Annuities, Structured Settlements, and When to Sell Them

Got questions about the complicated topic of annuities and structured settlements? Here are some answers from our founding attorney, Jeff Rasansky, Esq. If you need help with a legal matter, call 214-651-6100 to schedule a consultation. 

What are the biggest differences between cashing out an annuity and selling a structured settlement?  

Cashing out an annuity typically refers to withdrawing funds from an existing annuity contract before its maturity date. This may involve surrendering the annuity and receiving a lump sum payout. The cash-out amount may be subject to surrender charges, taxes, and potential penalties.  

Selling a structured settlement involves transferring the right to receive future periodic payments from a legal settlement, such as a personal injury lawsuit, to a third party in exchange for a lump sum payment. This allows the recipient to access the money sooner than waiting for the scheduled payments. 

If you need legal guidance on a personal injury matter, contact Rasansky Law Firm. We have been representing the injured and their families for decades and can help you, too.  

Is it ever a good idea to sell an annuity or structured settlement? What are situations where it may be beneficial?  

It depends on individual circumstances whether it's a good idea to sell an annuity or a structured settlement. In certain situations, selling these assets may be beneficial, such as:  

• Financial Emergencies: If an individual requires immediate funds to cover unexpected expenses or urgent financial needs, selling an annuity or structured settlement can provide the necessary liquidity.  
• Investment Opportunities: Selling an annuity or structured settlement can free up capital that can be invested in potentially higher-return opportunities.  
• Debt Management: If someone is struggling with overwhelming debt, selling these assets can help pay off debts and improve financial stability. 

What are the advantages and disadvantages of structured settlements in lawsuit settlements?  

Here are some of the advantages of structured settlements: 

• Guaranteed Payments: Structured settlements provide a reliable and secure source of income, as the payments are typically guaranteed and tax-free.  

• Tailored Payment Schedule: The recipient can negotiate a payment plan that suits their specific financial needs, such as regular payments over a certain period or a combination of lump sum and periodic payments.  

• Tax Advantages: In many jurisdictions, structured settlement payments are exempt from income tax, providing tax benefits to the recipient.  

Disadvantages of structured settlements may include:  

• Lack of Flexibility: Once a structured settlement is established, it can be challenging to modify the payment schedule or access a lump sum of money in case of unexpected financial needs.  

• Inflation Impact: Over time, inflation may erode the value of the periodic payments, potentially affecting purchasing power.  

If you need more information about lawsuit settlements or if you think you have a potential personal injury or wrongful death lawsuit, contact Rasansky Law Firm for a free consultation. For over thirty years, we have been helping clients fight for their rights and get the compensation they deserve in the Dallas-Fort Worth area. 

What should people consider before selling a structured settlement, and what type of professionals should they consult before making a decision?  

Individuals should consider several factors before selling a structured settlement and consult professionals such as financial advisors, tax advisors, and attorneys specializing in structured settlements. Some key considerations include:  

• Financial Needs: Assess the urgency and extent of financial needs and determine if selling the structured settlement is the most suitable solution.  

• Financial Implications: Understanding the impact of selling on long-term financial goals, tax obligations, potential penalties, and any associated fees or charges.  

• Legal Requirements: Familiarize oneself with the legal requirements and restrictions surrounding the sale of structured settlements, as some jurisdictions may have specific regulations.  

• Comparison Shopping: Obtaining multiple quotes from reputable buyers is a good idea to ensure a fair and competitive offer. 

What is the role of structured settlements in wrongful death claims?  

Structured settlements are not used in wrongful death claims. Structured settlements are used in catastrophic injury cases such as brain damaged baby, paraplegia, and traumatic brain injury cases. In these types of cases, personal injury victims will require a stream of income to cover ongoing expenses, medical costs, education, and other financial needs. These are usually settlement instruments, as courts cannot award the purchase of structured settlements.  

How do courts place a value on a wrongful death claim? 

Factors used to determine the amount of a wrongful death settlement include:  

• Economic Damages: This includes quantifiable financial losses, such as medical expenses, funeral costs, lost wages, and future income that the deceased person would have earned.  

• Non-Economic Damages: These are subjective losses that are more challenging to quantify, such as emotional pain, suffering, loss of companionship, and the impact on the survivors' quality of life. 

Jeff Rasansky and his team at Rasansky Law Firm have helped thousands of people secure fair settlements and verdicts in personal injury and wrongful death matters in the Dallas-Fort Worth Metroplex over the last three decades. We treat each client with respect and compassion as we fight hard against big insurance companies to secure a fair settlement.  

We help those who have been injured in an accident due to someone else’s negligence, whether it is medical malpractice, a car accident, birth injury, wrongful death, or any number of other personal injury matters. We offer all prospective clients a free consultation, during which we can learn more about their situation and give them the best possible guidance for moving forward. Contact us now at (214) 651-6100 to schedule yours.