When to Sell Your Structured Settlement

A structured settlement often follows a life changing incident, whether it be positive or negative. Due to these circumstances, you may be faced with the need for a large lump sum payment rather than small monthly payments over a number of years. So, where do you turn? To a company that can buy your structured settlement from you and turn it into an immediate payment that you may use on whatever you see fit.

Each individual has different reasons for wanting to sell their structured settlement, however, first you must decide if it is the right decision for you.

The Benefits of Selling Your Structured Settlement

A large portion of those who receive a structured settlement can benefit from selling it for a lump sum payment. The situations listed in this section represent possible circumstances of individuals that may get the most rewards from selling their structured settlement.

· If you cannot wait to receive small, spread-out payments over a long period of time due to a dire financial situation or hefty medical bills and/or lawyer fees. Many of the situations that can bring about a structured settlement can also stick the individual with such obligations.

· If you and your family decide that this is the time to finally make that large purchase that you have had your eye on. For example, if you have previously been denied mortgages or loans and would like to take this opportunity to buy that dream home you have always wanted. Or if you have a child or children who are preparing to go off to college and you fear you may not have the financial means to support that dream otherwise.

· If you have talked with a financial advisor and both of you feel that you could profit more by investing a lump sum payment, rather than waiting on monthly payments. If the money is invested properly, there is a chance that you could end up with more money in the end than your settlement was ever worth. However, this should not be a plan that is entered into lightly. You should work closely with a financial specialist and feel confident that you have found a great opportunity to invest in.

· If you are of older age and feel that you may not be around long enough to receive a fair amount of your structured settlement. You may want to the chance to enjoy the benefits of your settlement or may want to secure part of it for your family after your passing. This way you can distribute the funds as you see fit instead of relying on lawyers or courts.

· If you don’t plan to use the money right away, but would rather put it into a savings or money market account to draw interest. This would be best suited for someone who has a very hefty settlement, can find an account with large payoff terms, and plans to keep the majority of the money in the account for many years.

No matter what your reason for wanting to sell your structured settlement, choosing this option puts you back in control of money that is rightly yours. The problem that many individuals have with their structured settlements is that the control over their money is left to lawyers, courts, and the company or persons paying out the settlement. You are now able to say where, how, and - most importantly - when you spend your money.

The Drawbacks of Selling Your Structured Settlement

For a few individuals, selling their structured settlement and receiving a lump sum payment may not be in their best interest. One must also evaluate these situations and determine if they outweigh the reasons you are considering selling your settlement.

· First and foremost, selling you structured settlement means that you will receive less money than you would if you were to keep it. However, for many people considering this option, this seems like a win-win situation - they will get one large lump sum payment and the company they sold it to will make a profit in the end. The good news is that since you have several companies competing for your settlement, you can choose the one that will give you the a portion of the full settlement that you can live with.

· Because you may lose out on a substantial portion of your settlement by selling it, if you are in a financial situation where regular monthly payments will only be a bonus on top of what you already make, waiting out your settlement may be in your best interest. However, if you’re a senior, then you should also take your age and the length of your structured settlement into consideration. This would be the ideal situation for someone who is young enough that they have a great chance of living out the life of their settlement.

· If you are a person who is poor at managing large sums of money, then selling your structured settlement may not be right for you. For example, if you are the kind of person who gets a large paycheck every two weeks and finds themselves running low on available cash at the end of those two weeks, then that may be an indication that needs to be closely looked at. In this type of circumstance, having your settlement portioned out to you on a monthly basis may keep you from spending it too quickly. Once your settlement is gone, you will be back at square one.

· For those reasons, you should also not consider selling your structured settlement if you have an addiction to gambling, shopping, or drugs.

· If your settlement was due to an accident that has put you out of work and the funds from it will replace your monthly income, then keeping the payments on a monthly basis may help your family keep your finances in order. However, even in this situation selling your settlement may be best for you if you would like to renegotiate your payments into a larger sum each month to shorten the life of the settlement.

