Debt settlements, is my first thought.
Perhaps buyouts - in which a person who has won a legal settlement to be paid out over a period of time (often 10 - 20 years) sells that annuity for a single lump sum to be paid immediately. Said lump sums are generally 30% of the lifetime value.
So… what is a “structured settlement”?
You were right the second time … Usually require court approval in the case of a legal settlement
What also comes to mind is large lottery winnings … Lump sum vs $xxx per month for life. The funds are placed in an annuity structured to pay out over time. In many circumstances, if not pulled out early, people can collect more than the original principal as what is left accrues interest
Not here in WA. The state retains accrued interest.
For Lotto, as an example:
The annuity option: The state retains any accrued interest - winners are only guaranteed the amount of their winnings, paid out over 25 years.
The annuity is not transferable. Therefore it cannot be sold. However, it becomes part of your estate.
With the cash option, the winner receives a one-time payment of 50%.
Thanks for that verification!
The structured settlements that I have done have thus far always been as a result of some sort of bodily injury (usually auto accidents). The recipient has sued and received compensation usually in monthly payments. They can ‘sell’ future payments to a company at a discount rate. Making this up for clarity: Company will pay recipient a lump sum right now of say…$50,000 for $100,000 of recipients’. future monthly payments. While it doesn’t seem like a good deal, the lump sum may allow them to have the down payment on a house instead of just renting or it might give them capital to invest in something that will replace the monthly payment they ‘sold’** In any case, it puts them more in control of the funds than merely living on a monthly check. In my state, this must also be approved by the court.