While Social Security isn’t paying out benefits to those 6.5 million, only about 13 are actually receiving benefits, their Social Security numbers are still active and can be used. That can be a problem. A real, live person with an active Social Security number is in danger of identity theft, and report and clear it up when it occurs. A dead person is much less likely to have someone looking out for them when it comes to identity theft.

Social Security numbers are used for multiple financial purposes — everything from verifying employment eligibility to opening bank accounts and maintaining credit scores. That’s on top of their purpose of tracking Social Security eligibility and benefit levels.

Living people whose IDs are stolen can eventually get the problem fixed and also help authorities when their IDs are being misused. As the old adage says, “dead men tell no tales.” With still-active, real Social Security numbers of people who have passed away, it’s a lot easier for scammers to fly under the radar.

But there are things you can do to prevent such abuse. If you’re the executor or next of kin of a person who passed away, be sure that person’s death has been reported to Social Security. You can call Social Security at 1-800-772-1213 between 7 a.m. and 7 p.m., Mondays through Fridays, to report a death. You can also visit your local Social Security office (locations available here) to report a death in person. Funeral homes are willing to report the death on your behalf, but you would have to provide the funeral home the deceased’s Social Security number.

In addition to taking care of reporting those that have died, take care to protect your own Social Security number. Know the times you actually need to divulge your Social Security number and the times you don’t, and don’t give out your number unless you’re obligated to.

Your employer needs to collect your Social Security number to get your income and tax reporting correct, as do financial institutions like your mortgage bank and brokerage. While you do have to give your Social Security number to those institutions, you should be smart about how you give it out. Additionally, you do have to put your Social Security number on your tax return.

While you do have to divulge your Social Security number to those institutions, be careful in how you share it. For instance, don’t give your Social Security number out if someone claiming to be from some institution calls you and asks you for it. It may be a scam looking to steal your identity.

Despite these issues, the Social Security program is an important one that, among other things, provides a minimum income for retirees. Do what you can to keep your and your loved ones’ information out of the hands of those who’d misuse it. This way it will ensure you get what you’ve earned from Social Security.

Back in 2012, when Pelle Walls and his siblings were told by their father that their mother committed suicide they were obviously devastated. But, the father’s behavior in the weeks following the suicide had Pelle thinking it was not, suicide, but murder, and his father was responsible for the death of his mother.

John Brickman Walls ex-wife was a well-known German scientist, Uta von Schwedler who was found dead in her bathtub and Salt Lake City, Utah, authorities rule it a suicide. But Pelle had other ideas.

Pelle started noticing his father acting strange, saying things like ‘What if I did it and don’t remember?’, and asking for both his mother and his lawyer.

Even though the verdict was suicide. Pelle decided to seek justice for his mother. A year after her death he moved out of his father’s home and in with a friend, and soon after managed to get all of his younger siblings taken away from his father and put in the care of family and friends.

When he turned 21, Pelle decided to use the inheritance from his mother to sue his father in a wrongful death suit, which meant his father could be questioned under oath in a court. Taking the stand, his father’s story of Uta’s death soon showed cracks as he repeatedly changed his story.

Pelle was also able to tell the court of his father’s strange behavior after breaking the news to his children of their mother’s death. Various press reports say Pelle recalled, ‘He was kind of babbling and rambling. But he was saying things along the lines of, “Am I a monster?” and “What if I did it and I can’t remember?” I think he also said, “I want my mom or I want my mommy.”

Pelle hired an expert forensic scientist who testified that his mother’s body showed signs of a struggle before her death. The court found the father guilty of murder an he was sentenced from 15 years to life

The court case cost Pelle his entire inheritance.

The group filed the lawsuit in April 2017, alleging that New York City’s property-tax system discriminates against low-income homeowners and landlords. The organization includes the Rent Stabilization Association, prominent landlords and social welfare groups such as the NAACP and the Black Institute.

Justice Gerald Lebovits denied the de Blasio administration’s motion to dismiss, but left the State off the hook, finding the group has standing to bring the suit against the City.

