John & Jane Doe SETTLEMENT PLAN

Transcription

1 John & Jane Doe SETTLEMENT PLAN Prepared by: Settlement Professionals, Inc. PO Box 129 West Linn, OR Phone: (503) Toll Free: (800) Fax: (503) Website:

2 Monday, Registered Settlement Planner Board Certified Forensic Examiner - Annuities John & Jane Pain Pump Claimants 1234 Doe Street Tigard, OR RE: Settlement Plan; John & Jane Pain Pump Claimants /Pain Pump Qualified Settlement Fund Dear John and Jane: It has been my pleasure meeting and working with you both at your attorney s offices on March 11, 2009, and during numerous phone calls in the interim. Per our in-depth discussions regarding your current and future financial picture, as well as the pending settlement with the Pain Pump Qualified Settlement Fund (QSF), it is my understanding that your most important considerations are the following: The medical - potential future surgeries. John Never going back to work again, so income is paramount. Needs $6,000, monthly. You would also like to retire Jane from working. You would like college funds for your two children, Jeff and Sue. You do not have wills. You do not have excess personal liability (umbrella) coverage. You would like to pay off your home mortgage ($201,000). You would like to pay off all other debts ($60,000). You are thinking of a second, bigger home -possibly on the Oregon coast. With the above important considerations in mind, and based on our discussions and your current and future financial picture, my settlement plan recommendations are as follows: Settlement Professionals Incorporated Regular Mail: Post Office Box 129 West Linn, Oregon Physical Address: Old River Landing Lake Oswego, Oregon Telephone: Toll Free Local Fax: Meligan@SettlePro.com Website:

3 John & Jane Pain Pump Claimants Page You are electing to take approximately $1,270,434 of your net settlement in cash. After paying off your home mortgage ($201,000) and other debt ($60,000), you should be left with approximately $1,009, In order to meet your desire for a safe, secure, and liquid parking place for funds that could be needed at a moment s notice for your medical or other needs, consider placing your entire net settlement into a Treasury Bill Money Market Account (MMA) with free check writing. This should provide you with a degree of safety, security, privacy, liquidity, and a moderate return exempt from state income tax. I recommend American Century s Capital Preservation Fund. In the alternative, you can use a national bank-sponsored MMA, if your balance is expected to be less than $250,000, the current FDIC insurance limit. Enclosed is an account application and a brochure/prospectus for your review. Use the account as your long-term savings account for potential major, contingent needs. If after 3-6 years this account has not been tapped, consider at that time repositioning some or all into some type of retirement annuity account. Call my office at that time for a market survey and recommendations. Our reliable contact at American Century is Tatum Schuler, and you can contact him toll free at (888) , extension He can assist you with any questions, and easily help you establish your account online or over the phone. 3. To meet your need for income replacement and your income goal, you have elected to structure your settlement to provide future periodic annuity payments of $6,000 of income per month, for life, payable jointly, with 100% survivorship, and for 30 years, guaranteed. In the event that you divorce, a court will probably split the above payments equally between the two of you. While this is acceptable to you at this time, you may feel differently in the future. You have elected for a joint annuity payment in spite of this warning. Your joint expected payout from your structured annuities is $3,294,000 over the next 48 years. However, these annuities will pay at this level for as long as either of you are alive and drawing breath, no matter how long or how old. Should you both pass away within the first 30 years of these payments, the remainder of the 30 year guarantee will be paid to your estate or named beneficiary. To meet your goal for guaranteed education funds for your two children, you have designated $100,000 of your settlement to be structured to provide 4 annual payments of $23,000 for Jeff, and 4 annual payments of $25,000 for Sue, timed to arrive at the beginning of each of their projected years in college. These payments will be payable to you so that if your children receive scholarships, or otherwise have a change of plans, you can redirect these funds elsewhere. For diversification, you have selected more than one company to be the guarantors of your payments. See the attached Proposal A printout for details. With no mortgage payments and no debts, you may be able to retire Jane and live on the $6,000 of tax-exempt monthly annuity payments. To generate more income from your funds in the Treasury Bill Money Market account, consider asking your banker about laddering Certificates of Deposit (CDs) through the CDARS program. (Please see the attached CDARS article). For additional diversification, you may want to consider a portfolio of AAA Oregon Tax Exempt Municipal Bonds. I recommend John Woolway, CFA, of Vantage Investment Advisors, LLC

