What is Independent Professional Advice?

The purpose of  Independent Professional Advice IPA is to make sure that a structured settlement annuitant who seeks (or is induced) to sell (is a seller),

1. receives a fair market value from the factoring company (buyer);
2. has received more than a single quote from a single company

   2. has a clear understanding of the transaction and its ramifications; and

   3. that the structured settlement factoring transaction is in the best interest of the selling party and any applicable dependents.

Seeking and receiving Independent Professional Advice (IPA) is a mandatory requirement under the structured settlement protection acts of certain states before selling the rights to future structured settlement payments.

Receiving independent professional advice (IPA) is usually in the best interest of the seller and is recommended for ALL individuals selling any rights to their structured settlement payments, regardless of whether it is required under state law 

Making an irreversible decision to sell some or all of your structured settlement payment rights should be arrived at after a careful thought and examination. Acting without Independent Professional Advice may neither be in your best interest, nor your dependents, nor that of any potential buyer and could lead to your application not receiving the required judicial approval. Horror stories abound where annuitants have been taken advantage of by greedy cash now pushers.

Be cautious if a representative of any buyer of structured settlement payments suggests that you avoid an IPA "because it will cause a delay".

Independent professional advice can be provided by an attorney, accountant, financial planner or someone otherwise qualified to provide such advice.  Think about it.   

Be cautious if a representative of any buyer of structured settlement payment rights

1. Claims to be calling "from the Courts"
2. Claims to be calling "from the annuity company" with a form for you (or your 17 year old)  to fill out.
3. Meets you on Zoom or Teams and is wearing a logo short from a Life Insurance Company. We know the people that actually work at the annuity issuing life insurance companies and can verify if this is true.
4. Gives you a burner cell phone.

What States require Independent Professional Advice for Sales of Structured Settlement Payments?

• Alaska
• California ( see California Structured Settlement Protection Act, Cal. Ins. Code Sections 10134-10139.5).
  
• Delaware
  
• Louisiana
  
• Maine
  
• Maryland
  
• Minnesota
  
• Missouri
  
• North Carolina
• Ohio
  

Some settlement purchasers or factoring companies actually encourage structured settlement annuitants to seek independent professional advice even if not required by law, particularly in states like New York. From time to time we receive calls from new individuals who regretted having sold their structured settlement payment rights, or didn't shop around for the best deal when they did. The small cost of Independent Professional Advice (IPA) can provide additional piece of mind, confirm your understanding and help avoid rip offs.

Is a Structured Settlement IPA a Rubber Stamp?

No, and an IPA should not be a rubber stamp. Sometimes we get a call and the caller says "I just need you to sign this form".  That's not the way it works.  A now convicted and disbarred Maryland lawyer named Charles E. Smith, Jr. pretended to provide the required independent advice when in fact he was secretly receiving kickbacks through another now convicted lawyer Anuj Sud when Access Funding successfully obtained Smith’s clients’ payment rights.  Among the indiscretions of disbarred lawyer Charles E. Smith, Jr., .was to advise that 14 Allstate structured settlement annuitants proceed with structured settlement factoring transactions with discount rates from Access Funding that exceeded (in some cases far exceeded) the discount rates that the annuitants would have been charged had they utilized Allstate's then available Advanced Funding Exchange Notice or shopped for even lower rates. One of those was the late Freddie Gray.

What Does a Structured Settlement IPA Look Like?

Prepare to spend at least 30-45 minutes on a phone call, Zoom or Teams and to have a frank discussion about your financial situation to see if it selling makes sense*, including but not limited to the sources and uses of funds and your reasons for considering the sale of the structured settlement payments, explored negotiating with creditors**, how you were solicited and what steps you have taken to obtain more than one offer from unrelated settlement purchasers as well as assess whether you have a clear and informed understanding what you are doing. 

For example:

• How will selling a guaranteed lump sum payment at a discount impact financial aid? 
• Is the buyer trying to get you to commit fraud by getting you to say you live some where that you don't on a legal document submitted to the Court?
• Did you review the documents and sign each of the signatures?
• Is the buyer telling you that getting Independent Professional Advice will delay the transaction.  Not if the judge is doing their job.
  
