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.