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Frequently Asked Questions

Question:
The claimant’s attorney is in possession of the funds on behalf of the claimant who is a minor. They are aware that a regular annuity cannot be purchased due to constructive receipt, so we are thinking of purchasing an taxable annuity type product.  Is that the type of case that could be accepted as a Single Premium Immediate Annuity case?

Answer:
Because the plaintiff attorney has received the funds and he is an agent of the Plaintiff, the funds are now subject to U.S tax rules and can no longer be structured.  Once constructive receipt has occurred in the U.S, a settlement cannot be structured regardless of the type of claim.

 



Question:
Would child support and division of assets qualify under the Non qualified assignment program?

Answer:
If there is a settlement agreement in place that creates the future periodic payment obligation, that obligation could be assigned to Barco.  Liberty Life would issue payments without 1099 reporting since child support is not included in the recipient’s taxable income.

 



Question: 
Can an insurer assign lump sum obligations under the program?

Answer:
Single or multiple lump sum payments are acceptable in the structured settlements program.  Lump sum payments are different from ‘cash’ settlements where there are no future payments.

 



Question:
Can the standard NQAR be rewritten so that the ownership of the annuity would revert to the Claimant in the event that the settlement is terminated by the court?

Answer:
The BARCO NQAR states that in the event that the settlement agreement is declared terminated by a court of law the NQAR shall terminate, and BARCO, as Assignee will then assign ownership of the annuity contract to the Assignor.

BARCO will not accept an assignment which is altered so that the annuity would revert to the Claimant in the circumstances queried since the claimant would suffer a significant tax liability, possibly exposing other parties of structured settlement arrangement to the attendant risk.

 



Question:
Can any insurance broker use the Barco product, or is it only for the structured settlement consultants.

Answer:
Because BARCO funds its obligations solely through the purchase of an annuity from Liberty life, the broker must be one who is properly licensed and appointed with Liberty Life in the structured settlement channel since it is the broker who facilitates BARCO’s purchase of the annuity.

 



Question:
Can Barco structure a settlement for a claimant who has inherited a sum of money?

Answer:
The assignment program cannot support estate distributions because they are not settlements of disputes.  Without the constraints of a settlement, there may be risk of constructive receipt.

 



Question:
Can Barco structure a lost wage component of an employment settlement?

Answer:
Most employment settlements involve a component of past or future wage replacement. The IRS views that money as being subject to employment tax. Therefore, Barco cannot structure that component of the settlement. Any money related to the lost wages should be paid out in upfront cash at time of settlement and the former employer should be responsible for employment taxes.

Any other damages such as civil rights breach, emotional, reputational, etc. can be structured.

 



Question:
An Attorney is interested in placing his attorney fees into a non-qualified/BARCO annuity.  Please advise if this type of case meets with the Barco program to write the non-qualified stand-alone attorney fee annuity.

Answer:
Since there is no periodic payment obligation owed to the attorney, assignment to Barco would not arise. In order to qualify under the program, the periodic payment obligation first needs to be established before it can be assigned.

 



Question:
How long will it take a premium sent by cheque to clear?

Answer:
The clearance procedure for all cheques drawn on US banks, usually takes approximately 15 working days.