McKellar Structured Settlements Inc.Secondary Payment Direction Flexibility
Secondary Payment Direction Flexibility
Media Release - July 2, 2004
Recently, McKellar successfully obtained a Technical Interpretation from Canada Revenue Agency (CRA) approving a new form of structured settlement payment direction. Our new payment direction allows competent adult Claimants as well as minor Claimants, once they have attained their majority (provided that they are competent at majority), the flexibility of naming and changing, from time to time, their Secondary Payees (i.e., the person(s) who will receive the remaining guaranteed structure payments, in the event of a Claimant's death).
The advantages of our new payment direction are twofold:
- By selecting a specific individual rather than their own estate as the Secondary Payee, a Claimant's estate avoids probate fees on the value of any remaining guaranteed payments at the time of their death.
- If a change in circumstances (e.g., marriage, separation, children) or heart causes a Claimant to want to change their Secondary Payee direction, they can now do so without having to: (i) seek the consent of the Casualty Company (or the assignment company), (ii) amend the settlement documents, and (iii) amend the annuity contract.
Attempts to achieve the same result by certain other brokers are open to question, in that their payment directions have never been approved for use by CRA and, of greater concern, employ language which offends IT-365R2 (CRA's Interpretation Bulletin governing structures) and the Insurance Act (the use of which language, CRA has openly disapproved of in its Technical Interpretation approving our new payment direction).
Our precedent bank has been amended to reflect our new payment direction, and we invite you to consult us about its use.