Most individuals receiving a structured settlement can benefit from selling it to a company that can give them a large lump sum payment or shorten the life of the settlement, especially if they are older persons, an individual who has enormous expenses due to an accident or court case, someone in a critical financial position, or one who wishes to make a large purchase for themselves and their family. Finding the right company with terms that fit your needs is a key component of making your experience with selling your structured settlement a positive one.

How Is Income From Structured Settlements Taxed?

Income received from court awards as a result of personal injury is normally not taxable. For this reason, many personal injury awards are set up as structured settlements, usually in the form of an annuity, to totally avoid paying taxes on the income. This is one of the primary advantages of structured settlements where you receive payments over a specific period of time.

However, the income tax treatment can change completely when a structured settlement is sold. There are quite a few companies out there now who will offer to purchase structured settlements from individuals wanting to obtain a lump sum of cash in exchange for periodic payments. Once the periodic payments from a structured settlement are sold, the proceeds normally lose their tax-free status.

As you can imagine, with companies competing to buy structured settlements for lump sums of cash, abuse is a serious concern. So, in 2002, President Bush signed legislation that attempts to stop companies from abusing individuals who are selling part or all of their structured settlement. Most states now enforce very strict requirements and even require court approval before any structured settlement sale can take place, otherwise a substantial additional tax is placed on the proceeds of the sale. These new laws are intended to protect people from selling a structured settlement for considerably less than its true value.

Structured settlement agreements are extremely complicated. Your best bet is to have a competent personal injury attorney with experience in these matters review your structured settlement contract and advise you of your options.

One of the advantages of structured settlements is the payments are tax free. But, following your death, any lump sum or additional payments to your survivors may not be tax free, so you should also consult with a qualified tax attorney about the tax consequences to your survivors of inheriting your structured settlement payments

Selling Structured Settlements Is The Solution Sometimes

Getting a lump sum for all or a portion of a structured settlement can provide you with the money you need for costly immediate and unforeseen expenses. Thousands of Americans have sold, and are selling their future payments for a large lump sum now. There are hundreds of companies, which will purchase your structured settlement payments for a large lump sum.

With so many companies competing to buy your structured settlement payments, it is even easier to make sure you getting the most for your money.

Companies like Woodbridge Investments and JG Wentworth are leaders in the industry; they specialize getting you the largest lump sum possible for your payments.

Companies such as these understand that you cannot afford to wait for your money to trickle in when you need it now the most, and will provide you faster, greater access to your money.

Many Americans each year are still suffering financially even after they have begun receiving their structured settlement payments. They are forced into further debt or bankruptcy because their payments are not enough to cover the enormous expenses resulting from lack of income, injury, or unemployment.

The Pros and Cons of a Structured Settlement

Compensation for the pain, suffering, or your inability to work due to an injury or accident often comes in the form of a structured settlement.

You are awarded monies to help you recover financially from the hardship you endured. These monies are paid to you in regular payments, and over a long period. The ideal scenario would be that these monies would secure your future financial well-being.

If you are able to continue working, or have an income that supports your living expenses already, this may seem like the perfect solution. However, for many Americans the opposite is true.

The reality

For many individuals, the reality of resuming the duties of a job to support their family financially is not an option. Medical expenses will always be a concern, debts will continue to rise, and the stress and worries of maintaining a home become too much to handle.

Selling all or a portion of your future payments can give you the power to take back control of your finances. Too often, the restrictions of a structured settlement payment can only serve to cause more aggravation and frustration.

When you receive a large lump sum of cash for your structured settlement payments, you can immediately begin to take control of your future. You decide where your money will be best put to use. You determine how your money will work for you.

You do not have to wait years to collect your money. A company who specializes in purchasing structured settlements can give you a quote on how much your future payments are worth if you decide to sell your structured settlement for a lump sum.

Advertising Structured Settlements for Sale

There are a number of companies that are happy to purchase structured settlements from persons who are unhappy with the terms of the settlement, including the way that the settlement is scheduled to be paid. But how does one go about finding these companies that are willing to buy structured settlements for sale? Here are some ways you can connect with these firms and arrange a deal that is mutually beneficial.

