Are Annuities Good For Structured Settlement Funding?
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If you have been awarded a judgment or are considering a settlement offer from a defendant in a lawsuit, then you need to consider a structured settlement and the benefits that it can offer to you. While there are many benefits to a structured settlement, lets look at just a couple of them.
Structured settlement funding with an annuity is a great way to guarantee that you will receive income in a safe and secure manner. Often times, defendants have two options for paying a judgment or offering a settlement. They can pay a lump sum, which is bad on your part due to tax concerns, or they can purchase an annuity.
The annuity that they purchase is a guaranteed income mechanism for you that will pay the amount awarded over a fixed amount of time. Looking at most annuities, around 30 years is pretty standard. Often times, the annuity will pay more than the judgment amount, however that is taking into consideration the rates at the time the annuity is purchased.
When the income is guaranteed for, lets use 30 years as an example, you can expect a monthly income that is generally around $5,000 per month for each $1 million (US) that is awarded. These numbers only represent an example and you should check with your attorney and structured settlement adviser about specifics to the rates and income before signing anything.
Another nice aspect of the annuity as a structured settlement funding option is that the income can be tax exempt. There are certain considerations that you need to look into and any accountant or attorney can answer those specific questions for you. Most of the time, it just depends on the wording in the settlement papers and if there is a trust fund involved.
If you know you have expenses coming and are worried that you won’t have enough for them, like a wedding or college tuition, you can also structure into the payment plan lump sum payments at specific times. This is a great way to continue to have a monthly income while preparing in advance for larger expenses that you know you will have.
In summary, using an annuity as a structured settlement funding option is a great way to guarantee income for years ahead. Besides the potential tax benefits and planning for the future, it can often be a way to settle a legal case and avoid added expenses that accompany them.
Source by Marc Andrews
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