payments tailored to the victim's particular medical
care and basic living and family needs. The defendant then
assigns its periodic payment obligation to a life insurance
company, which funds the victim's damage payments with an annuity.
In some instances, the defendant retains the periodic payment
liability and purchases as annuity to fund the payments to
the victim.
Annuity contracts have been the preferred way of funding
because of their pricing and flexibility for settlement design.
An alternative is a trust fund, which invests only in United
States Treasury obligations. These trusts add the safety of
investment in obligations issued by the U.S. Government.
Back To Top
What are the benefits of Structured
Settlements?
There are some important benefits to the claimant in structuring
the settlement:
- The claimant receives compensation when it is needed. Instead
of receiving a lump sum that has to be invested at risk, and
managed for a fee, the recovery is paid out over time. This
better correlates the settlement with the actual need for funds.
- The full amount of the damage payments is tax-free. A lump
sum received for physical injury also would be tax-free, but
the investment earnings earned over the years or decades on
that lump sum would be taxable. By structuring the settlement,
the claimant avoids this taxation.
- The claimant receives payment from two of the safest types
of funding assets available: life insurance annuities or U.S.
Treasuries.
You
can cash in your structured settlement payments.
Who are the parties to a Structured
Settlement
- Plaintiff
- Injured party (or family) is the “Plaintiff”
- Defendant
- Responsible Party for accident
- Insurance Carrier
- Company who insures Defendant
What will a Structured Settlement show?
- Parties to the accident and the respective Insurance Carrier(s)
- Payment Terms of the agreement
- Assignability/non-assignability language
- Terms of the Settlement
- Jurisdiction of the Settlement
- Tax Implications under 104(a)1; 104(a)2 and 130C
What is a Qualified Assignment?
- A qualified assignment is a document that assigns the interest
of the original Insurance Carrier to another Insurance Company
for the purposes of purchasing an annuity policy to guarantee
the declared payment stream
You
can cash in your structured settlement payments.
Back To Top
Why is a Qualified Assignment done?
- The Federal Government, specifically the Internal Revenue
Service, gives tax breaks to Insurance Companies who structure
payouts in the form of future payment streams under Section
130 (C)
- New Companies have been formed for the benefit of realizing
the tax breaks given
What is an Annuity Application
An annuity application is the request for an insurance company
to provide a policy that guarantees the payment of the settlements
declared amount to the Payee (plaintiff)
What is an Annuity
Policy
An annuity policy is the guaranteed “promise to pay” a
declared amount to the Payee (plaintiff)
What will an Annuity Policy Show?
- Payee/Measuring Life
- Beneficiary
- Policy Number
- Issuer
- Owner
- Date of Issue
- Payment Stream to be paid
A structured settlement annuity is
a single premium immediate annuity, but defers from a traditional
single premium immediate annuity. To understand this, one must
first understand both products.
You
can cash in your structured settlement payments.
Back To Top
What is a Single Premium Immediate Annuity?
- A Single Premium Immediate Annuity (“SPIA”)
is a contract between a person or entity and an insurance company.
By paying in a lump sum of money the person or entity is guaranteed
to receive a series of payments over a period of time. The
amount of the payment is determined by both the current interest
rate at the time the contract is issued and by choices made
from a wide variety of payment options. Once the contract is
issued, the annuity payments are fully guaranteed for the period
of time the person or entity has chosen.
- The person or entity that initially provided payment owns
the traditional SPIA. The purchaser at the point of sale may
name an alternate owner of the SPIA other than purchaser. In
the event the Annuity Issuer cannot make payment the State
Life & Health Insurance Guaranty Association steps in and
assume the responsibility of the Annuity Issuer.
You
can cash in your structured settlement payments.
Why use a single premium immediate annuity for a structured
settlement?