One of the first things you can do is advertise online. There area number of message boards that are set up to allow persons who are currently drawing settlement payments to interact with one another. By making it known that you are interested in selling your settlement, you will not doubt attract the attention of several firms who are happy to do just that. Check around on the Internet for message boards where you can make your intentions known and make sure there is some way that you can be reached by interested parties.

Of course, there is no reason why you have to wait for interested firms to come to you. While you are online, initiate a search or two and come up with the contact information for a few companies that buy structured settlements for sale. Read up on how they do business and run some checks to make sure they are legitimate and ethical. Once you are satisfied that a company is respectable, then contact them about your settlement and see what kind of an offer they can extend to you.

Keep in mind that companies that purchase structured settlements for sale do not do so out of the goodness of their hearts. They are in the business of making money. However, you may be able to find a company that will offer you a large enough lump sum that you feel comfortable selling your settlement to them. Just make sure the deal you make today will not leave you without resources that you will need later in life.

Structured Settlements 101: How Structured Settlements Work

You have probably heard the term “Structured Settlement” on a television or print ad and wondered what it meant. After all, the term is not a part of our everyday lexicon.

A structured settlement is a contract under which an insurance company undertakes to make periodic payments to an injured party as part of a bodily injury claim settlement or to a surviving family member to whom a large settlement has been awarded. These are just two examples of where a structured settlement might be used. Structured settlements have become popular because they offer substantial benefits to all parties involved in the settlement agreement.

A brief review of the dictionary reveals the following definition: a structured settlement is simply a financial package that permits a settlement to be paid in regular payment installments for either a set period of time or over a lifetime. In short, a structured settlement is a package that is tailor made for the individual or payee by the payer or an interested third-party. Some structures include immediate payment to cover any special damages that may have occurred or will occur.

The system of structured settlements was first introduced in Canada in the early 1970’s and spread into the United States very quickly. Within a few years, the idea had found its way to many countries including Australia and most member states of the European Union.

Benefits of a Structured Settlement

A structured settlement annuity provides a payment stream that is tax-free over a determined period of time. Most investment options such as stocks and bonds, real estate, savings accounts, and similar vehicles simply cannot match the flexibility and security of a Structured Settlement Annuity.

Another benefit of a structured settlement annuity is that it can be designed so that payments are made over an extended period of time, even throughout the life of the payee. In the event of the recipient's death, a guaranteed portion of the settlement may be paid to the person's estate or to a named beneficiary.

Structured Settlements have become quite common and offer the additional security of regulation by both Federal and State statutes. There are also provisions in IRS and Medicare/Medicaid guidelines which take them into account.

Alternatives to Structured Settlements

It’s quite easy to see that a structured settlement can work to the advantage of all parties in a variety of circumstances. However, there are occasions when the beneficiary of a structured settlement would prefer not to have periodic payments, preferring instead a lump sum payment. Such might be the case where an individual would like an amount of money to purchase a home, perhaps to cover large medical bills or to pay off a mortgage.

This option has also proved especially popular with lottery winners. There are a number of insurance companies and others that provide this service for a fee. In such instances the insurance company or another interested third-party makes the lump sum payment with a charge for expenses and interest deducted. It is important to consider these fees and read the fine print carefully to be sure that you are not signing away the bulk of your payment.

How do the alternatives work?

The settlement contract is sold to a financial institution which then accepts the periodic payments from the payer and gives the beneficiary a lump sum. Commonly, the financial institution involved will be another major insurance company.

The insurance company charges a handling fee which will usually be calculated to take into account adjustments for interest charges and handling costs. Again, if you are considering taking this option you must bear in mind that the company buying the payments for a cash sum is in business to make money. The amount of the one-off payment will certainly be considerably less than the gross amount that would have been received over the original extended period.

Unless the amount of the lump sum is very substantial and the recipient can be sure of consistent investment income, it’s almost certainly going to be better to stick with the original arrangements. An exception might be where the recipient is a younger person in good health with a substantial expectation of gainful employment for the long term.

Again, as with any contracts be sure to read and understand the terms of the agreement you are making. Make a list of questions and ask until you understand. It is also a good idea to cast a wide net when looking for an alternative to structured settlements as fees and services; and thus your bottom line can vary greatly.

