There are many good reasons for a person to sell. I know of one gentleman who liquidated his payments to participate and pay for a Navajo Indian ceremony. He was a Navajo Indian and the ceremony was important to him and his heritage. There was a cost involved. Typically, most people choose to liquidate their future structured settlement payments because they find that they have a need for immediate cash to address a personal or family need, often that was unanticipated (i.e. loss of a job, resulting in falling behind in bills or house payments; a medical illness) or because they want to achieve a personal, family, or financial objective (i.e. educational needs for one’s self or family members; moving to a new area for a job opportunity; business/job opportunity; desire to purchase a home or automobile; etc.).

Judges are less likely to view a transaction favorably if the payee/annuitant is young (less than 25 years old). The typical thought process is that younger people are more likely to make unwise financial decisions. Selling structured settlement/annuity payments to “invest” in the stock market, or other passive ventures, or to put money in savings is almost always viewed by courts as unwise. The reason for this is that the payee is giving up future tax-free income/structured settlement payments (discounted to present value at a discount rate of 12 or 15%) to “invest” in assets or a venture where the return will be taxable. Economically and financially that is not a good bet.

Investing in a business in which the payee is going to be actively working and owning is another thing altogether. Courts are more willing to allow competent, mature, intelligent payees/annuitants to take a risk in a business venture if they have experience in the business and/or if they have the ability to replace the income they are giving up in the future by working if their business venture does not succeed as anticipated. (Again, this depends on the Judge.) For instance, a payee/annuitant and her husband owned two truck rigs, but worked as an independent contractor for a large trucking company. They had to wait to get jobs from the large trucking company and the large trucking company gave first preference on their jobs to their own trucks and employee/drivers. The payee/annuitant had a CDL and the payee/annuitant’s husband had been driving trucks for 25 years. They owned the rigs outright, but needed to get registration, licenses, fuel, working capital, tires for one of the rigs, etc. They would be giving up monthly income for a couple of months while they were getting started and awaiting payment from their customers, but the business was there, they were experienced, and the potential income was 3 or 4 times what they were currently making. It was a risk, but a reasonable risk, and the Judge allowed them to complete the transfer.
Judges are less likely to approve a transfer if the payee has completed multiple transactions in the past. The “serial seller” if you will, is viewed by courts as not being able to manage their money well and a possible spendthrift.

Selling to take a vacation is likely not going to be a good reason. That could change if the payee is suffering from a terminal illness and payments 5, 10, or 15 year in the future will have no value to them.