- No other investment provides the security of guaranteed
payments for the life of the annuitant and beneficiary (if
period certain). Because structured settlements are governed
by the Internal Revenue Code (IRC). These payments when funded
through the purchase of a single premium immediate annuity
product, can qualify for preferential treatment under 104(a)2
and 130 section of the tax code.
- IRC Section 104(a)(2) provides that compensation received
on account of personal injury or physical sickness is not includable
in gross income, whether received in a lump sum or as periodic
payments. Revenue Ruling 79-220, 1972-2 C.B. 74, provides that
when claimants have no control over the assets that fund a
periodic payment stream, the interest earnings on the investment
will be excludable from income under IRC Section 104.
The security and guarantee of the Structured Settlement Annuity
product is through first, the Life Insurance Company issuing
the Periodic Payments. Second to the Settlement Obligor, which
is the insurance company ultimately obligated to ensure the claimant
receives their Periodic Payments. And last, in the event a Life
Insurance Company becomes insolvent, the State Guaranty Fund
kicks into play. The State Life and Health Guaranty Association
provide the State Guaranty Fund.
You
can cash in your structured settlement payments.
Back To Top
State Life and Health Insurance Guaranty Associations
- If an individual is receiving benefits from an insurance
company in the form of an annuity and the insurance company
becomes unable to pay, a state guaranty association may be
responsible for all, part or none of the annuity. All states,
Puerto Rico and the District of Columbia have guaranty associations
that protect policyholders, up to specified limits, in the
event an insurance company is financially unable to meet its
obligations.
History of how and why Structured Settlements
came about
How many structured settlements are created yearly
Over $7 Billion in Settlements will be created in
2003
Amount will increase an estimated 15% yearly through 2019
200+ Deals a month completed by funding sources
Customers typically decide to sell their structured
settlement payments due to some financial hardship.
Usually the customer will go with the person they
feel most comfortable with, regardless of “price” .
New Federal and State Laws Regulating a Sale
Due to new State and Federal Laws, the closing process now
takes anywhere from 3 to 6 months to complete. Do not
be “fooled” by companies that say it can be done quicker.
Only in rare cases can this timeframe be shortened to 2 months.
On the Federal Level, in order to avoid any tax liabilities, either
to the customer or the funding company purchasing the payment
stream, a court order is now required.
On the State Level, 36 states currently have passed new “Structured
Settlement Protection Acts” which regulate exactly how the court
Order process is completed.
You
can cash in your structured settlement payments.
Back To Top
The Closing Process
On paper, the closing process seems very simple. However,
in order to comply with each state law, certain time
frames must be met. The closing process flows as follows:
Initial submission of settlement documentation
Disclosure Statement
Closing documentation
Attorney Estoppel letter
Petition for Court Order filed
Court order is obtained
Insurance Company acknowledges assignment
Submission Documentation
When submitting a file to a funding source, some initial
documentation is needed to begin the closing process.
You should obtain the following:
Application for sale
Annuity Policy
Check Stub
Settlement Agreement
Qualified Assignment
Payment stream to be purchased
Purchase Price you are paying to the customer
Disclosure Statements
Based upon each state’s laws, the disclosure statement must
be provided to the customer anywhere between 3 to 14 days
prior to the customers receipt of the transfer agreement.
