Proceed carefully with structured settlements.

When a settlement can be effected in a personal injury case, you must help the client decide whether to receive a lump sum or a structured payout. The decision must be based on informed consideration of his or her case and a thorough understanding of the structured settlement alternative. If structuring seems the best route, remember to take these 12 steps:

1. Always obtain the free services of a structured settlement specialist.

2. Always fully document every demand, offer, refusal, and counteroffer, as well as the explanation to the client of the cash or structural alternatives of the proposal.

3. Always negotiate a guaranteed minimum return (GMR) for the client through a term-certain annuity.

4. Determine the client's total indebtedness and his or her present and future needs, with the help of an experienced life care planner.

5. Enlisting a qualified economist, determine the exact projected cost of each need.

6. Choose the appropriate funding mechanism to meet the client's present and future needs.

7. Protect the record from constructive receipt. (The Internal Revenue Service uses the best evidence rule--that is, the papers and record.)

8. Place the structure with a secure annuity company.

9. Calculate attorney fees based on the total cost of the settlement package to the defendant.

10. Always include the possibility of a structured settlement in the employment contract.

11. For a catastrophically injured annuitant, substantially increase the value of the annuity by having the annuity specialist shop the rated age of the annuitant.

12. Carefully document the client's understanding of the settlement's terms and risks. This is best accomplished by videotaping the session in which you explain all the nuances of the structured settlement to the client.

Howard L. Nations
Houston, Texas