Structured Settlements and Inheritance

Structured Settlement Question and Answer Client First Funding

Whether or not a Structured Settlement can be inherited all depends on the annuity contract specifying either “life contingent payments” or “guaranteed payments”.

This may be a sensitive subject to think about, however, with the amount of money that could be at stake it is a reasonable question to contemplate. When you have loved ones that depend on you financially, this question is likely to arise and you may want to ensure that your family is taken care of in case the unthinkable happens.

This key difference in your annuity contract can have a big impact on the availability of payments to your loved ones. When choosing whether your annuity contract specifies either “life contingent” or “guaranteed” payments, here are some of the differences that may help with the decision.

  • Life contingent payments last only as long as the person who was awarded the settlement is alive.
  • Guaranteed payments are in accordance to the schedule in the annuity contract. The person who was awarded the settlement designates a beneficiary to receive the remainder of payments.

If you are the named beneficiary of a structured settlement, you will have to submit a claim after your loved one has passed to the annuity issuer so the rest of the payments can be disbursed to you. Even after the structured settlement is inherited the money will continue to be tax exempt.

In addition, a commutation rider can be added into the contract so all or part of future payments may be converted into a lump sum for the beneficiary.

If you do not have a commutation rider do not worry as you can sell future payments in order to get your cash sooner. Selling your future payments may be helpful in such cases as needing a down payment for a new home, financing an education for you or your child or even paying off a debt in order to maintain your credit. Learn More About Client First Settlement Funding.