Basics of Structured Settlements - Your Rights And Taxes

Structured settlement factoring regulations have undergone significant changes in recent years. You can now sell your structured payments with greater security and confidence. These changes are in place to make it easier for the person that has a need to get their compensation faster. While it is still going to cost you a sizeable amount of money when it comes to securing cash now for future structured settlements, the process is now a bit less complicated, especially in regards to working with insurance companies that used to resist the structured settlement transfers.

What's Changed And What You Need To Know

There are several key things that have changed in regards to structured settlement sales. First, it is not simply easier to make happen. Although 30 some states had already passed laws helping individuals to do sell their structured settlements already, the entire country now gets to benefit from these laws. In effect, they streamline the process making it a faster, safer way to get the funds that you need.

Another important consideration is that of taxes. There was a continuous battle going on over whether or not you had to pay taxes on the funds from your structured settlement if in fact you did sell it. The laws that just went into play say that there never was a need to pay taxes and that there is now no need to pay taxes on these funds. Therefore, the tax consequences that were once considered to be larger risks in whether or not you should sell your structured settlements have been leveled, making it less of a risk for you.

One thing that hasn't changed is the fact that you will lose money if you sell your structured settlement now as opposed to holding onto it over the course of the original term. In fact, this new structured settlement law does not provide you with any reassurance or limitations in regards to how much companies will have to pay you to purchase your settlement. This kicks the door wide open for various problems including losing a considerable amount of money through the sale of your structured settlement.

In addition to this, it has become even more important for the seller of a structured settlement to seek out the help of their trusted attorney, or someone that can work closely with them to insure that they are not being taken advantage of during the process of selling their structured settlement.

There are many times when the sale of a structured settlement is essential to the well being of the person that holds it. Life changes and and so does the need to get your hands on the money that should be your own. With the help of the recent laws, individuals can secure the funds to do with what they need to, without worrying about many of the pitfalls that once were in place. Now, you have the ability to make your own decisions regarding these structured settlement sales. That's a good thing.

Structured Settlements Offer Advantages over Lump-Sum Payments

A structured settlement, which offers injury victims cash payments through a long-term annuity as compensation for their damages and medical expenses, offer a number of possible advantages over payment in a lump sum. While the lump sum payment is the traditional way for responsible parties to pay accident claims, the structured settlement offers payments over the span of an agreed-upon period of time. This length of time may span from several years up to the remainder of the life of the injured party, depending on the severity of the accident, the amount of money involved, and the agreement reached between the two parties.

Depending on the specific circumstances of the case, structured settlements can have numerous advantages over a lump-sum payment:

They are tax free. Thanks to a 1982 change in the Federal tax code, payments on a structured settlement are free of state and Federal taxes. The paying party funds the settlement through the purchase of an annuity which earns the interest to fund the continued payments. This is not the case with a lump-sum payment, which the injured party must invest themselves. Any interest earned on those investments are taxable.

They are potentially safer. Most people who come into a large sum of money suddenly find that they are quite popular with long-lost relatives, unscrupulous purveyors of investment schemes, and good, old-fashioned thieves. By receiving payments in substantially smaller amounts, the beneficiaries of a structured settlement have far fewer worries about having others take advantage of them, which could leave them both poor and without adequate medical care.

They are simply less trouble. It’s difficult enough to adjust to changes in your life if you are seriously injured without having to also take the new responsibility of investing and managing a large sum of money. Not only must you invest the money, but you must invest it wisely, knowing that it must continue to fund your living and/or health care expenses. The regular payments of a structured settlement, along with their tax-free status, simplify day to day living considerably.

While they are not ideal for everyone, particularly those who are experienced investors or those who need a large sum of money at once for immediate medical expenses or the purchase of a home, structured settlements can offer a simpler, safer payment solution for many people who are victims of an accident or injury.

Structured Settlements 101: How Structured Settlements Work

You have probably heard the term “Structured Settlement” on a television or print ad and wondered what it meant. After all, the term is not a part of our everyday lexicon.

