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How To Sell An Annuity

Selling an annuity should only be considered in the most drastic economic situations due to the fact that significantly less money will be received than if the annuity or structured settlement were allowed to go forward as planned. If an unexpected economic situation occurs such as a medical emergency or foreclosure on your home then these would be appropriate reasons to sell an annuity. Other than that, the amount received from the monthly payments of a structured settlement will be far more beneficial over the long run than a one-time cash payment. If you are in the unfortunate situation of needing to sell your annuity or structured settlement their organizations to help you but be wary of scam artists and always read the fine print.

Much like refinancing your mortgage with your existing lender, sometimes dealing with the company you currently have your annuity with is your best course of action. The company which manages your annuity will often be able to sell your annuity outright by using what is called surrendering the annuity which will result in a smaller lump sum payment. As with all things nothing is free and there will often be surrendering charges or other fees resulting from the sale so be sure to ask if there are any additional costs from the surrender. If possible, record the telephone call and advise the party that you are making a recording and if not then take thorough notes of who you spoke with on what day and what the conversation entailed.

If the company which currently manages your annuity or structured settlement is unable to offer a lump sum payment there are numerous other organizations which can provide this service. Check with many companies when getting your offers to ensure you obtain the highest amount when the annuity is sold. It may even be beneficial to have various companies competing against themselves similar to when purchasing a mortgage or taking out an automobile loan. Due additional searches to see if any of the companies have been reported at scamming customers or charging unexpected fees. It is always good to run the company through the Better Business Bureau website to see what kind of rating they currently have.

Since selling your annuity should be considered a last resort, check to make sure you've exhausted all possible options first. If you owe excessive medical bills many healthcare providers allow you to make monthly payments instead of paying the balance in full. Other creditors are also willing to implement repayment plans as long as they know that the debt will be repaid. It may be the case that you don't really need to sell your annuity or structured settlement and can therefore make more money over the long run by keeping the annuity intact.

Not only will you be receiving less from the annuity of structured settlement as a result of the surrender and lump sum payment but there will also be a large amount of earned income. As a result it is important to consider the tax implications of the sale. Speaking with a tax specialists can provide insights as to whether the amount is subject to estate tax, capital gains tax and what the implications will be for earned income at your tax rate. If you only need a small percentage of the lump sum it may be beneficial to establish a trust or to make charitable gifts to offset any taxes from the sale. It might be worthwhile to read Publication 575 on the IRS.gov website to familiarize yourself with the tax implications of pension and annuity income.

The purpose of an annuity is to provide a constant stream of income over a fixed number of years which can help get most individuals through the lean times in life. Selling an annuity should always be a last resort but if it becomes necessary there are many companies willing to purchase your annuity for a fair price and minimal fees. Read all paperwork provided and verify any potential fees or penalties as well as considering any tax implications before the sale. If you take these steps into consideration then you should have a smooth time when selling your annuity.