4 John & Jane Pain Pump Claimants Page - 3 (phone ). Have John explain his methodology for protecting clients in their bond portfolios. 4. I recommend that you call the Money, Meaning & Choices Institute in Kentfield, California and schedule a counseling session to help you deal with Sudden Wealth Syndrome. Their number is Ask for Joan DiFuria, MFCC, or Stephen Goldbart, Ph.D. Either will be happy to counsel you regarding this dramatic change in your financial circumstances and how to deal with the inevitable requests for loans or gifts from friends, family and even strangers. 5. Ask your personal lines insurance agent for quotes on an excess personal liability insurance policy or umbrella policy. Most companies provide umbrella policy quotes in $1,000, increments. Purchase as much as you can reasonably afford, but at least $3,000, This should provide you with additional liability protection over and above all your other insurance polices, such as your vehicle and property insurance policies. Your personal lines agent will help you coordinate and adjust the policy limits of your other insurance policies with your umbrella policy. Make sure that your uninsured motorist and underinsured motorist coverages are also increased and included in the umbrella policy limits, if possible (this may be only available through State Farm). I personally carry $3,000, in umbrella coverage and my annual premium is less than $1, I recommend that you meet with your personal lines insurance agent or financial advisor to help you determine if you have an adequate amount of life insurance. The amount of life insurance you buy should depend on the standard of living you wish to pass on to your dependents. You should consider the amount of assets and sources of income available to your dependents when you pass away. Social security benefits, available cash and other sources of income and investments may not provide the standard of living you would like for your dependents. Life insurance helps bridge the gap between the financial needs of your dependents and the amount available from other sources. Your agent or other financial advisor can help you with these calculations. I recommend 20 or 30 year Renewable & Convertible Term Insurance, only. We have obtained 20-year Renewable and Convertible Term Insurance quotes for you from National Insurance brokers Lenz Financial Group. At the time of our meeting in September, it was your desire to apply for this insurance policy in early 2009, after getting in better physical condition so you might qualify for preferred rates. (Please see the attached spreadsheet of life insurance companies and costs). 7. I recommend you investigate the need for long-term care insurance. Long-term care is something you may need if you can no longer perform the usual activities of daily living, such as getting dressed, eating, or bathing. Statistics show that more than 40% of all people over the age of 65 will enter a nursing home during their lifetime, with care costs as much as $55, per year. While this type of care is most often administered in a nursing home setting, it can be provided in a variety of settings, including in your home, at an assisted living facility, or a nursing home. Long-term care insurance helps offset the cost to provide for your future care, if it becomes necessary. I recommend you talk with local expert Drew Anderson at (503) about this coverage. (The sooner you start on this one, the less it will cost you.) 8. You need to have a simple estate plan created as soon as possible. First, you need to have your wills drafted. In addition to wills, your estate plan should include healthcare directives, living wills, or durable power of attorney for healthcare. These documents will outline the specific types of medical treatments you do, and do not, wish to receive, and provide general guidelines regarding your wishes concerning any

