| Home | Search | News | Workers Comp | Malpractice | Personal Injury | Employment Litigation | Guardianships |
by Tom Williams - Recorder Business Writer
Nobody in their right mind wants to be disabled. Except for some genuine con artists,
people just don’t go looking for an accident so they can sue somebody and collect
some cash.
Disabled means you can’t do things you’ve always done. Disabled means you
can’t earn as much. Disabled means medical bills. Sometimes it means a shorter life.
So people don’t try to become disabled because they might get a cash settlement in
court comparable to winning the lottery.
But injuries do happen, people do become disabled, and sometimes it happens because of
negligence. When a permanently disabled person does receive a court settlement, that
person faces one more challenge: how to protect that money and make it provide a lifetime
income.
McNay Settlement Group's advisors specialize in making things financially more secure for people who have lost their earning
power.
Don McNay, an Edgewood native who established his business base in Lexington
15 years ago, specialize in helping disabled workers turn court settlements in lifetime
incomes. What’s more their clients receive regular “paychecks” without
paying income tax.
The income tax exclusion is the result of federal law that excludes certain forms of
payments received by people as a result of injury or disability.
“We work with attorneys representing people who have filed suit because of an injury
brought about by the defendant’s negligence, Robinson said. “When the other side
offers a settlement, our job is to bring their projections of future income and expenses
back to present values. The goal is to maximize future benefits for the injured
person.”
McNay’s job is to cut through the glitter. Inflation, taxes, and
medical bills will otherwise reduce the value of settlement offers in the long run. On the
other hand, investing the lump sum in an annuity that provides tax-free income can
increase the value of the offer.
“I’ve had clients who had a figure in mind. and they found that a lower amount
would provide what they wanted in the long run when you account for the impact of
taxes,” McNay said.
“Any income earned on investments from a settlement are taxable, unless you initiate
a qualified structured settlement at the outset,” McNay said.
Structured settlements are the core of what McNay and Robinson do. Essentially, a
structured settlement involves buying financial instruments that will provide steady
income. Cash from a court settlement can be put into annuities, investment instruments
offered by insurance companies.
“Compliance with the federal tax code for tax-free income can be provided by
insurance company annuities”, McNay said.
The crux, of course, is choosing an annuity that meets the injured person’s needs.
That’s not as simple as going to Kmart and picking a pop-up toaster.
Lawyers bring in financial consultants like McNay because what they do is a
professional specialty.
“I’m a lawyer, I know how to win cases and settlements, but I’m not a
financial expert,” said Andre Busald, a Florence attorney who has called in McNay
on several cases.
Busald, who has had several cases that resulted in large structured settlements, calls
them an excellent way to ensure future income for an injured person.
“They are especially valid in cases involving children and in cases involving people
who will require care and attention for the rest of their lives,” Busald said.
In addition to setting up a way to provide future income, structured settlements also make
certain that the money is there in the future to benefit the injured person.
Structured settlements are not brand-new, but the use of them is a phenomenon of the past
decade. Randy Dyer traces the start of structured settlements to 1983, leading to
accelerated growth in 1990s. Dyer is executive vice president of the National Structured
Settlement Trade Association in Washington, DC, an association that did not exist until
1986.
“The tax exclusion written into the 1983 federal tax code was the first recognition
of structured settlements and the use of them grew exponentially after that,” Dyer
said.
Structured settlements are involved in about $10.5 billion worth of court settlements each
year. About half that amount is paid to defendants in lump sums -- about $5.25 billion
that injured persons put into annuities. About average settlement is about $300,000, Dyer
said. Using those figures, the number of cases involving lump sums is about 17,500 a year.
The use of structured settlements has grown tremendously in the past ten years, but
it’s still a small part of the potential, McNay said.
Only 3 to 5 percent of settlements are going into structured settlements now. That means
that about 95 percent of the settlements remain as prospects,” McNay said.
McNay worked on his first structured settlement in 1984, shortly after he had started his
own insurance and financial planning business in Lexington. That case, won by Peter
Perlman, was the largest verdict ever awarded for a personal injury in Kentucky at that
time -- $2.8 million. The defendant settled while the case was in the appeal process.
The growth in the use of structured settlements since then and the potential for future
growth convinced McNay recently to devote his business solely to structured settlements
and to expand from his Lexington base.
“I actually looked at Nashville first,” he said. “Nashville is thriving and
I’m familiar with it because I went to Vanderbilt University there, but I also wanted
to look at Cincinnati and Northern Kentucky.”
McNay grew up in Northern Kentucky, graduated from Covington Catholic High School in 1977
and went off to Eastern Kentucky University in Richmond before going to Vanderbilt for a
master’s degree.
Besides his hometown ties, several factors induced him to focus even more on the
Cincinnati-Northern Kentucky area.
“Northern Kentucky is one of the fastest growing areas in the nation, so that was an
additional reason,” he said.
Also, several firms specializing in structured settlements have offices in Cincinnati, but
none have Northern Kentucky offices, he said.
All materials at
McNay.com are Copyright © 2002, McNay Settlement Group, Inc. All rights
reserved.
Registered ®
2002, " McNay
Settlement Group, Protecting Your Settlement Nest Egg.™ " and The Penguin Logo.
Please send any queries about this page to mcnay@mcnay.com