A structured settlement is a contract under which an insurance company undertakes to make periodic payments to an injured party as part of a bodily injury claim settlement or to a surviving family member to whom a large settlement has been awarded. These are just two examples of where a structured settlement might be used. Structured settlements have become popular because they offer substantial benefits to all parties involved in the settlement agreement.

A brief review of the dictionary reveals the following definition: a structured settlement is simply a financial package that permits a settlement to be paid in regular payment installments for either a set period of time or over a lifetime. In short, a structured settlement is a package that is tailor made for the individual or payee by the payer or an interested third-party. Some structures include immediate payment to cover any special damages that may have occurred or will occur.

The system of structured settlements was first introduced in Canada in the early 1970’s and spread into the United States very quickly. Within a few years, the idea had found its way to many countries including Australia and most member states of the European Union.

Benefits of a Structured Settlement

A structured settlement annuity provides a payment stream that is tax-free over a determined period of time. Most investment options such as stocks and bonds, real estate, savings accounts, and similar vehicles simply cannot match the flexibility and security of a Structured Settlement Annuity.

Another benefit of a structured settlement annuity is that it can be designed so that payments are made over an extended period of time, even throughout the life of the payee. In the event of the recipient's death, a guaranteed portion of the settlement may be paid to the person's estate or to a named beneficiary.

Structured Settlements have become quite common and offer the additional security of regulation by both Federal and State statutes. There are also provisions in IRS and Medicare/Medicaid guidelines which take them into account.

Alternatives to Structured Settlements

It’s quite easy to see that a structured settlement can work to the advantage of all parties in a variety of circumstances. However, there are occasions when the beneficiary of a structured settlement would prefer not to have periodic payments, preferring instead a lump sum payment. Such might be the case where an individual would like an amount of money to purchase a home, perhaps to cover large medical bills or to pay off a mortgage.

This option has also proved especially popular with lottery winners. There are a number of insurance companies and others that provide this service for a fee. In such instances the insurance company or another interested third-party makes the lump sum payment with a charge for expenses and interest deducted. It is important to consider these fees and read the fine print carefully to be sure that you are not signing away the bulk of your payment.

How do the alternatives work?

The settlement contract is sold to a financial institution which then accepts the periodic payments from the payer and gives the beneficiary a lump sum. Commonly, the financial institution involved will be another major insurance company.

The insurance company charges a handling fee which will usually be calculated to take into account adjustments for interest charges and handling costs. Again, if you are considering taking this option you must bear in mind that the company buying the payments for a cash sum is in business to make money. The amount of the one-off payment will certainly be considerably less than the gross amount that would have been received over the original extended period.

Unless the amount of the lump sum is very substantial and the recipient can be sure of consistent investment income, it’s almost certainly going to be better to stick with the original arrangements. An exception might be where the recipient is a younger person in good health with a substantial expectation of gainful employment for the long term.

Again, as with any contracts be sure to read and understand the terms of the agreement you are making. Make a list of questions and ask until you understand. It is also a good idea to cast a wide net when looking for an alternative to structured settlements as fees and services; and thus your bottom line can vary greatly.

Financial Security through Structured Settlements

Structured settlements have become a natural part of personal injury and worker’s compensation claims in the United States, according to the National Structured Settlements Trade Association (NSSTA). In 2001, life insurance members of NSSTA wrote more than $6.05 billion of issued annuities as settlement for physical injury claims. This represents a 19 percent increase over 2000.

A structured settlement is the dispersement of money for a legal claim where all or part of the arrangement calls for future periodic payments. The money is paid in regular installments—annually, semi-annually or quarterly—either for a fixed period or for the lifetime of the claimant. Depending on the needs of the individual involved, the structure may also include some immediate payment to cover special damages. The payment is usually made through the purchase of an annuity from a Life Insurance Company.

A structured settlement structure can provide long-term financial security to injury victims and their families through a stream of tax-free payments tailored to their needs. Historically, they were first utilized in Canada and the United States during the 1970s as an alternative to lump-sum payments for injured parties. A structured settlement can also be used in situations involving lottery winnings and other substantial funds.

How a Structured Settlement Works
When a plaintiff settles a case for a large sum of money, the defendant, the plaintiff's attorney, or a financial planner may propose paying the settlement in installments over time rather than in a single lump sum.