5 John & Jane Pain Pump Claimants Page - 4 life-prolonging treatments in the event you become terminally ill or incapacitated. You may also want to create a durable power of attorney for your finances, to ensure that your financial plans are executed in the event you become incapacitated. I recommend you call attorney John Wynn at (503) Mr. Wynn will schedule a meeting with you the next time you are available to spend an hour or so lining this out. 9. With the finalization of your settlement, and implementation of this plan, you probably will create an instant estate tax problem for your heirs and beneficiaries. Your current assets and the MMA, plus the remaining value of the guaranteed payments in your structured settlement, could presently kick your estate into tax territory. Ask Mr. Wynn to calculate the tax liability to your estate if you died today. You may want to consider buying term life insurance from your agent, or shopping for it over the Internet, to fund this potential liability. 10. As a final matter, if you have any outstanding obligations, such as back child support, back taxes or outstanding judgments against you, use the period just after settlement of your case (or judgment rendered), but before money is actually received, to reach a compromise agreement for said obligations. These are items that should probably get paid directly from your attorney s trust account, leaving you with net settlement dollars when all is said and done. At this time, and with this plan, all of your financial goals and needs should be met. Therefore, it is not necessary for you to take any risk with your remaining money or assets. As risk causes stress, and stress is something we are all trying to avoid, having funds in a position where it is possible to lose money is something you may want to avoid while you are busy pursuing your other life goals. If and when you do invest, minimize your exposure to the stock markets, keeping your funds safe and guaranteed for your future needs. You should never take any risk more than necessary to achieve your goals. That is all for now. If I have missed anything or there is anything else you wish to discuss, please contact my office at your earliest convenience. Yours very truly, SETTLEMENT PROFESSIONALS, INC. j President JLM/tan enclosures: Proposal A Annuity Payment Details Risk Pyramid MetLife, Pacific Life and Symetra Life Corporate Brochures American Century Capital Preservation Account Application/Kit and Prospectus CDARS article Spreadsheet of Term Life Insurance Companies cc w/encls: (Claimant s Attorney), Esq.

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7 JOHN DOE PAIN PUMP CLAIMANT D.O.B.: 06/20/1968 (Age: 41.1) JANE DOE PAIN PUMP CLAIMANT D.O.B.: 10/31/1971 (Age: 37.7) Joint Life Expectancy is 46.0 Years STRUCTURED SETTLEMENT PROPOSAL "A" Payment Descriptions: TAX EXEMPT JOINT LIFETIME MONTHLY PAYMENTS: $3, payable monthly, beginning 06/01/2009 for 30 years certain and life, paid jointly or 100% to the survivor. Last guaranteed payment is due 05/01/2039. Annuity Carrier Costs Guaranteed Payout Expected Payout Symetra $629, $1,080, $1,653, TAX EXEMPT JOINT LIFETIME MONTHLY PAYMENTS: $3, payable monthly, beginning 06/01/2009 for 30 years certain and life, paid jointly or 100% to the survivor. Last guaranteed payment is due 05/01/2039 TAX EXEMPT ANNUAL PAYMENTS-4 YEARS ONLY- (COLLEGE FUNDS FOR DOE CHILD #1): $23, payable annually, beginning 08/01/2020 for 4 years certain only. Last guaranteed payment is due 08/01/2023. Pacific Life $666, $1,080, $1,653, MetLife $50, $92, $92, TAX EXEMPT ANNUAL PAYMENTS-4 YEARS ONLY- (COLLEGE FUNDS FOR DOE CHILD #2): $25, payable annually, beginning 08/01/2022 for 4 years certain only. Last guaranteed payment is due 08/01/2025. MetLife $50, $100, $100, TOTALS: $1,396, $2,352, $3,498, Benefits to be Rating A.M. Standard provided by: Agencies: Best & Poor's Fitch Moody's Weiss Symetra Life A A A+ A2 B Pacific Life A+ AA- AA- Aa3 A- Metropolitan Life A+ AA- AA- Aa2 B+ THIS SETTLEMENT PROPOSAL IS CONTINGENT UPON VERIFICATION OF DATE OF BIRTH --Quote Valid for 7 days from April 15, Proposal prepared by: Settlement Professionals, Inc Old River Landing Lake Oswego, OR Phone: Toll Free: meligan@settlepro.com Website: