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If you inherited a structured settlement you probably have some questions, you may wonder, structured settlements, how do they work? Or can I sell structured insurance settlements? The easiest way for us to manage this is to go through some likely questions one by one, so here goes.
No, you will not have to pay taxes if you sell structured insurance settlements that were originally tax-free. You won’t have to pay taxes on the payments and you won’t have to pay taxes if you sell it for a lump sum. You are free and clear. The only way that you may have to pay some money is if you were not listed as a designated beneficiary. So, one of the structured settlement death benefits is that you can inherit it tax free if it was tax free to begin with and you were listed as a beneficiary.
If the person who owned the settlement listed you as the official beneficiary the money should transfer to your name relatively quickly and easily, once you provide a death certificate and your identification. However, if you were not listed as beneficiary, if no one was listed or the person listed also died and you are the next closest survivor, you may have to go to probate court to be assigned as beneficiary. This could take time and cost money.
Yes, you can sell structured insurance settlements that you inherited. You will need to wait for it to be officially turned over to you, per above. Then, you can sell it – though this will require the same court approval as any other settlement sale would and everything that we have written in this guide would apply to you. And you would get the lump sum structured settlement death benefits tax free.
It is important to note that some structured settlement agreements will have a commutation rider which will automatically convert the payments to a lump sum and give the beneficiary a lump sum upon inheritance. You should look into this before you spend your time getting structured settlement quotes and researching how to sell it.
The internet is a wonderful tool, just as our Strategic Capital website is a great resource, full of information and facts to help you make life decisions, small and large. But sometimes you really should consult a professional. When it comes to tax advice and major financial decisions, such as selling a structured settlement, it is a good idea to seek the advice of a tax professional or financial advisor, one who is paid by the hour to give you advice and has no stake in the decisions that you make and thus is giving you the advice that you need.
Yes, you can assign another person as the beneficiary or just assign the payments to them now, similar to how you would assign it to a company that purchased payments from you. So, say for example that you are retired and doing fine financially and you just inherited a settlement from a family member who passed away; you could contact the insurance company that owns the annuity and have the payments transferred to say your son or daughter who needs more financial help than you do. But you would not be able to ever get those payments back, so make such a decision carefully and talk to Strategic Capital about your options before you make a final decision.
Call Strategic Capital for structured settlement quotes today!