• If the structured settlement annuity issued by  John Hancock Life or any of the Berkshire Hathaway companies, is the effective discount rate better than that offered to do a hardship exchange with the insurance carrier's program?
• The IPA should provide you with a written summary of your discussion. The independent professional doing the IPA must make an informed opinion that a seller understands what he or she is doing and has evaluated the consequences.
  

Think about it.  What's 30-45 minutes to safely test an idea?

Looking beyond first blush

*A seller came to us for an IPA with a proposed deal  to sell $122,358.60 for $8,000.00  Seems like a " hell no" at first blush doesn't it?  On review we learned that she was a some credits shy of earning her nursing degree.  She had no other resources. A key fact beyond first blush was that the structured structured settlement payments to be sold would not start for 22 years and and when they started the payments would be under $600 per month. Using data from ZipRecruiter, we researched, analyzed and compared what average cost of an RN salary in the Dallas-Fort Worth Metroplex for the duration of the gap between not selling and waiting for the payments and the time the payments to be sold were to begin and it was clear that selling did make sense in that situation because the seller would earn many times more than the payments she was giving up starting 22 years into the future if she stayed employed for that 22 years alone.

**A client came to us with the notion of selling part of a lump sum that was due to be paid in only 3 months to pay for a $2,000 bill from a funeral home. Our review showed that the legal fees alone for the transaction together with the factoring discount and profit spread were a multiple of that. The transaction clearly was not in the client’s best interest, but the grief process temporarily diluted the client’s thinking. We suggested working out an arrangement with the funeral home and offered to help make the call. Even if the funeral home were to charge a nominal amount of interest, the interest accumulated over 3 months would be less than “haircut” from the factoring company “barber”. The client would still receive the full amount of the lump sum due.

Independent Professional Advice to Structured Settlement Annuitants, Guardians Ad Litem and Judges

If you need independent professional advice concerning structured settlements please consider 4structures.com, LLC's John Darer . Note that service is only provided where Mr. Darer holds an active insurance license.  Mr. Darer will accept an IPA where a court appearance is required provided that it is held on Zoom or Microsoft Teams.

Mr. Darer is not a lawyer and does not provide legal advice.

Furthermore as a general rule, Mr. Darer does not accept any IPA engagements where the structured settlement has been in effect for less than 2 years.

Some websites, such as Structuredsettlement.co offer a structured settlement factoring discount rate calculator. It is important to know the effective discount rate inclusive of all charges and expenses. You can then use the number to compare to competing offers to buy structured settlement payment rights and other sources of capital such as bank borrowing, credit cards, home equity loan, SBA loan etc.

What is the scope of Independent Professional Advice?

While the individual providing the IPA may be someone that you would later consider as a candidate to be your financial planner or financial adviser it’s important to understand that the role of the IPA in the context of a structured settlement factoring transaction is to make an independent assessment if the proposed deal is in your best interest and that of your applicable dependents. The IPA assessment may uncover items unrelated to the proposed structured settlement transfer, which the IPA chooses to inform the annuitant, that need to be addressed with the individual conducting the IPA, or another adviser or service provider of your choosing. The scope of the IPA assignment should be covered in the IPA report as part of the engagement.

What is the cost of Independent Professional Advice?

An IPA for a structured settlement factoring transaction typically costs a $500 flat fee per engagement, for a phone or virtual consultation by Zoom and written summary. $1,000 fee if court appearance is required (plus travel expense if outside New York City Metropolitan area or State of CT. No travel expenses will be charged if the appearance can be done virtually, via Zoom, Microsoft Teams,  or similar recognized services.  Payment is required before services are rendered.  A minimum payment of $500 via PayPal (or $1,000 if court appearance is required) before services are rendered. In the State of California, if the annuitant would like to obtain an IPA then the factoring company has the obligation to reimburse the seller up to $1,500.00.  [See the California Structured Settlement Protection Act, Cal. Ins. Code Sections 10136(b)]. 

Shouldn't the company or individual that is buying my structured settlement payment rights pay for the Independent Professional Advice?

An IPA is intended to be ”Independent” professional advice for the seller. If the factoring company (buyer) was to pay for this service, then the professional advice would not be independent. There are certain cases that payment arrangements can be made to help out the annuitant (seller), so the transaction can be completed.

Is a Structured Settlement IPA a Type of Craft Beer?

Not to our knowledge :-)  While there is an Ole Structures Tavern on Facebook, it is a tavern that only serves memories and goodwill.

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Last updated April 17, 2025