In order to annuity payments, Annuitants must first determine if this strategy is legally allowed in their state of residence. Nearly two-thirds of states forbid selling or transferring annuities in exchange for advanced cash. States which do allow the sale of structured settlements generally require the sale to be confirmed through the courts.

People elect to sell structured settlement payments for a variety of reasons. Some require lump sum cash to pay off outstanding debts, fund college tuition, or start a business. Others need money to fund investment opportunities such as buying real estate or funding business partnerships.

Structured settlements are commonly used to provide funds to a person who has been seriously injured. They are also used when paying out jackpot lottery winnings or to distribute inheritance funds provided in an irrevocable life insurance trust.

Individuals who receive annuity payments as injury compensation are often unable to work or in need of ongoing medical treatment. Annuities ensure injured parties receive sufficient funds to cover normal living expenses and obtain appropriate healthcare. Courts rarely authorize the sale of structured settlement payments unless Annuitants provide undeniable proof that the sale will improve their way of life.

Upon receiving court approval, Annuitants must locate a funding source to sell forthcoming annuity payments. The most common funding sources are private investors, investment companies, and cash advance providers. A few financial institutions provide cash for annuities, but the majority of banks and credit unions do not participate in this type of funding.

Annuity payments are backed by life insurance companies. Annuitants must obtain permission to sell future payments from the insurance provider that has underwritten their structured settlement. Annuitants must provide the number of payments sold, along with information pertaining to the funding source. Life insurance companies are not required to authorize the transfer of annuities and are often unwilling to engage in this strategy.

Annuitants typically sell partial payments to obtain advanced funds. Courts rarely authorize the sale of the entire structured settlement unless only a few years of payment remain. Funding sources do not pay full face value for annuities. Instead investors charge an upfront fee which generally falls between 20- and 30-percent of advanced funds.

For example, an Annuitant assigns payment rights to the funding source for a total of ,000. He would receive between ,000 and ,000 in cash. Annuity payments are sent to the funding source until the number of payments sold has been reached. Afterward, annuity payments revert back to the Annuitant.

Selling structured settlement payments is a serious decision which can have dire financial consequences. Annuitants should carefully weigh the advantages and disadvantages of selling future annuities. It is best to obtain legal counsel to determine the best course of action and ensure proper protocol is followed.

Transferring annuity payments usually takes three to four months to complete. Annuitants must take great care to ensure they are working with a trustworthy funding source. Always conduct due diligence before transferring future annuity payments and be certain to understand required procedures.