Structured Settlements: What Are They?
 |
Structured Settlements are used when an arrangement needs to be made to pay out a large sum of money over time. A good example of a structured settlement is when the winner of a large sum of money in a lottery takes the payments spread out over twenty years, instead of one lump sum payment upfront. Most structured settlements are purchased annuities, paying out over time on an annual basis.
The most notable form of a structured settlement comes into play with lottery payments. Rather than deal with the financial hit of handing out a single check for tens to hundreds of millions of dollars, state governments with lottery programs buy an annuity that's guaranteed to pay out the entire promised amount, usually at a discount; the annuity holder invests the money in bonds or other stable investments, sufficient to pay out the annual payment and turn a bit of a profit for the annuity holder.
The other very common use of a structured settlement is from court damage cases and they work in similar ways. A plaintiff wins a judgment in court for damages and the defendant will typically buy an annuity to pay out the damages on an annual basis, putting the payment schedule in the hands of the annuity holder. From a corporate tax purpose, purchasing the annuity is a one-time-charge and there are several advantages to doing this. The structured settlement type payment is the result of changes in federal laws dating back to 1982 and is meant to provide a steady stream of income for the recipient to pay for long term care for disability or injury payments.
Private citizens can also buy annuities, which will then payout a series of structure payments upon retirement, though this is less common than it used to be. Annuities bought this way were used extensively as supplemental retirement income, before the regulations on Individual Retirement Accounts (IRAs), 401(k) programs and Roth IRAs allowed people to get more direct control over their retirement investments.
If you're the beneficiary of an annuity, it can present some problems for you. First, there are some small temptations when getting that big annual check to blow it on something stupid, knowing that your day job can support you for the rest of the year. While this can be fun, it's very rarely sound financial planning. The second problem posed by an annuity is that the payments usually don't increase over time. This is the chief problem with them as a retirement strategy. Bringing home $500 a month in the mid-80s was a decent retirement income, assuming the house and car were paid for. Trying to squeeze by on $500 a month 20 years later is considerably more difficult, as day to day expenses rise with inflation on an annual basis.
Most annuities are set up as regular term payments over 10, 20 or 30 years. Sometimes an emergency strikes and an annuity payment isn't always the best way to handle it. At that point,there are several firms out there that will pay you cash (at a steep discount usually) for an annuity. They offer you a large sum of cash up front and buy the annuity from you.
Copyright Mark V. Schwartz - All Rights Reserved
The Millionaire in the Next Cubicle - The Money Times
| ||
Market Wire - Stone Street Capital Announces New Online Resource for the Structured Settlement Industry December 10, 2008 -- Stone Street Capital, LLC, a leader in thelump sum industry, announces a new free online resource for the structuredsettlement industry.This resource... | ||
Appeals may stall pet payments - Cincinnati.com MOUNT LAUREL, N.J. - More than 23,000 pet owners in the United States have asked for money from a $24 million settlement for owners of dogs and cats who were sickened or died after eating pet food contaminated with an industrial chemical. U.S. pet ... | ||
Structured Settlement « LAW INFORMATION There are several different options to setting up a structured settlement. A structured settlement can be paid out annually, quarterly and sometimes monthly depending upon how the payments have been set up. ... | ||
Business: How a structured settlement annuity works A Structured Settlement is essentially an agreement under which an insurance company agrees to pay an individual a predetermined amount of cash for a fixed length of time if the individual meets an accident. The documents generated in a ... | ||
Cash Payout On Structured Settlement Article The amount of a cash payout on structured settlement depends largely on the dollar value placed on a claimant's pain and suffering and terms offered by buy out firms... | ||
PR Newswire - NDC Board of Directors and General Meeting of the Partnership Members to Discuss the Company's Reorganization Proposal at December Meetings December 1, 2008 -- MOSCOW, December 1 /PRNewswire/ -- The National Depository Center (NDC), Russia's only settlement depository servicing the full range of debt and... | ||
Bizbits: Settlement: Contaminated pet food cases drag on - Fayetteville Observer MOUNT LAUREL, N.J. EUR” More than 23,000 pet owners in the United States have asked for money from a $24 million settlement for owners of dogs and cats who were sickened or died after eating pet food contaminated with an industrial chemical. U.S. pet ... | ||
Mizin signs mortgage deal with RakBank - Banking Business Review According to media reports, RakBank's new structured mortgage offering will settle all outstanding installments of the original price on the Remraam development and enable home buyers to settle payments over a period of up to 25 years. The new ... | ||
kirtsy - Structured Settlement Funding In this rough economy, an option for structured settlement recipients may be to cash out a portion of your future payments... | ||
Appeals may delay payments in pet food case - Bridgeton News MOUNT LAUREL, N.J. (AP) EUR” More than 23,000 pet owners in the United States have asked for money from a $24 million settlement for owners of dogs and cats who were sickened or died after eating pet food contaminated with an industrial chemical. U.S ... | ||
Business Wire - Ringler Associates Michael E. Westcott Elected President of NAMSAP December 16, 2008 -- CHICAGO -- NAMSAP, the National Alliance of Medicare Set-Aside Professionals has elected as their new president, Michael E. Westcott, head of the... | ||
Technorati Tags: Structured Settlement, Structured Settlements: What Are They?, Structured Settlement
-
Translate this page:
- Annuity BLOG
- Structured Settlement
- Annuity Life Care Plans
- Benefits Of Structured Settlements
- Can You Sell Structured Settlements
- Cash Trust Investments
- Get Money By Selling Structured Settlement Annuity
- How Structured Settlement Equal Cash
- How To Make Money Buying Annuity Payments
- Importance Of Comparing Annuity Rates
- Is Selling Structured Settlement Right For You
- Make Money Buying Structured Settlement Annuities
- Making Backwards Choices
- Options For Selling Annuity Payment
- Should You Sell Structured Settlement Payments
- Should You Take Cash For Annuity
- Structured Settlement Lump Sum Payment
- Structured Settlement Factoring
- Structured Settlements as Investment Vehicles
- Structured Settlements? Should You Sell?
- To Factor or Not to Factor
- Tips For Selling Structured Settlement
- Understanding Annuity Funding
- Understanding Structured Settlement Company
- Unstructured Settlements
- What Do Structured Settlements Brokers Do?
- When Should You Not Cash Out Your Annuity?
- Which Is Better - Lump Sum Or Structured?
- Social Bookmark This
- The Internet Real Estate Center
- eBay Real Estate Listings
- Home Loan Tips
- Credit Repair Tips
- Debt Consolidation
- Merchant Accounts
- Privacy Policy
- Sitemap