S2P2J Release 58

With projected 2015 annuity premium expected to fall substantially short of the historic 12 month industry high ($6.2 billion in 2008), the National Structured Settlement Trade Association (NSSTA) has organized a primary market "Growth Initiative" - as described by NSSTA President Michael Goodman during NSSTA's 2015 Fall Educational Conference and as part of a pre-conference S2KM interview - as its number one priority.

Although many structured settlement growth opportunities exist, NSSTA has selected and approved the following three preliminary initiatives:

• Rejuvenate defense programs
• Amend the Federal Employee Compensation Act (FECA)
• Develop convertible deferred lump sums

Consistent with NSSTA's growth initiative, recent updates of "Structured Settlements and Periodic Payment Judgments" (S2P2J), including Release 58, highlight multiple opportunities to expand the structured settlement market in addition to describing related industry developments and issues.

Publisher Law Journal Press distributed hard copy supplements for S2P2J Release 58 prior to calendar year end 2015 with online S2P2J subscribers receiving their update automatically and simultaneously. Online S2P2J includes a search feature and download capability as well as link features to access individual book sections, appendices, footnotes, cases and statutes.

First published in 1986 and updated semi-annually, S2P2J is co-authored by Daniel W. Hindert, Joseph J. Dehner and Patrick J. Hindert (S2KM's Managing Director). Both NSSTA and the Society of Settlement Planners (SSP) have utilized S2P2J as an educational resource for their certification programs.

Non-qualified Assignments

Among other topics, S2P2J Release 58 features an expanded analysis of "Non-qualified Assignments", a strategic structured settlement market segment which many industry experts view as historically under-developed and which S2P2J co-author Joseph Dehner also addressed in a featured presentation during the SSP 2015 Annual Conference:

Non-qualified assignments represent transfers of periodic payment obligations that do not meet the requirements of IRC section 130. They are generally used to defer taxable damage awards such as punitive damages as well as contingent attorney fees. Because they do not benefit from the favorable tax treatment of IRC 130, most non-qualified assignees are "off-shore" companies located in jurisdictions which do not tax the funds received by the assignee as income.

Two NSSTA-member annuity providers (Liberty Life and American General) currently offer and separately report non-qualified sales. Reported nine month 2015 non-qualified structured settlement sales by Liberty and Amgen totaled $159.0 million compared with $113.2 million in 2014 - a substantial increase which does not include non-qualified sales by a growing number of non-NSSTA member companies.

S2P2J Release 58 provides a comprehensive analysis of the following non-qualified assignment issues:

• Definitions, rationale, and historical development.
• Tax and security issues raised by off-shore assignment companies.
• Current market participants - expanding market of non-NSSTA members.
• IRS private tax rulings and federal appellate court decisions.

Other key topics featured in Release 58 include:

• New rulings about what recoveries qualify for tax-free treatment.
• Final outcome of the Executive Life of New York proceedings.
• Risks to the defense of overpaying amounts promised.
• Federal cases applying state periodic payment of judgment principles as substantive law.
• Exemption of workers compensation payment from bankruptcy.
• Templates for approval of Medicare Set-Aside Arrangements and for disclosure of structured settlement consultants’ roles and compensation.
• Loss of government benefits when settlements are not correctly documented.

In addition to non-qualified assignments, recent S2P2J releases have highlighted and addressed the following structured settlement developments and growth opportunities:

• Expanded coverage of Workers Compensation MSAs.
• Summary and discussion of recent PLR for indexed annuities and commutation riders.
• Summarized results of CLM Advisors surveys commissioned by NSSTA to determine the value claims executives, claims professionals and plaintiff attorneys place on structured settlements and structured settlement consultants.
• Introduction to ABLE Accounts.
• A new section to introduce and explain new federal and international regulatory developments and entities resulting from the 2008 global financial crisis.
• Updated analysis of the changing role of and standards for plaintiff attorneys engaged in personal injury settlement planning and when negotiating structured settlements.
• Summary and analysis of recent U.S. Treasury Regulations for IRC 104(a)(2).
• Practice tips for minimizing the risk of an IRS settlement challenge.
• Updated summary of lessons learned from the Executive Life Insurance of New York (ELNY) insolvency.
• Periodic payment reinsurance as an alternative means of funding structured settlements.

For summaries of all recent S2P2J updates, see the structured settlement wiki.