What about My Dependents? How are They Protected?

A Guide to everything you should know about selling.

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Chapter 6

I’m going to cash structured settlements out, but what about my dependents? How are they protected?

So, can I sell my structured settlement and still protect my children? When I cash structured settlements how does this impact my family? These questions can be answered in two ways. First, we can consider how your dependents can be protected in the event of your death. Second, we can look at how laws ensure that you consider the best interest of your dependents.

Leaving Your Money Behind

One way that you can protect your dependents is to leave your money, including your structured settlement payments, behind in a way that will not cost them anything to access it. When it comes to structured settlements how they work is that you simply appoint the person that you wish to inherit your money as the beneficiary of your policy. It’s easy – you will be asked to specify a beneficiary when the structure is first set up. Or, you can call the administrator of the annuity at any time to update or change the beneficiary.

When you designate a beneficiary you can be certain that in the event of your death this person will be given your settlement payments, tax free (if the payments were tax free to you), with little paperwork. You may also add a commutation rider which allows them to receive the proceeds as a lump sum, rather than maintaining the payment structure. Otherwise, those who inherit your settlement will have the same right to sell the payments for a lump sum as you do.

If you fail to identify a beneficiary then your dependents will have to go through probate court in order to access your money after you die. This is very time consuming and can be extremely expensive. By extremely we mean thousands, even tens of thousands of dollars, depending upon the amount of the settlement. So, unless you want the government to take a huge cut of your money it is important that you always have an updated beneficiary in place.

Now, if you are older and no longer need your money, or if you are very sick and have only a short time left, you may also consider a cash structured settlements payout and then simply give the money to your children. This can be quick and easy.

Take the time to update all your beneficiaries now!

Life flies right by and years seem to pass as quickly as stops on a subway. Because we move at such a fast pace we sometimes forget to do small things, like update financial beneficiaries when life changes. Now that you are considering selling your payments to get your finances in order this is a great time to look at other areas of your financial life. Take the time now to look at all your financial policies (life insurance, checking account, retirement account, etc.) and update your beneficiaries to ensure that the right person will inherit your money if something happens to you.

The Law Protects Your Dependents

Another way that your dependents are protected in regards to structured settlements has to do with the need to get court approval to cash structured settlements. One reason for this requirement is to ensure that if a person is supporting a family the family’s security will not be compromised by selling settlement payments. Can you sell your payments if you have children who depend upon you? Yes. But only if you can prove to the court that this sale is in the best interests of the entire family.

Before you go to court to try and sell your payments ensure that you have a good reason to sell. You will need to show the judge that such a sale is in the best interests of you, your children and the entire family. And remember, if you try to sell structured settlements for children it will take longer and be more difficult than selling a settlement that you own. But when you call Strategic Capital we can help you to navigate these difficult waters.