They claimed it violated the equal protection clause, Fair Housing Act, and state property tax laws.

The group is being allowed to move forward with all 16 of their claims against the city, including that its property tax system violates the FHA because it disproportionately affects minority neighborhoods and perpetuates racial discrimination in housing.

In the suit, filed in 2017, Tax Equity NY argues the property tax system tends to undervalue condominiums and cooperatives compared with rental apartments, causing more financial hardship for renters in the form of higher property taxes for landlords that are passed along to the tenants.

In a press release, Martha Stark, director of policy for Tax Equity Now wrote “We filed our suit because the current system unfairly burdens homeowners in lower-income and minority communities, primarily in the outer boroughs.”

A health care proxy is a way to eliminate confusion among your loved ones and health care providers about your health care wishes should you no longer b able t make those decsions yourself. Hospitals, doctors, and other medical providers must follow the agent’s decisions as if they were your own.

Here are a some common questions and answers about health care proxies:

Who can be your health care agent?

Anyone 18 years of age or older, including a family member or close friend can be your health care proxy.

A doctor can act either as your proxy or your attending doctor, but not as both simultaneously. A number of special rules apply to patients or residents of a nursing home, hospital, or mental health facility who want to name a staff member as an agent.

What powers do health care proxies have?

Your proxy can decide how your wishes apply as your medical condition changes, but he or she is legally obligated to always act in your best interest.

The person you select as your health care agent will have as little or as much authority as you want. You may allow your agent to make all health care decisions or only certain ones.

A health care proxy is different from a living will because it does not require that you know in advance all the decisions that may arise. Nevertheless, you may give your agent instructions that he or she must follow and specify on the form the treatments you do or do not want.

Also, note that you can continue to make health care decisions for yourself as long as you’re able. You can also cancel the authority given to your agent by informing him or her or your health care provider orally or in writing.

To appoint a health care proxy, you and your agent must sign a New York health care proxy form in the presence of two adult witnesses. This is best done in an attorney’s office like the Law Offices of Jeffrey Weinstein. Mr Weinstein is an estate professional and can guide you through what you need to do to insure your wishes are carried out.

Here are some instances when you would need a proxy:

• You are in a coma from an accident or illness.
• You are terminally ill and not expected to recover.
• You have Alzheimer’s or another form of dementia.
• You are under general anesthesia, when something unexpected occurs.
• You are in a persistent vegetative state.
• You suffered from an illness that left you unable to communicate.

One person caught up in this mess is homeless millionaire Alan Fantin. That’s right, a homeless millionaire. Fantin has a net worth in the millions but he has had trouble getting accessing it for years. He has been under a conservatorship that was created thirty years ago after a car accident left him with a severe head injury and partial paralysis.

He owns a house which is mostly paid off. But right now it’s ridden with black mold and there are squatters in the basement who don’t pay rent and won’t leave. And Fantin hasn’t been allowed near the house since he was arrested last month and charged with assaulting his live-in girlfriend. His pre-trial monitoring says he can’t come within one-mile of his alleged victim’s residence, which is also his home, or it it was.

On top of all that he is currently engaged in a legal tussle with the guy who controls his funds, a court-appointed conservator named Scott Christian. Christian was appointed in early 2015. Since then the two have battled constantly over financial matters, ranging from the amount of Fantin’s cable bills to his marijuana use. Christian has described Fantin’s weed smoking as a “substance abuse habit.”

Fantin has had a license to use marijuana for medical purposes since 2001.

In a report in Westword, Fantin says the weed helps him with the seizures he’s bee experiencing since his accident. “When I run out of pot, my seizures are more aggressive and they tend to last longer.”

Westword also reports

…Christian refused to provide any funds for his lodging after he was banned from his house; directed him to use a public defender in his domestic-violence case rather than hire his own attorney; threatened to cut off his phone if he continued to complain; and has been less and less responsive to Fantin’s pleas for help even as his firm’s fees for the conservatorship have steadily increased.

