Converting Your Annuity to Structured Settlements

You decided to settle out of court rather than go through a long lawsuit but now, you find yourself faced with an emergency or crucial situation whereby you need most, if not all of the money. However, because you opted for a structured settlement whereby you would receive consistent cash flow, there are no available funds. In a scenario such as this you might want to learn the key elements of converting annuities and structures settlements.

You decided to settle out of court rather than go through a long lawsuit but now, you find yourself faced with an emergency or crucial situation whereby you need most, if not all of the money. However, because you opted for a structured settlement whereby you would receive consistent cash flow, there are no available funds. In a scenario such as this you might want to learn the key elements of converting annuities and structures settlements.

People end up in this situation all the time, which is why structured settlement companies exist. No one knows when a situation will arise whereby a large sum of money is needed so while you would pay a fee for this type of service, it is nice knowing you have a solution. Remember, when converting an annuities and structured settlements you would have the choice of selling all the money remaining in your settlement agreement or just a portion to handle the current need.

What is the difference between Annuity and Structured Settlements?

For starters, we need to provide a brief description of an annuity, as well as structured settlement so you can see the difference. An annuity is a monetary distribution of an investment. In this case, the money would be paid on a set schedule whether quarterly, biannually, or annually. In most cases, an annuity is connected to some type of retirement plan such as a pension. A structured settlement is also a monetary distribution but in this case, the scheduled payments are the result of settling on a lawsuit outside the court system from an injury sustained by a negligent party. However, the financial distribution could also be from significant earnings coming from winning the lottery or a casino jackpot.

Now, the key in converting annuities and structured settlements and getting what you need for a fair price starts with the company providing assistance. A truly professional organization would work alongside you so your needs could be evaluated and the amount determined. Of course, you have significant input since the money is yours but having a broker or settlement professional helping with the analysis ensures you make the right decision. Once you meet with the representative from the company, the evaluation would begin so the decision pro or con for converting annuities and structured settlements could be made. After the agreement with the structured settlement company has been reached and the contract executed, you would have the money needed between two to three weeks in most cases.

Now, sometimes additional information or documentation is needed to finalize the deal but on average, three weeks would be the maximum amount of time. As a part of converting annuities and structured settlements you want to remember that taking a lump sum rather than sticking with the scheduled payments could have tax implications. Structured settlements are tax exempt but once you have a large sum of money, you could find yourself facing tax consequences. For this reason, prior to making any decision, it might be worthwhile to talk to a financial expert or attorney who deals with the conversion of annuities and structured settlements.

One last note is that because you would suddenly have a lot of money, spending time prior to the conversion to set up a budget would be a wise decision. Especially if you have lived with structured payments for years, that immediate position of having wealth can be a little overwhelming. Obviously, you want to take care of the financial issue at hand but also protect the rest of your money.