How to Take Advantage of Structured Settlement Annuities

To take advantage of structured settlement annuities, it is important to comprehend the concept of structured settlement.  Basically, this type of agreement uses an insurance company to pay the individual the predetermined amount of money based on a fixed timeframe.  The agreement normally covers annuity application, court order, annuity policy, and qualified assignment among others.

The structured settlement annuities reflect the payment stream that is supposed to be tax-free and paid normally in equal amounts across equal time period intervals.  The flexibility that is appropriated by structured settlement annuities remains unmatched by other types of investment solutions like stocks, bonds, savings accounts, and real estate among others.  The said can be said for the level of security that can be derived from structured settlement annuities.

Taking Advantage of Structured Settlement Annuities

The structured settlement annuities are becoming quite common primarily because of the added security it enjoys from the regulation provided State and Federal statutes.  Some provisions are likewise ensured through the Internal Revenue Service code including recommendations from Medicare/Medicaid which are likewise factored into the concept.  In order to properly take advantage of structured settlement annuities, it is important to become familiar with its various conditions.

  • One of the best ways to take advantage of structured settlement annuities is to have the payments made over extended periods to ensure that they last the lifetime of the plaintiff.  This will ensure that upon the untimely death of the recipient, there is a guaranteed portion of the original settlement that will remain to be paid to the estate or any named beneficiary.
  • It is important during the consideration of periodic payment to take into account the commencement date of the payment, its duration, including increments if any.  The basis should be done on the premise of using the structured settlement annuities for future financial obligations. 

In this context, recipients can take advantage of the money by factoring in their monthly expenses, hazard of occupation, current age, as well as any retirement plans.  Qualified assignment allows insurance companies to transfer the obligation of payments to a designated third party.

  • To ensure that the payments received from structured settlement annuities continue to be tax-free, it is important to alter the scheme once both parties come to an agreement.  It is equally important in the context of structured settlement annuities to understand that payments made to the estate remain free of income tax but continue to be covered by estate tax.
  • Based on the laws of State and Federal governments covering structured settlement, the entire process can be closed out anywhere from 3 to 6 months.  This means that an individual may run out of available money even before the structured settlement annuities begin to kick in.

In order to take advantage of the benefits of the structured settlement annuities agreement, you must realize that a court order is necessary to avoid tax liabilities.  Obtaining the court order must be in accordance with the Structures Settlement Protection Act as recognized by 36 states of the United States.

  • To take complete advantage of the structured settlement annuities agreement, the recipient must be aware that a disclosure statement should be made available from 3 to 14 days prior to receiving the transfer agreement.  This disclosure agreement should specify the amounts to be paid including the corresponding due dates.

In the same manner, it must include the IRS Discounted Present Value for that amount, the Annual Discount Rate, and the Gross Advance Amount as well as the list of fees and commissions that are incurred.  This helps to avoid unforeseen and sudden expenditures associated with the structured settlement annuities.

  • Unless you are extremely adept with statutory law or the Internal Revenue Service code, it would be to the best interest of the recipient to obtain the services of a qualified attorney.  This will ensure that the proper advice would be given to take full advantage of the structured settlement annuities.

In fact, having an attorney is a precondition in some states when it comes to dealing with structured settlement.  Recipients do have the right to waive legal representation for the Transfer Agreement of receive an Estoppel letter from the qualified attorney.

  • To take advantage of structured settlement annuities, the recipient must realize that the court order and the assignment must be received.  The funding company will never initiate payment to any individual without these documents.  In the same manner, a recipient should be aware that payment actually starts anywhere from 30 to 45 days after receiving the court order depending on the funding company.
  • In the context of understanding and taking advantage of structured settlement annuities, it is important for the recipient to remember that there is an option to have a lump sum payment instead of the regular payments.  This type of option is provided to ensure that the recipient has access to immediate huge amounts of money which may be necessary to purchase a house, pay medical bills, or settle mortgages among others. 

Knowing the presence of this option, works towards taking full advantage of the structured settlement annuities.

It is important to keep in mind that structured settlement annuities are not one-way streets that need to be followed strictly.  This means that for the recipients to take advantage of the agreement, it is extremely necessary to be aware of the various conditions that may arise from it including the alternative payments that are available.  By learning about this information, any recipient can successfully take advantage of structured settlement annuities.

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