Structured Settlement FAQ – John Darer CLU ChFC MSSC

Question 1

What is a structured settlement?

Accepted Answer

A structured settlement is a negotiated financial or insurance arrangement whereby a claimant agrees to resolve a personal injury tort claim by receiving part or all of a settlement in the form of periodic payments on an agreed schedule rather than as a lump sum. The periodic payments are funded by an annuity purchased from a life insurance company.

Question 2

Are structured settlement payments tax-free?

Accepted Answer

Periodic payments received under a structured settlement for personal physical injury, physical sickness, workers' compensation, or wrongful death are generally excludable from gross income under IRC §104(a)(1) or §104(a)(2). Structured attorney fees, employment settlements, and other taxable damages are tax-deferred, not tax-free.

Question 3

What is a structured attorney fee?

Accepted Answer

A structured attorney fee is an arrangement whereby a plaintiff attorney defers receipt of a contingency fee by directing the defendant or its insurer to fund a structured settlement annuity for the attorney's benefit. The attorney pays no income tax on the fee until payments are actually received, allowing for potential tax deferral and investment growth.

Question 4

What is a Medicare Set-Aside (MSA)?

Accepted Answer

A Medicare Set-Aside (MSA) is a financial agreement that allocates a portion of a workers' compensation or liability settlement to pay for future medical services related to the injury, illness, or disease that would otherwise be covered by Medicare. Structuring the MSA can save 20–30% compared to funding it with a lump sum of cash.

Question 5

How does a structured settlement benefit the claimant?

Accepted Answer

Structured settlements provide claimants with a reliable, guaranteed income stream that cannot be outlived (with a life-contingent annuity), protection from impulsive spending, potential tax advantages, no ongoing investment management fees, and the ability to customize payment schedules to meet anticipated future needs.

Question 6

Can structured settlement payments be changed after they are set up?

Accepted Answer

Once a structured settlement annuity is purchased and the settlement is finalized, the payment schedule generally cannot be changed. However, structured settlement payment rights can sometimes be sold to a factoring company through a court-approved transfer, though this is generally not advisable as it typically results in a significant discount.

Question 7

What is the role of a structured settlement broker?

Accepted Answer

A structured settlement broker works on behalf of the claimant (or plaintiff attorney) to design a structured settlement plan that meets the claimant's needs, obtain competitive annuity quotes from multiple life insurance companies, and assist in the documentation and implementation of the structured settlement.

Question 8

What states is John Darer licensed in?

Accepted Answer

John Darer holds insurance licenses in NY, CT, NJ, PA, AK, AL, AZ, CA, CO, DE, FL, GA, HI, IN, IL, KY, LA, MA, MD, ME, MI, MN, MO, MS, MT, NC, NE, NH, NM, NV, OH, OR, RI, SC, SD, TN, TX, UT, VA, VT, WI, WV and Washington DC. Questions are welcomed from anywhere.

Question 9

What credentials does John Darer hold?

Accepted Answer

John Darer holds the following credentials: Master Structured Settlement Consultant (MSSC), Certified Structured Settlement Consultant (CSSC), Registered Settlement Planner (RSP), Chartered Financial Consultant (ChFC), Certified Financial Transitionist (CeFT®), Chartered Life Underwriter (CLU), and Certified in Long Term Care (CLTC).

Question 10

How do I get started?

Accepted Answer

Contact John Darer directly by phone at 888-325-8640 or 646-849-1588, or use the contact form on this website. John is happy to answer questions and discuss how a structured settlement might work in your specific situation.

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