Personal Injury Annuity


When is a personal injury award not a personal injury award? When you’ve taken the money and turned it into an Annuity. Then it loses its character as a personal injury award and you can only protect it with a wild card.

Here’s some EXCITING NEWS! A little while ago, I fought a trustee on behalf of a client who had received an “annuity” for his personal injury settlement. We were going to argue that the annuity was the settlement because the client had not taken the money and created the annuity, but instead he was paid with the annuity. And I think that might have worked, however . . .

However, here’s the EXCITING part: We were able to get hold of the original settlement release. In it the insurance company stated that the insurance company “may purchase” annuities that they would then use to cover the payment. The release went to state that, EVEN IF the insurance company did buy annuities, the client would still only ever be a “general creditor” of the insurance company.

So, the client would never have a better right to the money . . . I actually said in court to the Judge: “As we all know if the insurance company filed bankruptcy, the client as a general creditor would be out of luck” The trustee’s attorney objected, and was overruled. That was when I knew we’d won.

If you’re ever having to fight for your client on this, get the release.  Because it was Safeco Insurance, a major insurance company’s release, chances are that same language will be in your client’s release as well.  I assume it was general form template release.