The case offers a rare glimpse behind the closed doors of probate court, where a professional cadre of attorneys, care managers, estate administrators and others are entrusted with guarding the interests and funds of some of society’s most vulnerable people. In many instances, they may be doing just that, protecting the elderly, the sick, the mentally or physically disabled from unscrupulous relatives or neighbors — and sometimes protecting them from themselves.

It’s a fascinating story which we suggest you read. Homeless Millionaire Alan Fantin Wants His Day in Probate Court

Today, funerals are becoming the way for the rich to flaunt their wealth. Along with lavish weddings and over-the-top birthday parties, funerals have become a way for the rich to flaunt their wealth one last time.

William Villanova, general manager of Frank E. Campbell Funeral Chapel, New York’s “undertaker to the stars.” told “Accounting Today, “Whatever we can do that is legal, lawful and in keeping with the integrity of our profession, we will do.”

CEO Nigel Lymn Rose of the U.K.-based A.W. Lymn funeral home said, custom-made Rolls-Royce Phantom VII hearses and a fleet of 25 matching Rolls-Royce sedans are sought-after internationally.

He also told Accounting Today, “I get inquiries from people who have always driven Rolls-Royce’s and want their final journey to be in a Rolls-Royce. They “want to make a statement: Ride it in life, ride it in death.”

Accounting Today also told of the recent funeral of a fashion designer they did not name, where they assembled 120 gospel singers who performed as the casket was carried from the hall. A marching band performed at one service, and Lincoln Center’s Alice Tully Hall was covered in blue hydrangeas to mirror the deceased’s Hamptons home.

Businessmen and billionaires are often aggressively competitive in life “and that doesn’t end when they think they’re going to die,” said Ted Klontz, a Nashville, Tennessee-based financial psychologist.

In September 2016, the company was bought by South African conglomerate Steinhoff International Holdings in a $3.8 billion deal that included Steinhoff assuming more than $1 billion in debt the U.S. retailer had racked up in an expansion move.

Last December, Steinhoff’s president and chairman resigned following the discovery of what the company described as “accounting irregularities.” Also in December, Mattress Firm revealed they planned to close about 200 under-performing stores in 2018.

New York, New Jersey, Maryland an Connecticut say the new tax overhaul has upended 150 years of precedent and that the deductions are essential to prevent the feds from abridging constitutional states rights. New York State Attorney General Barbara Underwood said in a statement the new law is a result of “hyper-partisan and rushed process.” A State analysis found that the cap will increase New Yorkers taxes by $14.3 billion in 2018 an another $121 billion from 2019 to 2025.

According to the lawsuit filed yesterday in Manhattan Federal Court, the so-called SALT deduction will make it more difficult for the four states to maintain their taxation and fiscal policies, thus “hobbling their sovereign authority to make policy decisions without federal interference.”

The tax law, passed last December, caused some local governments to revise their rules to help last-minute change in federal tax strategies, while homeowners in states with the highest property taxes quickly began looking to prepay bills ahead of the cap.

In a written statement, New Jersey Attorney General Gurbir Grewal said the federal government “went after these states deliberately” in crafting the SALT deductions cap.

According to Bloomberg, the elite private banks say $25 million is just get you in the door, rich. To most $25 million is a non-attainablke dream but to the private bankers, it’s the basic tier.

But don’t get the idea that these bankers turn up their noses at those with just a puny few million. Bloomberg quotes Brent Beardsley of Northern trust Corp. who said 505 of their new clients have assets in excess of $10 million, “but to get to the highest level companies have raised the bar.”

What makes people rich these days has changed in the last 20 plus years. In 1994 what made someone rich was $3 million and now $25 million is high net worth.

On the other hand, those who have a need for a lawyer have different opinions. 61% of those said a lawyer was a necessity and 57% said they were important. So, what if you need an attorney?

All attorneys are not created equal. By that we don’t mean that some are better than others. While this is true, what we really mean is attorneys usually specialize in various aspect of the law. But why not look online for help?

While their is a plethora of information online quite often it isn’t accurate. Laws and regulations vary from state to state and if you rely online you might not get the exact info you need.

