settlement trusts by christi fried continental trust srvcs llc

2010 Settlement Professionals Inc.

01/25/2010

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Continental Trust Services, LLC

Settlement Trusts are an excellent option used in conjunction with a structured settlement annuity to provide access to funds for unexpected changes in the future

The structured settlement annuity provides the advantages of rated ages and longevity for the life of the plaintiff

Many vendors offer Settlement Trusts with options to create a unique settlement for the needs of each individual family

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Professional Trustee Accounting and preparation of income tax

returns Fiduciary responsibilities Spendthrift protection

Disbursements Replicate period certain and lump sum payments Discretionary access to funds Assets held in separate accounts

Define Investment Instructions

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Duty to administer Trust by its terms Duty to account and furnish information Duty of confidentiality Duty of loyalty Duty of impartiality Duty to avoid conflicts of interest Duty to protect against adverse trust appointments Duty to control and preserve trust property Duty to make property productive Duty to keep trust property separate Duty of delegation Duty of Trustee’s special skills


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Good communication, accounting, organization and detective skills

Attention to detail Understanding of legal, tax, insurance

and investment issues Good health administration Effective coordination


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Define Trust Property Investment Instructions

Assets are held by a Custodian (bank or other entity chartered to accept deposits)

Investment advisors are licensed to trade bonds

Treasury bonds are backed by the full faith and credit of the United States government

Municipal bonds chosen are investment grade, non-callable and insured by a monoline insurer

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Guarantees the payment of principal and interest on a bond if the issuer defaults

Purchased through a onetime payment of a premium at the time of the bond closing

The process begins with the issuer submitting documentation for review Official statement Financial statement Bond documents

If the issue qualifies then, the policy may be purchased by direct purchase or elective bidding

Direct purchase – issuer purchases the insurance policy directly from an insurer Elective bidding – each bond dealer assesses whether insurance will enhance the bond

then, the bond dealer pays for the insurance policy


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MONOLINE INSURANCE COMPANIES

AMBAC Assurance Corporation Financial Guaranty Insurance Company (FGIC)

Assured Guaranty Corp. (AGC) National Public Finance Guaranty Corp. (MBIA)

Assured Guaranty Municipal Corp. (FSA) Syncora Guarantee

CIFG Assurance North America, Inc. Berkshire Hathaway Insurance


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Assets are kept separate and are uniquely identified by individual tax identification numbers

Executed trust document is required Investment profile defines that

investments are limited as defined in the trust document

Review of each distribution request prior to releasing funds


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Member of Securities Investor Protection Corporation (SIPC) Replacement of missing securities and

cash up to $500,000 Limit of $100,000 for cash

Account protection in excess of SIPC limits from Lloyd’s of London


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Is the payment listed on the distribution schedule pre-tax?

What accommodations can be made via language in the trust to plan for college or if the child does not go?

Will the payment listed in the quote be the payment mailed to the beneficiary if no other changes are made during the life of the trust?


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Discretionary If the Beneficiary requires funds early is

this possible? How will that change the distribution

payment? Disbursements are made directly to the

Beneficiary from the Custodian Will Continental Trust do a conference

call with the family to help plan the flexibility of the trust?


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Trustee fees Settlement consultant referral fee Other (accountant, attorney, investment

advisor, fidelity bond, etc.) Is the quote net fees? What are the fees? Can the fees be disclosed to the court? How does the obtaining of the bond work

if the court requires a bond?


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Grantor Plaintiff Defendant Court

Trustee Invest assets within the investment instructions Perform administrative services Compensate others such as; attorneys, investment advisors,

brokers Pay taxes and provide loans to the beneficiary

Are the taxes and tax filing fees paid from the trust? When are the taxes due on the trust? Can you provide a letter estimating taxes?

Select Custodian of the assets


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Beneficiary Plaintiff Family Members


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Intentionally Defective Grantor Trust provides that the income of the Trust is taxed to the Grantor and the assets of the Trust are distributed to the Beneficiary

A contractual arrangement whereby property is transferred from the Grantor to the Trustee to hold the property for the benefit of the Beneficiary

Type of Trust that cannot be annulled, changed, or terminated by the Grantor

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111 Beach Street, Suite 3DBoston, MA 02111www.continental-trust.com