Allstate exits the structured settlement market, implications for structured sales

The announcement earlier this month that Allstate would be leaving the structured settlement market has had profound implications on the market for structured sales, oil and gas lease bonus structures, divorce structures and other taxable damage or taxable sales. Mark Wahlstrom looks at the implications of these changes, discusses possible new companies interested in moving into the market as well as what people should do in the interim if they have a structured sale case they are working on. 

Allstate rolls out their structured sales product for oil & Gas Lease bonus payments

In yet another innovative move by Allstate Financial and their structured settlement division, it was announced this week that Allstate would be rolling out yet another “non-qualified” annuity funding vehicle that would allow for the structuring of oil and gas lease bonus payments.

While seemingly obscure to those who do not have land upon which they lease oil or gas rights to drilling or production companies, this market has substantial potential given the wide number of privately held or closely held businesses, as well as individuals, who might be interested in spreading the bonus payments they get in some years over a several year period. The fact is in an era of rising oil and gas prices, these lease bonus payments can be substantial and many owners of the leases would prefer to spread those big bonus years where oil and gas prices spike, over several years if possible, or even defer it far into the future when the oil or gas lease might be played out or sold. This is going to be a really solid planning tool in this niche market.

This particular product has one key feature in that there is a revenue ruling, RR 68-606, which specifically addresses the tax treatment of this technique, something that has inhibited the use of structured sales and income deferral strategies in the areas such as celebrity endorsements and divorce settlements.

Learn more about this announcement by viewing this weeks edition of Speaking of Settlements, where Mark Wahlstrom discusses some of the basic issues and for whom this product or strategy might be suitable. Structured settlement expert and broker, Mark Wahlstrom can be contacted at Wahlstrom & Associates in Scottsdale, AZ