What you need is to find a lawyer who specializes in what you need. Just as you would hire a plumber, not a roofer when your sink is stopped up, you wouldn’t hire a personal injury or criminal lawyer to deal with your will and estate.

When and if the time comes when you need to seek out the services of an attorney, make sure to do your research and try and find the most qualified attorney in your local area.

When we see those smiling lucky bums with their over-sized lottery checks on the television an we hate them. We think their trouble are over. They’re set for life. But, maybe appearances are deceiving. Many winners might not be used to managing large amounts of money and will winds up blowing through their windfall.

Psychologists who have studied lottery winners found that coming into money doesn’t change who that person is. If the person had trouble managing their money when they weren’t filthy rich, they will have trouble when they are rich. Now we’re not suggesting those reading this are irresponsible. Not at all. We just think if you aren’t used to handling a boatload of money, it’s different than when you are handling an average income.

We have some suggestions. When you get the money:

• Don’t do anything. Don’t go on a spending spree and buy a mansion or things like really expensive luxury cars. Sit on that windfall for six months to a year. Let it soak.
• Wait that same six months to a year before making any life changing decisions. Let the idea that you have this money sink in.
• Don’t automatically quit your job. Even if your job sucks it will occupy your time and keep you away from spending that money. You might also lose the social interaction that you got from friends at work.
• Find a trusted financial advisor. That can be a trusted friend, family member or financial professional. Just make sure thy have your interests at heart an not theirs.
• Pay off any debt. Get out from under owing. Once you have eliminated your debt, that is a major pressure release.
• Create an emergency fund. Take some of your money and set it aside so you will have at least a year of living expenses in case of some financial catastrophe.
• Set up trusts to keep your money from the tax man. Contact a financial pro who can help you set up the trust(s) that are best for your financial situation

These are just a few ideas to how to manage your money if you come into unexpected riches. The best thing you can do is find a reputable financial advisor.

The change has been swift and virtually unnoticed, even though it has meant that tens of millions of Americans have lost a fundamental right: their day in court.”

“This amounts to the whole-scale privatization of the justice system,” said Myriam Gilles, a law professor at the Benjamin N. Cardozo School of Law. “Americans are actively being deprived of their rights.”

What has been happening is that companies, large and small have been adding arbitration clauses to contracts and agreements that take away people’s right to sue in a court of law should the situation arise. These simple clauses can take away a person’s right to sue for medical malpractice, sexual harassment, hate crimes, discrimination, theft, fraud, elder abuse and wrongful death.

The family of a 94-year-old woman at a nursing home in Murrysville, Pa., who died from a head wound that had been left to fester, was ordered to go to arbitration. So was a woman in Jefferson, Ala., who sued Honda over injuries she said she sustained when the brakes on her car failed. When an infant was born in Tampa, Fla., with serious deformities, a lawsuit her parents brought against the obstetrician for negligence was dismissed from court because of an arbitration clause.

Little is known about what goes on in arbitration hearings due to confidentiality provisions and the fact the cases don’t have to be reported to the federal government.

The NY Times reports this disturbing issue

Unfettered by strict judicial rules against conflicts of interest, companies can steer cases to friendly arbitrators. In turn, interviews and records show, some arbitrators cultivate close ties with companies to get business.

Arbitrators aren’t required to follow legal procedures like discovery, which enables you to request information from the defendant. Also, there is no regulation or rule that requires arbitrators to take the law and legal precedent into account in making their decisions. They’re supposed to, but aren’t legally required to do so.

And here is probably the most important aspect of arbitration, most decisions cannot be appealed.

Mandatory arbitration is a lose-lose situation. Don’t deal with anyone who requires a mandatory binding arbitration clause. If you find they do require one, walk away and explain why you are doing so. Read every contract and look for the clause. The clause isn’t always straight forward. They can say it various ways, such as “dispute resolution mechanism.”

Basically Medicare is health insurance for people 65 or older and Medicaid is for people who meet certain income requirements. While Medicare will pay for some rehabilitative services in a nursing home, Medicaid will pay for long-tern care provided you financially qualify. Each state has different requirements. New York has three income limitations to get long term care using Medicaid.