• The Disclosure Statement must show:
• Amounts and due dates of payments being assigned
• The current IRS Discounted Present Value of the payments
• The Gross Advance Amount and the Annual Discount Rate
• An Itemized listing of all commissions, fees and expenses
• The Net Amount to be received by the seller
• Several other minor disclosures required per state
Transfer Agreements
Once the customer has received the Disclosure Statement,
and the allotted time has expired, the transfer agreement
can be sent to the customer for signature. The documents
Sent to the customer are:
Transfer Agreement
Testamentary Agreement
Updated Application
Fee Agreement (In some cases with the Disclosure Statement)
Attorney Estoppel Letter
IRS form W-9
Attorney Advice
Attorney advice in any type of financial transaction is
smart for a customer. However, not all states require the
customer to obtain said advice. Based upon the laws to
be used on your customers transaction, he can either:
• Waive legal representation in the Transfer Agreement
• Obtain legal advice and have their Attorney prepare
and sign an Estoppel Letter
Court Order Process
The court order process is generally the longest part of the
overall closing process. Steps taken during this process are:
• Attorney obtains complete file and reviews documentation
• Drafts of Petition and Order are reviewed by funding source
• Petition is filed (must allow 20 to 30 days notice to all
interested parties prior to actual court date)
• Court Date is set
• Judge hears arguments and approves the order
• Judge signs the order (can be immediately or at a later date)
• Court Order is provided to the funding source
Insurance Company Acknowledgement
Depending on which funding company you use, the
Funding of proceeds to the customer can take place either
after the court order is received or after the Annuity Owner
and Issuer approve of the changes to the Annuity Policy.
If the funds are dispersed after the court order is obtained,
the dispersal is usually 5 to 7 business days after receipt
of the court order.
If the funds are dispersed after the Insurance Company
Acknowledges the assignment, the funding can be anywhere
from 30 to 45 days after receipt of the court order.
Individuals awarded future payments through litigation derived
from personal injury misfortune have sold the right to receive
these payments for years. The industry that grew up around this
consumer need operated without regulation until January 2002
when the U.S. Congress stepped in and legitimized the process,
demanding that the practice be approved by a judge following
scrutiny of the transaction.
You
can cash in your structured settlement payments.
Back To Top
Our Mission
Prosperity Partners, Inc. specializes in refinancing deferred
payment obligations. We make tomorrow's dreams happen today
by providing financial alternatives to lottery winners and
recipients of Structured Settlement awards.
What is a Structured Settlement?
A Structured Settlement is a term that generally refers to
a deferred payment obligation resulting from the settlement
of a personal injury lawsuit. Typically these payments are
paid over several years or even decades.
Services We Provide
Prosperity Partners, Inc. Is a niche finance company committed
to providing liquidity to individuals holding illiquid assets.
Many individuals holding certain types of assets such as Lottery
Winnings and Structured Settlements have a strong liquidity
preference and cannot be serviced by traditional financial
services firms such as banks and finance companies. We have
established a distinguished record of performance in the alternative
cash flow industry. Our innovative techniques and guidelines
allow us to successfully turn alternative cash flow instruments
into a lump-sum payment at no risk to our clients.
Every day, thousands of people receive insurance settlements
and lottery prizes that are paid over time. Prosperity Partners,
Inc. has forged a leadership role in helping these cash flow
recipients increase the value of their payments, improve their
quality of life and create wealth by turning payments over
time into a lump-sum payout today.
Prosperity Partners, Inc. offers flexible and individually
tailored plans to meet our client’s specific financial
goals. Our focus on outstanding customer service has made us
a leader in the Structured Settlement and Lottery Award refinance
industry. Current low interest rate environment enables us
to offer better rates to our clients than ever before.
http://www.prosperitypartners.com
Back To Top
TO COMPLETE THE PROCESS OF YOUR STRUCTURED
SETTLEMENT YOU WILL NEED THE FOLLOWING:
**AUTHORIZATION Signed, Dated, and notarized.
SETTLEMENT AGREEMENT and RELEASE documents from your settled case releasing
the defendants and everyone involved also stating what was agreed upon. Please
make sure you have signed copies. If you do not have this you may call your
attorney who handled your case, or the courthouse where you settled the case.
ORDER APPROVING MINORS CLAIM and DISMISSAL TO THE ORDER
OF MINORS CLAIM. (if applicable) These are documents that gave
court approval for you to enter into a Settlement. If you do
not have this you may call your attorney who handled your case,
or the courthouse where you settled the case. (these documents
are only applicable if your case settled when you were a minor).
