When we work with personal injury attorneys and their clients and discuss options for settlement proceeds planning, one common topic we discuss is the payout options of structured settlement annuities.
One concept we use to explain annuities is to compare an annuity to concrete. When you set up an annuity, it’s like pouring concrete — it’s very flexible in the beginning, and it can be as creative as you want, but once it’s set and established, it’s hard to change.
For example, when we work with a minor for whom we’re setting up a structured settlement annuity for, we can design the structured settlement annuity so that the individual receives semesterly payments to help fund future college expenses. At the date of the anticipated graduation, we can design the annuity to make a lump sum payment to help the client transition into the next phase of his or her life. This lump sum can be used as a down payment on a first home or graduate school or whichever purchase decision he/she makes at that age.
If we’re working with an adult who needs monthly payments for the next 10 years, we can design the annuity to make monthly payments over that 10 year period, or we can set up the annuity with lump-sum payments along the way.
In situations where a client wants a guaranteed income stream for life, we can include a monthly benefit that pays to that client for the rest of his/her life. This provides security because the client cannot outlive their payment stream. By so doing, we can ensure income for the rest of the client’s life.
In short, with a structured settlement annuity, the payout options are very flexible. It’s important to remember that the payout design and schedule have to be decided at the time of settlement, and once the payout schedule has been determined, the design can’t be modified or changed.
If you have a question about a certain case or a client, give us a call. We can help you come up and determine if an annuity makes sense for your client, and if so, we can help design some payout options that fit with the needs of your client.