Maybe you’ve heard the late night commercials: “If you’ve got a structured settlement, we’ve got cash!” Individuals who suffer severe personal injuries often settle their claims against the responsible party through “structured settlements,” which provide a guaranteed stream of income over long periods for the benefit of the injured party and his or her dependents.
Federal and state laws protect structured settlements by requiring that state courts approve any transfer of these guaranteed sources of income. Unfortunately, unrepresented persons often agree to – and courts sometimes approve – the sale of future guaranteed payments in return for an immediate lump sum amount that represent a tiny fraction of the true present value of the future payments.
In recent months, Legal Aid’s Consumer Law Unit has been representing clients in these structured settlement sales transactions. In one case, for instance, Thomas Papson—at the time a pro bono attorney with McKenna Long & Aldridge LLP and now a volunteer staff attorney with Legal Aid—assisted a woman permanently disabled in an automobile accident who had already sold the first 10 years of her future income stream. Her agreement to sell the next 10 years of payments on patently unreasonable terms was pending before the court in a petition prepared by the company seeking to purchase the rights to her stream of future income.
After confirming that the client needed cash for home improvements to accommodate her disability, Tom was able to negotiate a new deal with the purchaser that resulted in a lump sum payment more than double the amount in the original agreement. That amount was sufficient to enable the client to cancel the proposed transfer of yet another segment of her structured settlement payments.
After a hearing on the petition, the Superior Court judge was satisfied that the vastly better deal was in the client’s best interests and approved the petition. In an example of Legal Aid’s emphasis on multi-disciplinary client services, attorneys with the Public Benefits Law Unit are now exploring the possibility of obtaining additional medical equipment for the client through her Medicare benefits.