Structured Settlement Survivor Payments

The following blanket statement was seen on the Internet about structured settlement survivor payments.

A. "If no beneficiary was designated, the payments will become part of the recipient's estate and be distributed according to their will or state laws".

The statement needs further clarification.

Commentary

1. If the Measuring Life is the Payee and dies without having made a written designation of bneeficiary to the annuity issuer in acceptable form, prior to the Payee's death, AND there are any remaining period certain payments or guaranteeed lump sums, those period certain and guaranteed lump sum payments will be paid, when due, to the Estate of the Measuring Life/Payee. From there, payment will be distributed in accordance with the Measuring Life/Payee's will, if there is one, or state intestacy laws if there is no will. See intestacy | Wex | US Law | LII / Legal Information Institute (cornell.edu)

2. If a Commutation Rider is in place when the Measuring Life dies, any remaining certain payments and guaranteed lump sum payments are commuted to a lump sum in accordance with the terms of the annuity issuer's commutation rider. There could be a full or partial commutation depending on the terms of the contract.

3. It is worth noting that Berkshire Hathaway Life Insurance Company of Nebraska offered what I've referred to as a Responsive Commutation option for a period of time when it was actively writing structured settlement annuities. There would have had to have been a provision for this option in the settlement documents executed at the time of settlement when Berkshire Hathaway was actively writing stryuctured settlement annuities.

4. If the Measuring Life dies at a moment in time where there are no remaining period certain payments or guaranteed lump sums then payments will cease at the Measuring Life's death.  There will be no further payments.

5. If the structured settlement payee is receiving structured settlement payments as the result of being a beneficiary of a structured settlement annuitant who has died and then, sometime later, they (the first annuitant's beneficiary) pass, then the first annuitant's beneficary's named beneficiary/beneficiaries will receive any remaining certain or guaranteed  lump sum payments. Did you follow all of that? (smiles)

Structured Settlement Beneficiary | Why It's Important (4structures.com) 

Structured Settlement Beneficiary Designations (4structures.com)

B. "All payments from a structured settlement are guaranteed"

Commentary

All payments from a structured settlement are contractually guaranteed in accordance with the terms of the contract. 

When a structured settlement is established there are multiple contracts

• A settlement agreement and release which establishes an obligation to pay periodic payments as damages in exchange for a release of claims.
• A qualified assignment, which is a subsitution of obligors from a Defendant or his/her/its insurer(s) to a qualified assignment company
• An annuity contract, which is purchased as a "qualified funding asset" by the qualified assignment company and is owned by the qualified assignment company.

How Do Structured Settlements Work | Structured Settlements Explained (4structures.com)

While the terms "guaranteed" and "certain" are often used synonymously by those holding an insurance license, including some settlement planners and structured settlement brokers and even lawyers, such use is inaccurate and can lead to misinterpretation and/or misunderstanding by Payees.