Law Times

Page 14 November 30, 2015 • Law Times www.lawtimesnews.com Tax-free payments key for severely injured Structures often beat lump-sum payouts BY MICHAEL McKIERNAN For Law Times tructured settlements shouldn't come as an af- terthought for the par- ties to a personal injury action, according to brokers of the products. Structures have established themselves as an increasingly popular alternative to lump sum payouts in Ontario, divid- ing high-value court settlements into regular tax-free install- ments, and Barry Chobotar, the managing partner at Hamilton, Ont.-based Henderson Struc- tured Settlements, says address- ing the possibility of a structure early in the process can help avoid headaches for all sides fur- ther down the line. "The sooner we're involved the better," Chobotar says. "It makes the whole process move much more smoothly, and that's irrespective of whether the de- cision is ultimately to go with a structure or not." According to Kyla Baxter, the president of Baxter Structures in Toronto, her early involvement benefits insurance companies because one of her first actions on a file is to obtain assessments on life expectancy of the injured party. "It also allows us ample op- portunity to run figures for the casualty insurer to assist with setting the reserves," she says. For plaintiffs, an initial meet- ing with a broker can often serve as the introduction to a brand new concept. Ryan Murray, a partner with personal injury firm Oatley Vigmond LLP, says most of his clients are complete- ly unaware that a structured settlement is even an option for them, since few have previous experience in the area. Murray, who is based in the firm's Barrie, Ont., office, says particular types of cases allow him to turn his mind especially early to the possibility of a struc- ture, such as actions involving a seriously injured minor, or a claimant with brain injuries so severe that he or she is unable to make decisions about his or her own case. "In those cases, you can be confident that a structure will be required, because it needs court approval, and judges don't usually like to put family mem- bers in control of large amounts of money," Murray says. For adult plaintiffs without capacity issues, structures only tend to become a factor once a settlement is in sight, accord- ing to Murray, since not every award will be large enough to make a structure worthwhile. "I haven't seen many for less than $150,000, so it's hard to move forward without knowing how much money is going to be available," he says. Tony Lafazanis, a personal injury lawyer in Toronto, says the length of time to get to that point varies wildly from case to case. "It's only when we have a prognosis that we can start quantifying what a case may be worth. Every case is different, so, if there's an obvious injury, it could be within six months of the accident. But depending on the kind of injury, it may take three, four, five years or longer," he says. Baxter says she likes to meet with plaintiffs before settlement discussions or mediation ses- sions get underway so that she can establish a relationship with them before getting into the nit- ty-gritty of a structure's details. "It avoids, or at least mini- mizes, that overwhelming feel- ing that many claimants ex- perience at mediation; when they are finally offered a sum of settlement money to consider but at the same time are under a certain amount of pressure to discuss what they want to do with those funds," Baxter says. "If we are able to meet with the claimant prior to the media- tion, we are then a familiar face along with the familiar concept of the structure, and can help guide them as a trusted member of their settlement team. The claimant often feels more com- fortable asking questions since we have established that trust factor." Ralph Fenik, the president of Guelph, Ont.-based McKel- lar Structured Settlements, says that, in an ideal situation, he will attend the mediation in person after meeting with the claimant. "It helps ensure that noth- ing falls through the cracks. I've had several cases where the plaintiff 's lawyer has forgotten to get the right to structure, and that has caused real problems. Sometimes, it has been talked about with the insurer but not clearly defined. When we're at the mediation, it's the first thing we raise," Fenik says. Rhona Waxman, a Hamil- ton, Ont., personal injury law- yer, says the general public's unfamiliarity with structures can leave brokers facing an up- hill battle to convince plaintiffs of their value, with their task made even more difficult by the record low interest rate environ- ment in Canada and around the world. In that context, fixed-rate investments such as structures are not the most fashionable of financial options. Still, Wax- man strongly encourages clients to consider a structured settle- ment. "I think it makes a lot of sense as far as protecting the plaintiff when you're dealing with such big sums of money, as it's supposed to last a very long time. Most clients are not so- phisticated enough to invest it themselves; I know I certainly wouldn't try," she says. Chobatar says he is frank with plaintiffs about the fact that BRIEF: STRUCTURED SETTLEMENTS What do your clients need? The means to move on. Guaranteed. ™ Baxter Structures customizes personal injury settlements into tax-free annuities that can help your clients be secure for life. » Pre- and post- settlement consultation and support » Caring professionalism for over 30 years » No fee to you or your clients Need more information? Contact us at 1 800 387 1686 or baxterstructures.com Kyla A. Baxter, CSSC PRESIDENT, BAXTER STRUCTURES Baxter_LT_Oct7_13.indd 1 13-10-01 4:03 PM S 'Judges don't usually like to put fam- ily members in control of large amounts of money," says Ralph Murray See Young, page 15

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