It is not uncommon for individuals who may have elected structured settlement arrangements to consider selling (assigning away) some or all of their rights to their annuity payments.

One of the most common reason why someone would consider selling off a structured annuity revenue stream in lieu of a lump sum payment is the knowledge (realization) gained over time that the true value of a deferred payments arrangement is generally is not significantly (if at all) greater than the lump sum they may be able to sell it for. Another reason that often prompts many recipients to trade their annuities for a lump sum payment is the (subsequent) realization that the current (true) value of the payment stream is actually less than the total gross amount of the payments -a condition that is somewhat similar to what is referred to as "up side down" situation in auto financing.

Considering that everyone’s circumstances, health conditions, individual personal needs and desires change over time, it is no surprise that many recipients of a structured payments arrangement see a need to sell their periodic payments annuity for a lump sum payment. Sometime, it is prompted by availability of new or better treatment options that may have become available due to some recent advances in medical sciences or a new drug therapy. In some cases, it may be a quality of life issue that may make one to contemplate trading of structured payments for a lump sum amount.

There are also cases where it is merely a simple case of economic sanity. For example, if one finds that a new treatment/therapy has become available that costs more up-front, but would significantly lower the ongoing treatment costs, it may make a perfect sense fiscally to sell off the annuity, and use the lump sum payment to pay for such a treatment options. Similarly, some individuals may want to exercise their option to get better returns on their money (i.e. possibly earn a higher annual income) by investing the funds themselves into better paying investments or in their own businesses.

The reasoning that prompts someone to sell his or her rights to an annuity arrangement at a later date essentially involves the same thought-processes that one goes through initially while agreeing to a structured settlement arrangement in lieu of a lump sum payment. In essence, one weighs the relative value of the purchase price (the lump sum amount) being offered compared against the (expected) present discounted value of the income stream being sold. If the said analysis shows that one has more to gain by selling (assigning) rights to one's annuity in lieu of a lump sum payment, that individual may choose to sell it.

Considering the fact that there are many complex variables (fluidity of investment and financial markets, current and future state of economy, interest rates, personal wellness related issues, etc.) at play here, there is a serious risk for an error in judgement to occur. It is very important, therefore, to consult with investments professionals who specialize in the management of structured payment annuities -after factoring in your special needs and desires.

This is extremely important, especially, in cases involving recipients that have reasons to believe that their prognosis is suggestive of a life span that may be considerably shorter than what was assumed initially in the structured settlement arrangement. In such cases, it may be in the recipient's best interest to sell the structured settlement payment stream, but only after a very careful and informed analysis.

Regardless of the reasoning that may be driving one to sell a structured settlement arrangement, it must be noted that in doing so, the recipient would be in fact replacing an otherwise tax-free investment with a taxable lump sum payment.