Most long term care applicants are disabled, aged 65+, or have diagnosed blindness. If you are any of these you are most likely subject to the Non-Magi (Modified Annual Gross Income) standard

• Income Limitations: If you are single, your income (wages, Social Security benefits, pensions, veteran’s benefits, annuities, SSI payments, IRAs, etc.) must be no higher than $825.00 per month or $1,209 per household if you are a couple.
• Asset Limitations (Exempt vs. Available): Medicaid divides assets into two categories: Exempt and Available. Exempt assets are designated under the rules and ownership of an exempt asset by the applicant will not result in a denial of benefits. If an asset is not listed as exempt then it needs to be liquidated and applied toward the costs of nursing home care before the applicant can receive Medicaid benefits. The state has a look back period of 5 years with a penalty for people who sell assets below fair market price, transfer assets to others, or give money and property away.

Exempt Assets for an applicant in New York include:

• $14,850 or less in cash/non-exempt assets if single. If the assets exceed the limit on the first of the month the applicant is ineligible for the entire month. If married and both spouses reside in a nursing home, the asset allowance for a couple is $21,750.00.
• One home is exempt (equity limit $840,000) if planning to return, a spouse, a child under 21, or a disabled person resides in it. Whenever an institutionalized person sells a previously exempted residence, the money from the sale becomes a countable asset. The recipient may then lose eligibility for Medicaid until he/she has spent down the money and their countable resources are once again less than the maximum.
• One car, no equity amount specified. An irrevocable funeral trust, no amount specified.
• Life insurance policy if the face value of said policy is $1,500 or less. Household goods and personal effects, i.e. jewelry, furniture, heirlooms, etc.

For more information: New York Medicaid Information- New York Department of Health

Managed Long Term Care

Sherwood and a long time associate attorney Thomas Lagan were arrested and charged with two counts of grand larceny and a scheme to defraud. The two were estate planners for the estate of Warren Bruggeman, a top General Electric executive and Albany area philanthropist who died in 2009.

After their arrest in March, Sherwood resigned his position.

Following Bruggeman’s death, Sherwood and Lagan handled the distribution of Bruggeman’s estate for his widow, Pauline Bruggeman; and her two sisters, Anne Urban and Julia Rentz, who were to be taken care of with sub-trusts. According to a news release from the New York Attorney General’s Office, they diverted $2 million from one of the sub-trusts into an irrevocable trust established in Urban’s name for which the two men were named as trustees.

In late April, the town chose a new judge, trial attorney Christine Napierski. Town Supervisor Peter Barber told altamontenterpise.com, Napierski was selected for her depth of experience in trial law, mediation, and negotiations, as well as for her even temperament and her ability to meet the scheduling demands of the job, which requires being available at all hours of the day, every third week.

Robert Tembeckjian, administrator and counsel for the Commission on Judicial Conduct, said, “While the felony charges against Mr. Sherwood have not been adjudicated and he is entitled to the presumption of innocence, by resigning he spared the judiciary and the courts from the spectacle of a judge as criminal defendant.”

The IRS says identity thieves came up with the scam around 2008 and they have been having a hard time stopping it. In fact the practice has tripled in the last 5 years.

The IRS estimates that it sent out nearly three million fraudulent refunds to the tune of $1.68 billion last year.

But the agency has been trying ways to cut down on the fraud. They now require employers submit W-2s earlier and had they hold refunds for those claiming certain tax credits. Those changes gave the IRS more time to work on identifying discrepancies before issuing refunds

The Treasury Department believes the numbers are much higher than that $1.68 billion number. In January of this year, the General Accounting Office (GAO) issue a 50-page report with suggestions as to how the IRS can combat this problem. Here are three of their recommendations

