Structured Settlements Twist

A structured settlement is money that is owed to you in a monthly stream of income for many years, such as a lottery winning, large law suit or a payment from an annuity that has been annuitized. In exchange for the income, the owner of the structured settlement receives a lump sum amount of money. These have existed for quite some time, investors or companies like to purchase them. The latest development in this market is people selling all or a portion of their retirement pension, often called a defined benefit plan, as featured in the article Investing in a Stranger’s Retirement – WSJ.com. In my opinion sellers often financially desperate to get the lump sum, are anxious to sell them, perhaps not consulting advisors or getting quotes from numerous carriers. Also I fear that the lump sum will not be used wisely, and then shortly be destitute. People considering these, should have someone like an accountant estimate the tax ramifications, and the real cost of the transaction, before making a decision. Lastly, they should meet with a financial planner to help them plan their affairs and invest the lump sum wisely, if they decide to do it.

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