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Buying a Judgment Provide High Rate of Return

A Tort victim who sells their existing annuities to investors for a lump sum of money today creates an opportunity for you the buyer. A claimant receives their settlement in periodic payments over time. The payments (when set up under IRC Section 5891(c)) are totally tax-free and guaranteed by highly rated life insurance companies, and back stopped by state guarantee funds. When the claimant needs to get their hands on a significant portion of the future income immediately, selling their judgment is an attractive option. As the buyer, the rate of return is between 6% – 8%, this is nearly twice what you could get with the same kind of risk parameters.

Who are good prospects for this kind of investment?

Almost any individual or entity that wants a rate of return that is in the range of 6% to 8%.

The fact that these investments have a great deal of liquidity makes the argument to put a portion of your portfolio into this asset group very strong.

Although these annuities are totally tax-free to the claimants who originally bought them, they are taxable to almost all other investors (except charitable institutions). In fact, the insurance companies don’t even send out 1099s to the investors who buy these from claimants. For qualified retirement plans, there is no tax while the investment is in the plan. When money from, or any money for that matter is withdrawn from a retirement plan (excluding Roth Conversions) there is a tax due on the proceeds.