| Issue / Concern |
Structured Settlement |
Bank Trusts |
| What types of securities/insurance products support the payments? |
A fixed annuity contract issued by a life insurance company. |
For cases involving incompetent individuals, minors or serious injuries, investments may be restricted to federally insured products (i.e., Certificates of Deposit). For others, any investment may be used - fixed income, stocks, bonds, and mutual funds. These securities are NOT F.D.I.C.-insured. |
| Can this option provide a stable, lifetime income? |
Yes. Payments and distribution schedule are determined up front. Can provide a dependable, predictable income stream that you cannot outlive. |
Any income or return will depend on the type and performance of the underlying investments. |
| Is there a guarantee with this option? |
Yes. The annuity issuer guarantees payments, according to the terms of the structured settlement agreement. |
Federal Deposit Insurance Corporation (FDIC) insures up to $100,000 on Treasuries and C.D.'s. Any other investments are NOT guaranteed. |
| What are the costs and fees associated with this option? |
No additional cost to annuitant. |
Bank management fee of 1-1.25%of asset value per year, every year.Transaction processing costs for securities purchases. Management fees from the various securities in which the Trust invests (i.e. 12(b) 1 fees on mutual funds). |
| Will this option keep pace with inflation? |
A cost-of-living adjustment (COLA) feature is available that can help offset the effects of inflation. This option must be elected when the settlement is designed. |
It depends on the performance of the underlying securities. |
| What are the tax consequences? |
Income provided by a qualified structured settlement is TAX-FREE, provided the damages received as periodic income (other than punitive damages) are the result of personal physical injuries or physical illness. |
Generally, income generated is FULLY TAXABLE (except some income from tax-free Municipal Bonds). Capital gains taxes may apply when securities are sold. |
| Is this option affected by market fluctuations? |
No. Benefit payments are determined and fixed at the time the annuity contract is issued. |
Payment amounts are fixed, but how long they last may be affected by the performance of the underlying securities. |
| Can I make changes to this option after I select it? |
No. The payment amount and schedule are fixed and may not be changed or accelerated. |
It depends on the types of securities and the terms of the trust. Payments may be withheld at Trustee's discretion. |