**ANNUITY CONTRACT AND BENEFITS LETTER/Policy or Contract
Number Annuity contract is the policy that your Insurance Company
issued to you when you settled your case. Benefits letter is
a typed letter on your Insurance Company’s letterhead
listing the scheduled payments. If you do not have this you
may contact the Insurance Company making payments to you, and
ask for copies to be sent to you. In most cases you will have
to write a letter requesting the paperwork.
QUALIFIED ASSIGNMENT (if applicable) a qualified assignment
occurs when the defendant’s insurance company assigns
all of their liabilities and obligations to make the Periodic
Payments to another insurance company.
** APPLICATION To be completed in detail and signed.
RECENT CHECK STUB OR RECENT BANK STATEMENT only needed
if you are receiving monthly payments. If you have the payments
wired into your bank account, please send your most recent
bank statement indicating the wired funds.
**CLEAR PHOTO ID please make sure the photo is clear.
Sometimes it is difficult to copy a picture clearly. If this
is a problem you may send us an old picture along with your
copied ID.
SECOND ID this may be a copy of your social security
card, birth certificate, marriage license, passport or all
of the above mentioned.
INCOME TAX RETURN WE ONLY NEED THE FIRST PAGE.
DIVORCE DECREE OR SEPARATION PAPERS & Property disbursement
schedule (if applicable)
BANKRUPTCY DOCUMENTS AND DISCHARGE (if applicable)
Back To Top
Structured Settlement Processing
This information is for you to use as a reference so that
you have a step-by-step outline explaining to you how your
transaction will occur. Your cooperation in all steps will
insure that your transaction is completed in a timely manner
so that you can receive your money as quickly as possible.
The first step is to return your application completed, include
a clear copy of your photo ID, your most recent annuity check
stub (if applicable), a copy of your Annuity Contract, signed
copy of your Settlement Agreement, Qualified Assignment, (if
applicable) and if you were a minor when your Settlement occurs,
a copy of the Order for the Minors Claim, (if applicable).
If you are missing any of the documentation, send us everything
you have and we will help you to obtain the missing documentation.
After we have received and reviewed your documentation, we
begin our internal process. The amount of information you have
provided to us will determine how long you can anticipate receiving
closing documents. Normally it will be within 2 to 5 business
days after we receive the initial documentation back from you.
Once the file review has been completed, we will create and
issue to you the closing documents. The closing documents consist
of a Disclosure Statement, which outlines the financial terms
of the transaction and the Transfer Agreement, which outlines
the legal terms of the transaction. Based on the State statue
where we will be petitioning for the Court’s Approval,
the Disclosure Statement and Transfer Agreement may be sent
together or separate. If the Disclosure Statement is sent separate,
the Transfer Agreement will be sent to you upon our receipt
of the signed Disclosure Statement, but no sooner than ten
(10) days after the Disclosure Statement was initially sent
to you.
Once you receive the closing documents, review them completely.
If you have any questions, give me a call and I will be glad
to review those items on which you have questions. After this
review, you will need to take the contract to a notary and
sign the contract in front of the notary. The notary will need
to notarize each of your signatures, where noted. Once completed,
you will need to send the closing documents back to us.
After we receive the closing documents, we will review them. We then continue
with our internal process. At which point, we will pull your credit and
search records for UCC filings, judgments, liens and child support obligations
against you. We may either pay or escrow funds to satisfy any lien filed
against you or the periodic payment if necessary, and deduct the amount
from the purchase price. If we are not satisfied with the results of our
investigation, in our Sole and Absolute discretion we shall have the right
to cancel your request.
To continue the sale process we will copy the closing documents
to the attorney representing the Transfer, with information
on proceeding with the Court Order. Once the transfer has been
approved and Ordered by the Court, an acknowledgement letter
is sent to the insurance company. Upon our receipt of the acknowledgement
letter, our final funding review is started. Provided that
everything is complete, funding is set up and will take place
within ten (10) business days after final approval has been
received.
You
can cash in your structured settlement payments.