• The Acting Commissioner of Internal Revenue should collect data to track late W-2 filing penalty notices and the extent to which they are associated with fraud and non-compliant returns. (Recommendation 1)
• Recommendation: The Acting Commissioner of Internal Revenue should assess options for improving enforcement of late W-2 filing penalties, for example, by mailing notices before the next filing deadline. (Recommendation 2)
• Recommendation: The Acting Commissioner of Internal Revenue should develop an evaluation plan to fully assess the benefits and costs, including taxpayer burden, of modifying the February 15 refund hold, and determine how this effort informs IRS’s overall compliance strategy for refundable tax credits and fraud risk management. (Recommendation 3)

We posted the WXYZ video story about this scandal last year. Probate public administrator in Michigan cashes in on other people’s estates…legally

Barbara Andruccioli was one of the lawyers exposed by Detriot’s WXYZ 7 News investigation into collusion between probate attorneys and estate brokers to cheat heirs. She was recently hired by the Oakland County Probate Court at a taxpayer cost of $102,000/year. Channel 7 investigator asked Anruccioli, “How can the taxpayers have any confidence with you working here?” Andruccioli answered, “Really, I think you probably need to talk to the judges.”

Andruccioli was a partner at Kemp Klein law firm and an Attorney General-appointed Public Administrator: a public official with the authority to open probate estates after someone dies if there are no heirs available.

WXYZ reports

Andruccioli was a partner at Kemp Klein law firm. She was also an Attorney General-appointed Public Administrator, a public official with the authority to open probate estates after someone dies if there are no heirs available.

Court records show Andruccioli teamed up with real estate broker Ralph Roberts and his companies to open those estates, sell the homes, and cash in.

WXYZ uncovered court filings showing “Andruccioli and one of Roberts’ companies, Probate Asset Recovery, were billing for thousands of dollars, while the actual heirs ended up with very little.”

After the station’s investigation, Attorney General Bill Schuette terminated Andruccioli as a Public Administrator and the FBI and Oakland County Sheriff’s detectives raided Ralph Roberts offices, and launched a criminal probe into the Public Administrators.

Oakland County Clerk Lisa Brown told the station that her reaction when she first heard of the hiring was “Shock, absolute shock and bewilderment… So out of having a wonderful pool of applicants, why would you choose this person who has a cloud over them?”

Joan Antoniello, of Mazurs USA Wealth Advisors told Bloomberg News, ““For the mega wealthy, it’s really a window of opportunity that’s limited.”
Dynasty trusts let the richest Americans protect and preserve wealth for generations, while minimizing tax bills. Treasury Secretary Steven Mnuchin appears to have used one prior to assuming his government role. They can be funded tax-free with assets up to the exemption limit, which was $10.98 million in 2017 for couples, even though complex tax-planning techniques can get around that threshold.

Blloomberg reports that about a dozen of the nation’s top wealth planners say they’re seeing “increased interest in the trusts as clients look to capitalize on the additional $11 million they can now easily shift over. Some families want to transfer money out of their estates into the trusts in case Democrats take back control of Congress and pull the limits back down before 2025, while others say it’s best to move assets before they appreciate even more.”

Estimates are the new rules affect fewer than 2,000 families per year, but billions of dollars are at stake. A University of California, Berkeley study found that 0.1% of families control a growing share of U.S. wealth, from an estimated 7 percent in 1978 to 22 percent in 2012. The net worth of the wealthy has zoomed even higher in recent years as values of stocks, real estate and private businesses have climbed.

Trustee Thomas Casey filed the lawsuit on Thursday in the federal bankruptcy court in Santa Ana, California. The suit adds yet more legal headaches facing Manafort, who was Trump’s campaign manager for Donald Trump’s presidential campaign for a few months in 2016.

The lawsuit relates to a $2.7 million deed of trust Manafort recorded in Los Angeles County that positioned himself as a secured creditor in a luxury property he was developing in partnership with his former son-in-law, Jeffrey Yohai.

A deed of trust was recorded Dec. 20, 2016, one day before the company that owned the property filed for bankruptcy protection to stave off foreclosure by its lender Genesis Capital LLC, according to property and court records.

Casey, whose job as trustee is to liquidate the assets of the bankruptcy estate for the benefit of creditors, alleges in the suit the money Manafort put into the property was equity and not a loan as Manafort claimed.

