A Comprehensive Guide to Selling Your Structured Settlement Annuity

Shawn Plummer

CEO, The Annuity Expert

There comes a point when your financial circumstances shift, requiring you to make new decisions. Knowledge is your most potent compass when such a crossroads looms ahead, mainly involving your structured settlement annuity. The phrase “sell my structured settlement annuity” may cross your mind more frequently than you’d like, and you might wonder about the ins and outs of this process. So, let’s demystify the path of selling your structured settlement annuity, helping you make an informed choice about your financial future.

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Understanding Structured Settlement Annuities

Before you confidently say, “I want to sell my structured settlement,” it’s crucial to understand what structured settlement annuities are and how they work. A structured settlement annuity is a contract where an insurance company agrees to pay you a predetermined amount over a specified period. These payments are often a result of a lawsuit settlement or a lottery win.

Example: Suppose you were involved in a personal injury lawsuit, and the defendant’s insurance company agreed to pay you $500,000 in settlement. Instead of giving you a lump sum, they opt for a structured settlement where you get $25,000 annually for 20 years. You have a structured settlement annuity.

Sell Structured Settlement Annuity

The Allure of Selling Your Structured Settlement Annuity

When life throws you a curveball, you may need to sell your structured settlement annuity for a substantial lump sum instead of the scheduled smaller payments. The reasons can be as diverse as a house purchase, debt repayment, investment opportunities, or unforeseen medical bills.

Imagine you’re allowed to invest in a promising start-up, but you lack the necessary funds. The potential returns far outweigh the total of your annual payments. This situation might prompt you to consider selling your structured settlement annuity to raise the investment capital.

The Process to Sell Your Structured Settlement Annuity

Selling your structured settlement annuity is not as simple as trading in your old car. It requires court approval and involves several steps, each requiring careful consideration. Navigating the paperwork, evaluating offers, and managing potential tax implications can be overwhelming. Still, you can successfully navigate this financial landscape with a step-by-step guide and professional assistance.

Example: Suppose you’ve decided to sell your structured settlement annuity. You’ll start by contacting several companies, receiving their quotes, and deciding which offer suits you best. After accepting an offer, you’ll go through legal documentation and, finally, appear in court to approve your sale. It’s a multistep journey that requires due diligence at each stage.

Sell Structured Settlement Annuity

Selecting the Right Company

Choosing a reputable company to facilitate the sale is paramount. Don’t just consider the lump sum they’re offering but also their track record, customer service, and professional integrity.

Example: Consider John, who decided to sell his structured settlement. He received attractive offers from Company A and Company B. Company A offered a higher lump sum. Still, after researching, John found several complaints regarding their customer service. Company B offered a slightly lower sum but had excellent customer reviews and a track record of integrity. John decided to go with Company B, valuing their transparency and customer-centric approach.

Getting Court Approval

To sell your structured settlement annuity, you will need court approval. This process ensures the sale is in your best interest and prevents potential exploitation.

Example: Take the case of Jane, who decided to sell her structured settlement annuity. She worked with her chosen company to compile a comprehensive case documenting her reasons for selling and how she plans to use the lump sum. The court reviewed her case, asked questions to confirm that the sale was in her best interest, and ultimately approved her request, allowing her to proceed with the sale.

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Potential Pitfalls When Selling Structured Settlement Annuity

While the option to sell your structured settlement annuity can be a lifesaver, it is not without potential drawbacks. You might receive less than the total value of your annuity, and the resulting lump sum could be subject to taxes. Knowing these pitfalls upfront will help you make a well-informed decision.

Example: Imagine you sold your structured settlement for a lump sum of $400,000, whereas the total value of your future payments was $500,000. Additionally, you used the money to buy a home, only to find out later that the lump sum was subject to taxes, leaving you with less money than you initially thought.

Making the Decision: Is It Right For You?

Only you can decide whether selling your structured settlement annuity is best. It requires thoroughly evaluating your current and future financial needs, understanding the implications of selling, and, perhaps most importantly, seeking professional advice.

Example: Let’s look at the situation of Bob, a retiree with a steady pension and an additional income from a structured settlement. Bob’s children have finished their education, and he has no significant debts or financial obligations. Although Bob could use a lump sum to renovate his home, selling his structured settlement might not be in his best interest as the regular additional income provides a comfortable living and financial security.

Next Steps

The choice to sell your structured settlement annuity is a personal one that requires careful thought and understanding. Weigh your options, understand the process, and consider the potential pitfalls before deciding. Knowledge is your most significant financial asset, and well-informed decisions are your best investments. By shedding light on this topic, we hope you feel confident and equipped to make the best decision for your unique situation. It’s not about rushing into a sale but about making an informed and sensible choice for your financial future. You have the power, the knowledge, and the choice – all you need to do is navigate your path wisely.

A Comprehensive Guide To Selling Your Structured Settlement Annuity (2023)

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Do I owe yearly taxes if I have a structured settlement from winning the lottery?

The answer to this depends on the type of structured settlement you have and your tax situation. Generally, lottery winnings are taxable income and must be reported on your taxes each year.

Can I sell my structured settlement annuity to a third party without the court being involved?

No, in most cases, the court must be involved when selling a structured settlement annuity. This is because you must first obtain court approval to sell your settlement payments legally. Without this approval, it is not possible to sell your structured settlement annuity or any of its associated benefits.

What court fees are associated with selling my structured settlement annuity?

The fees associated with selling your structured settlement annuity depend on your state of residence and the company you work with. Typically, court fees can include appraisal fees, court filing fees, legal costs, document preparation costs, and other related expenses.

Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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