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Structured Settlement Present Value Calculator

See what your future settlement payments are worth as a lump sum today.

Direct answer

Present value is what a stream of promised settlement payments would be worth as a lump sum today, discounted at a rate that reflects how certain the payer is. That discount rate decides whether a buyout offer is fair, and quoted rates vary widely. This tool discounts each payment date so an offer can be compared to the schedule.

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Legal Disclaimer

ClaimLedge provides educational estimates for general informational purposes only. This tool does not create an attorney–client relationship, does not constitute legal, financial, or tax advice, and cannot predict the value of any specific structured-settlement transfer. Discount rates, transfer terms, and court-approval requirements vary by jurisdiction and by annuity. Before selling any structured-settlement payments, consult a licensed attorney and a qualified financial advisor in your jurisdiction.

Lump-Sum Present Value of Your Settlement

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Your future payment stream
The amount you receive each period before any sale or transfer.
How many payments you receive per year.
How many more years the payments will continue.
Discount rate
Factoring companies typically use 8–18%. Try several rates to see the range. A common conservative estimate is 8–10%.
Buyout offer (optional)
Leave blank to skip the offer comparison. Entering one shows whether it is above or below the modeled present value.

Calculated in your browser · Nothing submitted to ClaimLedge · Compare saves only when you choose it

Present Value of Your Payment Stream Awaiting input

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What your future payment stream is worth as a lump sum today at your chosen discount rate.

Present value: — · Total nominal: —

$0—
Total nominal payments (no discounting)—
Discount rate applied (annual)—
Present value (lump-sum equivalent)—

Offer verdict: Enter a buyout offer above to compare.
This is an educational estimate of the time value of money on your payment stream, not financial or legal advice. Factoring discounts vary; confirm any transfer with a licensed advisor.

Next step

How the lump sum compares in cash today

Present value only means something next to the alternative: what a cash settlement nets after fees, costs and liens.

Compare the cash offer

Why a dollar tomorrow is worth less than a dollar today

A structured settlement pays you in installments over many years rather than in one lump sum. That stream has a real value, but it is not simply the sum of every payment. Because you could invest a lump sum today and earn returns on it, each future payment must be "discounted" back to what it is worth in today's money. That discounted total is the present value, and it is the number to anchor your evaluation of any buyout offer.

PV = PMT × [1 − (1 + r)^-n] ÷ r

where PMT is each payment amount, r is the discount rate per payment period (annual rate ÷ payments per year), and n is the total number of payments remaining (payments per year × years remaining).

Why people sell structured settlement payments

Claimants sell some or all of their future payments to a factoring company in exchange for immediate cash. Common reasons include paying off debt, covering medical expenses, buying a home, funding education, or handling an emergency. The trade-off is receiving less total money in exchange for liquidity now.

The discount rate drives everything

The discount rate is the single most important input. Factoring companies typically apply annual rates between 8% and 18%, though court-approved transfers often fall between 8% and 12%. For a conservative personal estimate, many people use 6–10% to approximate a reasonable after-tax investment return. A higher discount rate means a lower present value — which is how a factoring company builds its margin into the offer.

Hypothetical example

A claimant is owed $2,000 per month for 20 years (240 payments). At a 10% annual discount rate, the present value of that stream is roughly $207,000 — even though the nominal total of all payments is $480,000. A buyout offer of $200,000 is below that present value; an offer of $220,000 is above it. Trying several discount rates shows the range where an offer shifts from competitive to thin. This is a hypothetical illustration, not a prediction; real transfers depend on the specific terms of your annuity and applicable court approval.

What this calculator does not account for

  • Tax treatment of structured settlement proceeds (consult a tax professional)
  • Court approval requirements and applicable state structured-settlement protection laws
  • Fees, escrow costs, and administrative charges factored into a real transfer
  • Inflation adjustments or cost-of-living escalators built into some annuities
  • Early-payment penalties or contingent beneficiary rights

What happens next

  1. Gather your annuity schedule: payment amount, frequency, and years remaining.
  2. Run the calculation at several discount rates (try 6%, 10%, and 15%) to see the present-value range.
  3. Compare any written buyout offer against the present value at a reasonable rate.
  4. Before signing any transfer agreement, have both an attorney and a financial advisor review the terms.

Frequently asked questions

What is a structured settlement?

A structured settlement is a financial arrangement where a claimant receives compensation in regular installments over time rather than a single lump sum. They are often used in personal injury, workers compensation, and wrongful death cases. The payment stream is typically funded through an annuity purchased by the defendant or insurer.

Why would someone sell structured settlement payments?

Claimants sometimes sell some or all of their future payments to a factoring company in exchange for immediate cash. Common reasons include paying off debt, covering medical expenses, buying a home, or funding education. The trade-off is receiving less total money in exchange for liquidity now.

How is present value calculated?

Present value discounts future payments back to today using a discount rate that reflects what you could earn by investing a lump sum now. A future dollar is worth less than a dollar today because of the time value of money. The higher the discount rate, the lower the present value of the payment stream.

What discount rate should I use?

There is no single correct rate. Factoring companies typically apply discount rates between 8% and 18%, though court-approved transfers often fall between 8% and 12%. For a conservative personal estimate, many people use 6-10% to approximate a reasonable after-tax investment return. The rate you choose dramatically affects the result.

Is the buyout offer I received fair?

A fair offer depends on your personal circumstances and the discount rate embedded in it. Use this tool to calculate the present value of your remaining payments at several discount rates. If the offer exceeds the present value at a reasonable rate (say 8-10%), it may be competitive. If it falls well below, the factoring company is building in a significant margin. This is an educational estimate — consult a financial advisor before signing any transfer agreement.

Why do buyout offers discount the payments so heavily?

The discount rate prices the buyer's cost of capital, the payer's credit risk and the time value of money. Those components are why an offer sits well below the arithmetic sum of the payments, and the gap between them is what a negotiation is actually about.

Is a structured settlement transfer taxable?

A court-approved transfer generally preserves the tax treatment of the original settlement under the federal structured settlement rules, and the discount itself is not deductible. State statutes add filing, notice and disclosure requirements that must be met for approval.

Can I sell only part of my payments?

Yes, and partial transfers are common because keeping some payments preserves income later. Court approval is required in most states, and the judge applies a best-interest standard weighing whether the transfer is necessary and whether the price is fair.