The company filed for bankruptcy protection in Delaware, an action many have for some time. The company owes as much as $500 million and that debt has burdened it over the years. According to Bloomberg News, a $135 million loan should help keep Gibson in business after its debt is restructured. The report also states that several dozen companies were contacted about a purchase, but no deal was finalized in time.

Gibson has been in the music business since 1894, and throughout that time has sold millions of guitars to some of the greatest artists who have ever recorded music, like Elvis Presley. The company still sells over 150,000 units every year, and through the decades has diversified and moved into other areas of the music industry. The guitar giant also owns a dozen other brands like Epiphone, Steinberger and Kramer. it sells audio equipment such as amplifiers, tuners an headphones.

According to a number of experts, its this diversification is one of the reasons Gibson is in financial trouble is because it tried to expand and diversify and make the company more of a lifestyle brand, instead of just a guitar seller.

Lawsuit loans seem very attractive to plaintiffs awaiting judgments or settlements in civil lawsuits, like personal injury cases. But read the fine print before you sign on the dotted line. In fact, don’t even read the fine print, don’t do it.

The way it works is a plaintiff in a lawsuit finds their injuries have prevented them from working or being able to pay bills. They contact a lawsuit loan company. The company contacts the plaintiff’s lawyer to ascertain what the ball park settlement or verdict might be. Then, based on that estimate the company will offer a cash advance to the plaintiff.

The amount advanced can range anywhere from $500 to $50,000 depending on the case. The money is paid at the end of the lawsuit.

Sounds good, no? NO. The devil is in the interest rates. Lawsuit loan borrowers can find themselves paying annual interest rates in excess of 100%.

FOXBusiness quotes Justin Hakes, a spokesman for the U.S. Chamber Institute for Legal Reform, which ironically, is a group that represents business interests against plaintiffs interests

Even when the consumer ‘wins’ or settles the case, he or she often recovers no money, because the entire amount of the award or settlement goes to pay the plaintiff’s attorneys or to repay the lawsuit lender. Fees also vary depending upon the company and the type of case. Some companies will fix the fee for the advance up front. Others will charge a monthly fee for each month between the time the funding is issued and when it is repaid, sometimes as high as 15% per month.

Given that lawsuits can drag on for years sometimes, it would be prudent for a person to seek out alternative ways of financing and steer clear of lawsuit loan companies.

Businesses like payday lenders and pawn shops are regulated by the government but not so for the lawsuit companies. The reason these lenders fly under the radar is that they don’t call their loans, loans. They call them non-recourse financing or cash advances.

Hakes says

The lawsuit lending industry goes to great lengths to tell the public that consumer lawsuit loans are not really loans but are instead ” and this is how, in many states, lawsuit lenders have managed to skirt usury and fair-lending laws. But their advertisements sing a different tune. A simple Web search using the term ‘lawsuit loan’ turns up a flurry of paid advertisements with headlines like ‘lawsuit loans NOW!

Due to the lack of regulation, the courts have stepped in. The website ExpertLaw cites two cases, in Michigan and Ohio where courts ruled against the companies.

A Michigan court recently held invalid a lawsuit funding contract where the defendant’s liability had been established, holding that as the plaintiff was certain to recover some amount of money the funding company’s advance was no longer contingent, and thus that the plaintiff only had to repay the principal (without interest) under Michigan’s usury laws.

An Ohio court similarly discharged a plaintiff’s obligation under a lawsuit funding contract on the basis of a common law doctrine called “champertry” – a prohibition against the sale of a party’s interest in a lawsuit. The court’s rationale was that lawsuit funding company sought to profit from the injured woman’s case, that lawsuit funding could create a disincentive to settle a case, where the plaintiff would have to pay the entire amount of the settlement to the finance company.

The best bet is to only utilize pre-settlement funding companies as a last resort when you have no alternatives sources of funding like friends or relatives. And if you do, which we don’t recommend, make sure you get all the details spelled out and they clearly disclose the terms of the contract.