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Structured Settlement Beneficiary Facts
Your Structured Settlement Beneficiary will continue to receive payments in the event of your death, at least in most cases. I know it is not a pleasant thought, but none of us know when it will be time to meet our maker. If you set things up correctly, you won’t have to worry about it. When you take a lump-sum payment, there may be nothing left at the time of your passing.
It all depends on how your structured settlement is set-up. Timing is critical. Get it done in the beginning, keeping your beneficiaries in mind, and you won’t have to worry about it the rest of your life. If it is set-up with it only paying you, the Annuitant, while you are living, then nobody else is going to get a dime when you pass on to the great beyond.
Nobody will be surprised to learn that the attorney’s for the Defense would like to see this in their personal-injury cases, because the liability would be terminated if the annuitant is dead. I would never let any of my clients accept such a set-up where there are no named beneficiaries.
Options To Consider
The structured settlement can be set up to have a fixed payment over a period of time. This could also be in terms of a set number of payments. This is called a “Guarantee-Period”, because even if you pass-on, the payments will be continued until the end of the specified period. If you should pass-on, the remainder of the payment-stream would go to your named-beneficiary, or if you have none, they would go to your estate.
Another way to make sure the settlement is paid out in full is to set it up with a “Joint-And-Survivor” Benefit. In the event something happens to you, the remaining payments would go to the named survivor. This is commonly a spouse or a child. It is an important option to consider.
Here is an interesting option – the “Commutation-Rider”. This is a way for your beneficiary to receive a lump-sum payout as opposed to getting the remaining payments. Such a Rider usually calls for a lump-sum payment of 90% of the remaining payments if you die. This is a good deal as opposed to having to sell the settlement at a discount.
Should You Sell It Now?
The question is, should you sell your settlement now to make more money for your beneficiaries? Selling is surely a critical decision. Yes, you can get a lump-sum now, and turn it into a fortune. I know several people who have done just that, but it takes discipline. You are also giving up a tax-free stream of income, for a taxable income. Sometimes, the money earned is worth paying taxes on it, even though there are always plenty of ways to minimize the tax burden.
If you have a good financial advisor, yes, you can take these funds and make more money than the original settlement was worth, and still have a monthly income dependent on the way the investments are set-up. This will benefit the Structured Settlement Beneficiary.
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