by Structured Settlement Watchdog
This week's structured settlement social media "road kill" , "scraped up" near Detroit Michigan, is Travis Waack's effort** to explain "how does a structured settlement annuity work" is woefully uninformed.
The structured settlement watchdog will review the errant "Waack job" for your education.
"With if the recipient of a structured settlement annuity is also a recipient of Medicare or Medicaid, the income from this type of annuity will not impair their ability to continue receiving benefits from these programs"
The structured settlement annuity in and of itself may very well impair a Medicaid recipient's ability to receive Medicaid absent proper settlement planning. For example, using a structure without a Special Needs Trust will be problematic if the amount of income generated, together with income from other sources, exceeds certain threshold amounts.
"These products are designed to make regular payments to their holders for a set period of time in specific intervals. In many cases, annuities also have a death benefit option whereby if the holder of that annuity were to pass away prior to receiving their funds, then the remainder of the money would be paid out to a stated beneficiary".
- Payments are made to payees, not the holders. The owner/holder of the structured settlement annuity contact is typically an assignment company (qualified or non qualified depending on the nature of damages).
- The payee of an annuity could be said to be the "holder" of "structured settlement payment rights"
- Payments maybe made for a set period of time or for life. There are other types of structured settlement payments
- One again, "the holder" of the annuity is the assignment company. The assignment company does not "pass away". If the payee, is a natural person and the payee passes away, any remaining certain payments or guaranteed lump sums can be paid to their named beneficiary. There are other possibilities such as where the measuring life is a naturalperson but the payee is a trust. The terms of the settlement agreement will dictate the ability to change beneficiaries.
With a deferred annuity, the holder will wait until a specified period of time in the future before taking receipt of their funds. The money that remains in the annuity account is sheltered from taxes until it is withdrawn.
- A properly designed structured settlement will avoid constructive receipt.
- Structured settlement payments which represent damages for physical injury, physical sickness wrongful death or workers compensation are generally income tax free [see IRC 104 regarding exclusion for the elements of damages]
- Structured settlement payments are not withdrawals.
"The components of a structured settlement annuity can include:
- The structured settlement agreement
- An annuity application
- A court order (only if a claim is being made by a minor)
- An annuity policy"
- The components of a structured settlement annuity include the annuity contract and the application.
- A court order is not required for every structured settlement annuity. A court order is required to approve the settlement where plaintiffs or distributees are minors or incompetents.
- Other documentation, such as a settlement agreement and release and qualified assignment are important documents in the structured settlement process, but such documentation is not a component of the structured settlement annuity.
"When a structured settlement annuity is in place, the insurance company that is offering the annuity contract will calculate the amount of the regular income payments to the recipient"
Waack is really off here! The amount and timing of the structured settlement annuity payments is determined BEFORE the structured settlement annuity is in place.
**at the time of posting the subject post was live at www.americanpremiumfinance (dot)com/annuities/structured-settlement-annuity-work and linked to Travis Waack's Google Plus profile.
Structured Settlement Social Media "Road Kill" is an ongoing "weed whacking" journey through some of the worst writing about structured settlements on the internet. American consumers of structured settlements need to be properly informed. Those who churn out poorly written inaccurate content because they are too lazy to seek out readily available information that IS accurate, do no service to the American consumer.