by John Darer CLU ChFC MSSC CeFT RSP CLTC
Should you name a Structured Settlement Beneficiary with the Structured Settlement Annuity Issuer, or Should you just name beneficiaries in your Will?
Key Takeaways
- Naming a beneficiary with the structured settlement annuity issuer simplifies the process and avoids probate delays.
- You can change beneficiaries anytime, ensuring the structured settlement proceeds go directly to them.
- Failing to name a beneficiary can result in payments defaulting to your estate, subject to fees and claims.
- Considerations about trusts and Medicaid can complicate future settlements if not planned properly.
- Resources are available at 4structures.com to help consumers understand the importance of naming and reviewing beneficiaries.
Once again, I’m scratching my head at the output of the settlement purchasing company that, at time of publishing, is currently believed to be the only member of the National Association of Settlement Purchasers with a related entity that has direct agency relationships with structured settlement annuity issuers and brokers structured settlement annuities in the primary market.
In the process of soliciting people to sell their structured settlement payments the New York company states in a blog:
“A loved one left you their future structured settlement payments in their will, and you’re wondering what you can do with it. Maybe you have a business opportunity, or you are interested in purchasing a house. You might be facing an emergency and looking at your options to cover that sudden expense. So, can you sell this asset? The short answer is yes. If you inherited a structured settlement, that means you now have the rights to it, and to the future payments. And in situations where you have a financial need, you most likely qualify to sell some or all of the future payments from the inheritance for a lump sum in cash” Source: CrowFly website
While someone could name a beneficiary of structured settlement payments in their will, it is certainly not the norm and probably not advtantageous to do so.
Here’s why:
- Naming a beneficiary with the structured settlement annuity issuer is easy and simple. You fill out a beneficiary designation form and you file it with the insurer, checking to confirm that your wishes have been recorded. Your signature may need to be notarized.
- You can name and change primary and contingent beneficiaries and their respective shares/percentages at any time, as long as such changes are in writing and in the proper format accepted by the insurance company that issues the structured settlement annuity.
- Naming a beneficiary with the structured settlement annuity issuer means that the proceeds will begin to flow directly to your beneficiaries without delays and costs associated with probating an estate. It’s the matter of completing a claim form and providing a copy of the death certificate.
- Death proceeds that pass through the probate estate are subject to executor/executrix fees (if there is a will), administrator/administratrix fees (if there is no will)
- Death proceeds that pass through the probate are subject to claims of creditors of the Estate.
Where you might find future structured settlement payments going to an Estate
- If you fail to name a beneficiary for your structured settlement, or the beneficiary you name is not living at the time of your death, and you have not named a contingent beneficiary, payments will default to your Estate.
- If the payments are going to a trust, such as Special Needs Trust or Supplemental Needs Trust, your structured settlement has a full commutation provision at death and there is an abundance of cash that exceeds the Medicaid payoff, payment will be distributed subject to terms of the trust.
- A number of structured settlement annuity issuers, including Berkshire Hathaway Life Insurnace Company of Nebraska, First Berkshire Hathaway Life Insurance Company and Independent Life Insurance Company will allow a beneficiary designation that allows a partial commutation based on a notice of shortfall in the trust assets to satisfy amounts owed to Medicaid and/or Estate taxes. The balance would go to named beneficiary or beneficiaries, or the Estate (if no beneficiary has been named, or if a beneficiary has named, but no contingent beneficiary has been named at the time of the annuitant’s death).
- If you are selling (or have sold) part of a lump sum structured settlement payment to a settlement purchaser such as CrowFly, and the annuity issuer will not split annuity payments, payments will be subject to a payment servicing arrangement. It’s really important that anyone entering into a structured settlement factoring transaction where payments are being serviced and where the seller is only doing a partial sale, to name and confirm in writing both a primary and contingent beneficiary.
4structures.com LLC has a number of resources for consumers about the wisdom of naming and periodically reviewing structured settlement beneficiaries
- Why It’s Important to Name a Beneficiary on a Structured Settlement Annuity (4structures.com) July 24, 2023
- Structured Settlement BeneficiaryDesignations| The Beneficiary Mantra (4structures.com) March 24, 2021 Last updated August 23, 2025
- Structured Settlement Death Claims | What You Need to Know