Selling Structured Settlement Annuity Payments
BY Carson Nash
A structured settlement is an agreement made to settle a claim or lawsuit involving an injured individual (claimant). It provides for a series of periodic payments to be made over time to the claimant. These payments most often are intended to cover living expenses and medical costs. A structured settlement may be agreed to privately (for example, in a pre-trial settlement) or it may be required by a court order. These periodic payments are most often funded through an annuity purchased from a major life insurance company.
Payments received as damages under a structured settlement agreement for personal injuries or physical sickness are not subject to income taxes. Earnings realized on investments from a lump sum, however, are subject to income taxes. In 1999 the IRS issued a Private Letter Ruling stating that an individual's sale of their structured settlement payments would not create a tax liability.
The annuity itself is not assignable by the annuitant because he or she does not own it. It is typically owned by a subsidiary of the life insurance company that issued the annuity or the original defendant's casualty company. So the annuitant/payee does not have the right to sell or assign the annuity. What they do have is the "right to receive the payments" under the settlement. That right is personal property which can be assigned. Carson Nash Funding buys the personal property "rights to receive the payments" which is legally assignable by the claimant or payee.
Most states have enacted transfer statutes requiring either a court order and/or certain disclosures before a structured settlement recipient can sell their annuity payments. Every transfer of payment rights will require a court order to avoid a penalty. List of states with transfer statutes.
The following states do not currently have transfer statutes, individuals living in these states are still required by federal law to get court approval to sell their structured settlement payments. Carson Nash Funding can assist individuals in these states to get approval under the appropriate transfer act in another state. List of states without transfer statutes.
Structured settlement transactions are based on the financial needs of each individual annuitant. The annuitant can sell all or part of his/her remaining payments for a lump sum cash payout.
ABOUTH THE AUTHORAbout the Author: Carson Nash has over 20 years of experience in providing financial services to individuals and companies receiving deferred payments which are not serviced by traditional financial institutions.
Carson Nash's website, carsonnash.com provides financial information o
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