The firms buying annuity payments are the same specialist finance companies buying structured settlement payments, and where a settlement is behind the annuity they carry statutory duties towards you. Those duties are the most useful thing a payee can know, because they are the parts of the conversation you are entitled to insist on.
What they owe you in writing
Where a structured settlement is involved, a written disclosure of the deal before you are committed - in Florida at least 10 days before the date on which the payee first incurred an obligation with respect to the transfer, in bold type no smaller than 14 points in size - and, in Texas, written advice from the buyer itself to seek independent professional advice, which the court then has to find was given.
The three figures to ask for
The discount rate, the gross advance amount and the net advance amount. Those are New York's own words: the court is told to consider whether the discount rate used to determine the gross advance amount and the fees and expenses used to determine the net advance amount are fair and reasonable. A buyer that gives you all three has given you something comparable; one that gives you a single number has not.
What a New York court has to find
New York is the statute on this record that looks hardest at the money. The court must find the transfer is in the best interest of the payee, taking into account the welfare and support of the payee's dependants, and whether the transaction, including the discount rate used to determine the gross advance amount and the fees and expenses used to determine the net advance amount, are fair and reasonable. It also requires the payee to have been advised to seek independent professional advice and the agreement to be written in plain language.
Questions people ask about annuity buyers
Does a court really have to approve this?
Yes, in every state. The federal exception in 26 U.S.C. 5891(b) applies only where the transfer was approved in advance in a qualified order finding it is in the best interest of the payee, taking into account the welfare and support of the payee's dependents.
What is the single biggest variable in the price?
The discount rate, and after that how far in the future the payments fall due. The reported range across the market is between 9% and 18%.
Do you take a share of what I get?
No. Buyers pay a flat fee for the enquiry itself, never a share of the discount and never anything contingent on a transfer completing.