Lump Sum Trades Are Complicated

Trading in your structured settlement for a lump sum eliminates the tax-free guarantee for the annuity payment stream that you and your loved ones may receive on a regular basis. Once the company that you’re dealing with and going through buys your payment stream, those payments are not longer considered free from taxes due to Section 104. It’s usually much safer to find a reliable structured settlement company to provide regular payments through an annuity or some other type of financial instrument that will simplify your tax burden.

That being said, selling your annuity stream is a decision that has to be made at the macro level, taking all the benefits and problems into account. Yes, losing tax-free status is a big drawback, but there are other factors that may weigh in more heavily.