A structured settlement is actually a tradeoff. The individuals who were injured and/or their parents or guardians work with their lawyer and an outside broker to determine future medical and living needs. This includes all upcoming operations, therapy, medical devices and other health care needs. Then, an annuity is purchased and held by an independent third party that makes payments to the person who has been injured. Unlike stock dividends or bank interest, these structured settlement payments are completely tax-free. What’s more, the individual’s annuity grows tax-free.

Pros and Cons

As with anything, there’s a positive and negative side to structure settlements. One significant advantage is tax avoidance. When appropriately set up, a structured settlement may significantly reduce the plaintiff's tax obligations (as a result of the settlement). Another benefit is that a structured settlement can help ensure a plaintiff has the funds to pay for future care or needs. In other words, a structured settlement can help protect a plaintiff from himself.

Let’s face it: Some people have a hard time managing money, or saying no to friends and family wanting to "share the wealth.” Receiving money in installment can make it last longer.

A downside to structure settlements is the built-in structure (no pun intended). Some people may feel restricted by periodic payments. For example, they may want to buy a new home or other expensive item, yet lack the funds to do so. They can't borrow against future payments under their settlement, so they’re stuck until their next installment payment arrives.
And from an investment perspective, a structured settlement may not make the most sense for everyone. Many standard investments can provide a greater long-term return than the annuities used in structured settlements. So some people may be better off accepting a lump sum settlement and then investing it for themselves.

Here are some other important points to keep in mind about structured settlements: An injured person with long-term special needs may benefit from having periodic lump sums to purchase medical equipment. Minors may benefit from a structured settlement that provides for certain costs when they’re young—such as educational expenses—instead of during adulthood.

Special Considerations

- Injured parties should be wary of potential exploitation or hazards related to structured settlements. They should carefully consider:

- High Commissions - Annuities can be highly profitable for insurance companies, and they often carry very large commissions. It is important to ensure that the commissions charged in setting up a structured settlement don't eat up too much of its principal.

- Inflated Value - Sometimes, the defense will overstate the value of a negotiated structured settlement. As a result, the plaintiff winds up with much less than was agreed upon. Plaintiffs should compare the fees and commissions charged for similar settlement packages by a variety of insurance companies to make sure that they’re getting full value.

- Conflict of Interest – There have been situations where the plaintiff's attorney has referred the client to a particular financial planner to set up a structured settlement, without disclosing he would receive a referral fee. In other cases, the plaintiff's lawyer has set up a structured settlement on behalf of a client without revealing the annuities are being purchased from his own insurance business. Plaintiffs should know what financial interest their lawyer may have in relation to any financial services being provided or recommended.

- Using Multiple Insurance Companies – It’s advisable to purchase annuities for a structured settlement from several different companies. This offers protection in the event a company that issued annuities for a settlement package goes into bankruptcy and defaults.

Benefits of Selling A Settlement

A structured settlement is specifically designed to meet the needs of the plaintiff at the time it’s created. But what happens if the installment arrangement no longer works for the individual? If you need cash for a large purchase or other expenses, consider selling your structured settlement. Many companies can purchase all or part of your remaining periodic settlement payments for one lump sum. This can boost your cash flow by providing funds you can use immediately to buy a home, pay college tuition, invest in a business or pay off debt.

If you’re considering cashing out your structured settlement, contact your attorney first. Depending on the state you live in, you may have to go to court to get approval for the buyout. About two thirds of states have laws that limit the sale of structured settlements, according to the NSSTA. Tax-free structured settlements are also subject to federal restrictions on their sale to a third party, and some insurance companies won’t assign or transfer annuities to third parties.

When selling your structure settlement, check with multiple companies to make sure that you get the highest payoff. Also, be sure the company buying your settlement is reputable and well-established. And keep in mind that if the deal sounds too good to be true, it probably is.

Explanation of Structured Settlements

Before you can make a decision on whether you want a lump sum or monthly payments you first need to know what a structured settlement is. Let's break the terms apart and give a quick description of each.

