by John Darer® CLU ChFC MSSC RSP CLTC
Lottery winnings paid over time are simply NOT structured settlements. Here are several reasons why:
- Lottery payments are the result of a game of chance not a settlement negotiation
Taking your lottery winnings as an annuity is not a structured settlement. Selling your lottery payments for a lump sum is not a structured settlement either - Lottery payments cannot be customized like structured settlements. For example Powerball’s annuity payout schedule is 30 annual payments with an annual increase.
- Lottery payments are generally only for a fixed duration, with no lifetime option. There are more varied types of structured settlement payments, including lifetime, income and lump sum options and fixed percentage increases
- Lottery winners cannot be secured creditors of their lottery payments, while structured settlement annuitants can.
- Lottery payments are taxable. Structured settlements that represent payment of damages for physical injury, physical sickness, wrongful death or workers compensation are income tax fee pursuant to IRC 104(1) or IRC 104(2).
- The IRS Structured Settlement Factoring Audit Technique Guide(2015) on p20 emphatically states “lottery payouts should not be equated with factoring of structured settlements.
Companies that misrepresent lottery payouts as structured settlements*
- Prosperity Partners Inc. (Prosperity Partners also misrepresents Royalties, Reverse mortgages and payday loans as structured annuity settlements”)
- Annuity Casher (Adler’s Insurance) “You can sell lottery payments of your structured settlement “
- Funds 4Claims
- Peachtree ” lottery payment structure”
- Strategic Capital “Lottery winners can get cash now for structured settlements”
*as of time of posting on April 3, 2017.