Structured Settlement Annuities

You may have heard of structured settlement annuities. If you look up information about it, you may be confused. There are a lot of legal and tax regulations attached to these things. Here is some information to make it a little clearer.

What it is

Suppose you are involved in a lawsuit. It may be personal injury. Perhaps you suffer serious injury at a particular business. You are awarded one million dollars in damages. The company may ask you to take the money in payments. They may be regular payments. You may receive periodic lump sum amounts. Your payments make up an annuity.

Another type of annuity is a lottery win. You may win ten million dollars in a state lottery. You can take $300,000 a year for thirty years. You may also take a lump sum. The lump sum is about half of the original amount, or five million dollars. The lump sum is much less, because it has not earned any money. The state lottery invests this amount, to be able to make your annual payments. However, lottery money is taxable. Your settlement will not be.

Decision

Back to the injury claim, it can be a very good idea to have the money in payments. This gives you a chance to manage the money. It gives you fewer chances to make risky investments, too. There are many financial businesses that will buy your annuity. There is very good reason for this. They will only give you a fraction of the total amount. It is similar to taking a lottery lump sum.

It may be to your advantage to sell your annuity. However, the majority of people will be better off keeping it. Everyone's situation is different. An annuity has certain legal aspects that can be complicated. It is best to seek professional advice before making major decisions. Talk to a lawyer or financial planner.

Summary

Are you looking into structured settlement annuities? They can be tricky with a lot of legal language. An annuity is a good way to receive a large settlement. You may receive regular payments. It gives you a constant flow of tax free money. Before you sell one, talk to a professional first. Make sure that it is in your best interest.