Settlement:

If you were involved in an accident at work (workers compensation claim), been involved in an automobile accident, or a wrongful death case and won that lawsuit then you were awarded a settlement. If the amount was small it would have been awarded to you in a lump sum. If it was a rather large amount then it would be awarded to you in a Structured Settlement.

Structured Settlement:

Roughly 20 years or so ago if you had won a lawsuit the cash payout was in the form of a lump sum. It was felt by many that the injured plaintiff would wisely invest that money so they would have an income for the rest of their lives. As it turns out that was not the case in several situations. Therefore, lawmakers decided that large sums would be distributed on a periodic basis; monthly, quarterly, annually etc. etc. An agreement was made between the injured party (plaintiff) the lawyers (for both sides) a Financial advisor and the defendant. It then had to be determined how the payments would be distributed and this was called Structured Settlement Annuity.

Structured Settlement Annuity:

The defendant in large cash sum cases would purchase an annuity for the distribution of funds through an Insurance Company. This distribution then allows for the plaintiff or beneficiary to live off the proceeds for the duration specified or for the duration of recovery.

The structured settlement annuity is the alternative when the lump sum is undesirable. The challenge to deal with the after effects and worries of an accident, illness, or death of a family member and being forced to adjust to your new lifestyle, is enough without having to deal with the troubles of whether or not you have wisely invested your settlement.

As an example; you have always lived an active lifestyle and now you are confined or bedridden for an unknown amount of time. Having to manage thousands of dollars in assets could be overwhelming. Even healthy people find investing a large cash disbursement rather intimidating.

With a structured settlement annuity your investments will be handled by a qualified and trustworthy company. Your tax implications could be reduced if not eliminated entirely. Can you imagine the implications if you had hired an individual who was not competent or trustworthy. You have to remember this is your money that you possibly may need to survive on for the rest of your life.

With the structured settlement you receive a steady income for several years and in some cases your lifetime. Inflationary demands are calculated in the scheduled payments. In other words, if you could calculate all the payments at the end of your structured settlement payment cycle, you would discover that they surpass any amount you would have received in a lump sum.

Since the payments of the structured settlement were purchased up front as an annuity, the responsible party actually pays less than the sum of all the payments.

Ultimately, with structured settlements both parties are in a win-win situation; you become the recipient of a constant flow of income (possibly for life) and the responsible party for paying doesn't have to worry themselves with monthly or annual payments.

Preparing to Meet With a Buyer of Structured Settlements

Once you have made the decision that selling your structured settlement is an option you want to consider, you should begin to prepare yourself for the selling process. In particular, this means preparing to meet with a buyer of structured settlements. Because this is uncharted territory, there are certain steps you should take to better equip yourself for this meeting.

The first phase of groundwork is to educate yourself on the selling process. Although the buyer will happily provide this information to you, it is a better idea to have an idea what you are walking into beforehand. The reasons for this are numerous – one, you do not want your knowledge to hinge on a buyer’s honesty or forthrightness; and two, you want to know if you are getting the raw end of the deal. Having the proper information and being educated on the process will better improve your chances of getting a higher offer to begin with, as the buyer knows you are serious, and gives you the tools to know when to walk away from a deal.

You should also have an idea what you want out of the sell; in other words, how much do you want to be paid for your structured settlement? This may sound simple, but oftentimes, people do not know what to ask for and, therefore, take the very first offer on the table. They let the buyer dictate the price because they are not adequately prepared for a negotiation. Granted, some companies may be inflexible in their purchase terms, but you never know until you ask. Of course, if this is the case, you always have the option to walk away and go to a company that is willing to work with you and meet some, if not all, of your terms.

Structured Settlements: Cash Them Out?

Structured settlement payments are a type of payment a party receives upon receiving a favorable decision during legal proceedings. As part of the courts ruling, one party is ordered to make financial compensation to the other party. Often times, the amount of the compensation awarded is spread out over time. Structured settlements are payments arranged in this fashion.

Many people choose to receive a structured settlement payment over time instead of a lump sum payment if they know then will need cash payments for expenses in the future. Also, the court will sometimes award structured settlements on behalf of the party required to make the payments. Setting up payments like this has the benefit of guaranteeing payments over a long period of time to the person receiving them, and lessening the financial hardship of the party required to make the payments.

