Converting a Structured Settlement Annuity into a Large Sum of Cash

Many people that have experienced damage or injury from the intentional misconduct or negligence of another individual most often is awarded a structured settlement annuity in court. Historically, courts often awarded a lump sum of cash to the victim. However, structured settlements have become the norm because of their ability to pay out a monthly, quarterly or annual payment to the claimant.

Receiving installment payments in lieu of a single lump sum of cash ensures that the claimant receives regular income for a scheduled period of time. Usually, the defendant (the one that caused the negligence or misconduct) purchases an annuity through an insurance or annuity company for a specific dollar amount. In exchange, the insurance company provides income payments on a routine schedule, following the terms of the structured settlement annuity.

Options

Usually, through the advice of his or her attorney, the claimant will select the type of payments they choose to receive from their structured settlement annuity. They can opt to accept deferred payments, or set the installment payments to keep up with inflation, and even provide special provisions to increase funds later in life. The choices and options available through an annuity should be designed to fit the needs of the beneficiary.

Bound by the Terms

The downside to accepting a structured settlement annuity is being bound by the terms accepted in court. If the payment schedule agreed to by both parties no longer fits the needs of the beneficiary, the terms cannot be changed. However, the structured settlement annuity can be sold with the value of the policy being converted into a lump sum of cash.

Determine Structured Settlement Payments that Work for You

When creating the terms for the structured settlement payments that one would receive to help deal with the aftermath of an injury, many factors are going to come into play. Some of the things that you are going to have to determine while coming up with the settlement include the date the settlement will begin, the duration of the payments and the periods at which the payments come due. Determining the amount of the payments is important as well, and considers other things, such as the current age of the claimant, all monthly expenses, retirement plans, and more.

In some cases, the payments are going to be tax-free. Payments made to an estate might be free of income tax, for example. However, they will have an estate tax associated with them. If you have a payment plan in place and it is currently tax-free, then you are not going to want to change the plan, at least not without consulting with a specialist. In fact, making changes to the settlement agreement once it is in place is not always an easy task.

An Annuity Buyer Can Convert a Structured Settlement into Cash

For most beneficiaries of structured settlements, there are options available to convert the annuity payments into a lump sum of cash. Many individuals that won a lawsuit accepted a structured settlement annuity as their award in the case. However, over time their lifestyle or condition has changed, where the monthly or annual payments are not enough to cover ongoing expenses and medical bills. They find themselves seeking an annuity buyer that will help them convert the remaining worth of their annuity into cash.

Originally, the courts most likely accepted the offer of an annuity payment in lieu of a lump sum of cash to benefit the claimant that won the award. As a way to ensure an ongoing source of income in the years ahead, the judge agreed to a structured settlement. Many times, the courts are eager to allow structured settlements as a way to avoid specific problems when the claimant in the case receives large amounts of money that include:

• Purchasing big-ticket items including homes and cars
• Investing in questionable ventures including businesses or purchasing junk stock
• Simply giving money away to family members, friends and others

Seeking an Annuity Buyer

Sometimes, the structured settlement annuity is simply not enough to meet monthly expenses. Although the annuity offers an income it might not be enough to provide a lifetime of financial security. Often, seeking an annuity buyer is the best option for converting a structured settlement into one large payment, or to sell off a certain portion of the annuity and have the remainder continue to provide a monthly check.