Friendly Advice: Stay Away From Companies That Purchase Injury Settlement Annuities
I was in Court yesterday in Tarrant County, Texas and the hearing before mine was about a lady who wanted to sell her structured annuity to one of those companies you see on TV, JG Wentworth. I don’t know the full history, but what I gathered is that she had been injured on the job with the railroad and had received a structured annuity as part of her personal injury lawsuit settlement. The lady was there alone and the only lawyer present was representing JG Wentworth. I learned that the lady received around $500 a month from the settlement (tax free) and that she was due to receive a lump sum payment of around $30,000 in 2017. Including that lump sum payment, she would receive a total of $72,000 over the next seven years. But in all her wisdom she had decided to sell her annuity for the whopping sum of $29,000. Wow, that was less than 50% of its present value.
The Judge quizzed her on her needs and it was not very clear why she needed the money. She had a job, had a car and had a house. The Judge made it very clear to her that he thought she was making a huge mistake. And he was absolutely right. She was truly making a horrible mistake and just giving away half her money. But ultimately, the judge approved it as she was an adult and if she wanted to make huge mistake, then that is her right.
My advice is to stay away from these type of companies. If you own a settlement and also need more money than the settlement stream provides, then do everything in your power to not sell the annuity—as you will lose over half its value in a sell. What can you do? Borrow money from others. Put a second lien on your house. Just don’t sell the annuity.
As an aside, I think structured annuities are great as they help make sure that the settlement money will still be there later. I encourage my clients that are receiving large settlement to at least consider the benefits of annuities. I refer them to Dirk Weeks at Structured Annuities, Inc. Dirk is extremely knowledgeable on these products and can provide lots of options depending on the future financial needs of the injury victim.
On a related topic, click here for my thoughts on Lawsuit Loan Companies.
Information provided by Texas Board Certified Injury Lawyer Mark A. Anderson, who can be contacted at 817-294-1900 in Fort Worth, at 214-327-8000 in Dallas and at 1-877-294-1115 across Texas. Also, please click here to contact online.