People receiving structured settlements have the option of selling their entitlements to third party companies. When they do this, a company will purchase their settlement contract for less than the total value, and usually offer a lump sum payment. If, for instance, a person were receiving $100 per month for the next 60 months, or $6,000 total, a company could offer to pay the individual a lump sum payment of $5,000. The individual will receive less total money overall than if they chose to continue to collect their payments over time, but they will have $5,000 immediately instead of having to wait for the next 50 months to have that same amount of money.

Structured settlement companies make their profit by purchasing the structured settlement for less than the amount that they will collect. People choose to sell their settlements for a variety of reasons, including:

• Making down payments on large purchases

• Purchasing a car

• Paying for education.

• Buying a house

There are a ton of reasons one would elect to sell their payments in order to receive a large, immediate lump sum payment. Structured settlement transactions must meet strict guidelines and legal restrictions in order to be completed successfully, and for this reason it is best to secure the services of a reputable structured settlement company before making any decisions.

How to Sell Structured Settlements

Structured settlement is defined as a legal contract wherein an individual makes payments in exchange for a release of liability. It could be the outcome of a personal damage or some other form of injunction. The payment is done over a period of time in fixed installments rather than a lump sum amount.

There are various situations that entail selling of structured payments. Individuals may resort to this option when they are faced with a personal injury or crisis in terms of an accident, divorce proceedings, the loss of a job or a medical emergency. The most viable option for finance in such situations is the liquidation of a part of the structured payment.

The first step in the process of selling a structured settlement is to create an information file with details such as the residing state, the insurance company party to the settlement and the payment schedule document. An individual possessing a structured settlement contract could approach a company that is interested in the purchase of the settlement for a lump sum payment.

In approximately two-thirds of the states in the U.S., the sale of structured payments is restricted. Additionally, tax-free settlements are liable to federal restrictions when the sale is to a third party. Insurance companies may not assign or transfer annuities to third parties. These factors discourage many from the sale of structured payments. The other factors that make selling of structured payments difficult are the individual's state of residence and the current status of the annuities.

The prime advantage in the sale of a structured payment settlement is the reduction in tax payment and in some cases, the total nullification of tax liabilities. The drawback of a structured payment is that they cannot be borrowed for use. The companies interested in buying a structured settlement typically look to profit from the purchase and hence the offers may be lesser than the expectations. In such a scenario, it is advisable to shop around and opt for the company that offers the highest price.

Structured settlements are a good source of finance when an individual finds himself in an unanticipated financial crisis. However, it is essential to ensure that the company is a well-established set-up with sufficient funding. Individuals should also consider consulting their attorneys prior to entering an agreement.

Pros and Cons of Structured Settlements

Structured settlements have many benefits to it. With a structured settlement, tax is avoided. Because of an appropriate and educated setup, a structured settlement is also able to reduce the plaintiff's tax obligations and may sometimes be tax-free.

A structured settlement can be a good way to preserve the plaintiff's settlement funds, preparing him for necessary future payments. Most of the time, a structured settlement serves as a protection from the plaintiff himself and limits his money use. A lot of people are simply not good with money, or could not just say "no" to relatives and friends who want to "taste" their wealth. For these types of people, a large settlement can immediately go to waste and disappear.

Structured settlements are also advantageous for minors as well for they can be used to provide payments through their lifetime--personal costs during their adolescence, additional disbursements for college and other academic expenses, and other disbursements during adulthood.

A person who is injured and needs long-term special treatments and services benefits from this as well. Having periodic lump sums will give him the financial capability to purchase medicines, medical equipments, or modified vehicles that he may need.

The downside

Some people feel limited by the periodic payments in a structured settlement. They may want to buy a new car, get a housing loan, or pay for other expensive items and services but this will be impossible with the structured settlements because they are not allowed to borrow against payments for the future under their agreement. So for some people, accepting a lump sum settlement is the better option. They will be the ones to invest it and plan for their future. For them, other standard investments seem to give a better long-term return than the annual payments there is in structured settlements.