Frequent Questions and Answers
Q. Do I have to sell my entire annuity or structured settlement?
A. No, we help clients carefully evaluate their needs to determine how much of their annuity they should sell, to build a transaction that provides the most flexibility possible.
Q. How long will it take to receive my lump sum?
A. Although the process varies depending on the state, annuities take about 12-14 days and structured settlements typical will take less than 90 days
Q. What is the process for selling my structured settlement payments?
A. Most states now have a fairly simple court proceeding. CFIP will initiate this court proceeding and take care of processing most of the documentation
Q. Will I be required to show up in court?
A. This will vary by state and local jurisdiction.
Q. What documents will I need?
A. Although specifics will vary; generally, a copy of the annuity contract, settlement agreement and identification are all that is required.
Q. Are there tax consequences if I sell all or part of my structured settlement payments?
The Internal Revenue Service has ruled that where a claimant (i.e., you) assigns periodic payments due to be received under a settlement agreement in exchange for a lump sum, the lump sum remains tax-free.
As part of the Tax Relief Act of 2001 (H.R. 2884) signed by President George W. Bush on January 22, 2002, individuals who must sell their structured settlement payments to meet unplanned financial needs are protected. This legislation made it mandatory for individuals to seek court approval when they sell their structured settlement payments, and works in conjunction with state laws directing how these types of transactions will be completed. In addition to benefiting and protecting the individuals, it also makes clear that annuity providers will suffer no tax consequences as a result of these transactions. The legislation states that annuity owners and providers do not now owe, nor have they ever owed, taxes as a result of these transactions.