The payee/annuitant should feel comfortable with the company and people they are doing business with. If the company/sales person is using high-pressure tactics to get the payee/annuitant to commit to a transaction, that should be a red flag. Be wary of the sales person trying to encourage you to sell more payments than is necessary to achieve your objective or address your need. I would recommend perhaps doing a little more than you need, but don’t go too far. (For instance, if the payee thinks that they need to raise $ 25,000, perhaps they should consider raising $ 30,000, but don’t let the company persuade you to do a transaction for $ 65,000.)

A company that actively tries to discourage you from consulting an attorney or financial advisor regarding the transaction is also a red flag. Many payees/annuitants prefer not to incur the expense of consulting an attorney or financial advisor, but the court will likely feel more comfortable with the transaction if the payee has consulted with an attorney/financial advisor. However, the court will feel more comfortable with the transaction even if the payee does not consult with a financial advisor/payee if they know that the payee considered doing so, did not feel it necessary, did not want to incur that expense, and fully understands the transaction.

Make sure that the transaction documents do not include a security interest or right of first refusal in payments that the payee is not being assigned. For instance, say a payee is receiving $ 2,000.00 per month for life with 30 years (through 2025) guaranteed. The payee decides to transfer/assign 120 partial monthly payments of $ 500.00 each from January 2013 through December 2022, and will retain $ 1,500 per month during that time period and will remain entitled to receive all payments after December of 2022. Some companies will include a security interest and/or right of first refusal in all of the payee’s future payments. That is not proper and can create a lien/claim/encumbrance on the payee’s non-assigned payments, restricting their future flexibility relative to those payments. (This may also be included in the disclosure statement. If it is, ask that these provisions be removed and do not sign a contract with those included.) *Companies that give you 2 or 3 potential transaction options would be preferable to me. That way, you have some options to consider.