Back To Top
State Timetables
Products
Structured Settlement - This product is insurance annuity based
A structured settlement is an arraignment to satisfy a legal liability. It
provides periodic payments to a person holding a legal liability against
another over a negotiated period of time (e.g. as an injured claimant would
against the person at fault for the injury). Settlements are used increasingly
in the settlement of personal injury, wrongful death and product liability
claims, instead of lump sum settlements. As an alternative to the continuing
receive these long term payments, some of these individuals (referred to
as claimants) assign or transfer part or all of their of their settlement
payments to a structured settlement purchasing company for a discounted lump
sum payment.
The seller/customer was the plaintiff (claimant) who settled a claim either
in court or out of court with the defendant and their insurer. In most cases,
in order avoid protracted litigation and for consideration of releasing the
defendant and their insurer from future litigation, the parties involved
enter into a Release and Settlement Agreement, where the defendants insurer
agrees to provide future payment(s) to the claimant. To ensure the future
payment(s) is/are made, the defendants insurer through qualified assignment
(an amendment to the IRC §130(b)(1) and §104(a)(2), where the defendants
insurer is released from further obligation by providing a lump sum payment
to a third party insurer and transferring their obligation to that insurer.
Through qualified assignment the deferred payment stream to be provided to
the claimant is tax exempt.) is released from their obligation and a third
party insurer (obligor) assumes the obligation. The obligor purchases an
annuity contract from an insurance company to provide and guarantee the payment
to the claimant.
The guarantee of this product is through first, the life insurance company
issuing the payments, second the obligor, the insurance company obligated
to ensure the claimant receives their settlement payments and last the states
guarantee fund.
Assignment of Structured
Settlement payment rights (Non Assignable Redirection)
The claimant and funding company enter into a sale and assignment agreement
and other related documents, where in consideration for a lump sum payment,
the claimant agrees to assignment their rights to receive payment under
the release and settlement agreement and the annuity contract to the funding
company. The funding company secures their assignment of payment rights
by filing UCC1 under article 9 of the Uniform Commercial Code. The funding
company also has the claimant redirect annuity payment to an address or
bank account controlled by the funding company.
You
can cash in your structured settlement payments.
Back To Top
Court Ordered Structured Settlement payment right
transfers
The claimant and funding company enter into a transfer agreement and other
related documents. Where in consideration for a lump sum payment, the claimant
agrees to assign their payment rights under the release and settlement
agreement and annuity contract to the funding company. In order to comply
with certain state statutes, a courts approval is required to effectuate
the transfer agreement. All interested parties are put on notice and are
given the chance to oppose the transfer. An Order is entered and a notice
of transfer is sent to both the insurer and the obligor. The transfer of
payment rights is secured by an Order of the court and by the filing of
UCC1 under article 9 of the Uniform Commercial Code.
Non-Court Order Structured Settlement Payment Right
Transfers
The claimant and funding company enter into a transfer agreement and other
related documents. Where in consideration for a lump sum payment, the claimant
agrees to assign their payment rights under the release and settlement
agreement and annuity contract to the funding company. By complying with
certain state statutes the insurance issuer and obligor agree to assign/transfer
payment rights to the funding company. The transferred payments are secured
by the insurers acknowledgement of the assignment/transfer and by the filing
of UCC1 under article 9 of the Uniform Commercial Code.
Catastrophe Fund Settlements
The seller/customer was the plaintiff (claimant) who settled a claim in
court with the state and their insurer. For consideration of releasing
the state and their insurer from future litigation, the parties involved
enter into a Release and Settlement Agreement, where the state’s
insurer agrees to provide a future payment to the claimant. The payment
is from an insurance company to provide and guarantee the payment to
the claimant.
The guarantee of this product is through first the life insurance
company issuing the payments, second the obligor, the insurance
company obligated to ensure the claimant receives their settlement
payments and last the states guarantee fund.
You
can cash in your structured settlement payments.
Back To Top
1015 10th St | Lake Park | FL | 33403
