Structured Settlement Payments

Getting Cash for Future Annuity Payments

People receiving structured payments as the result of a lawsuit or personal injury settlement have other options including receiving an immediate cash payment if they choose to sell their structured settlement payments.

How to Sell Structured Settlement Payments

Many people who receive monthly annuity payments under a settlement agreement do not realize they can sell all or a portion of their stream of annuity payments in exchange for a cash lump sum. Getting paid this money can be a way to help fund the current life needs of your family. Receiving the cash now rather than waiting a period of a year or more for a stream of inflexible payments structured in the future can be a big advantage to some people. Factoring is the name of the process of selling ones legal right to receiving future structured payments in exchange for a the present value of that money. This sale becomes a legal contract with the settlement company.

Companies now offer to pay for your rights to receive future annuity payments under structured agreements. The settlement companies offer annuitants the benefit of direct access to cash.

On January 22, 2002, President George W. Bush signed new protective legislation. This law was designed to protect any individual who has received a settlement annuity as part of a lawsuit or settlement that wishes to sell their structured payments. Under the law a court would have to authorize a transaction to sell future settlement payments. A transaction must in the best interest of the annuitant, their family, dependents or estate to be approved. If a court order and approval is not received, a federal excise tax of 40% would be paid on the total payments sold. This law is intended to help people who receive offers of cash for their annuity payments from being defrauded or taken advantage of by settlement buyers or even their own families.

You have probably seen advertisements urging you to "sell a structured settlement payment". Many beneficiaries wonder if they should sell and cash out, especially if they are in a situation where they need the money. This is a major financial decision and you would be well advised to carefully evaluate your options before making a decision. You need to determine if selling all or even a portion of your guaranteed settlement payments is in your best interest. It usually takes about two months from the date you start to complete a sale and for you to receive the cash when you sell insurance payments. For more information please fill out the form on the right.

What are Structured Settlements?

What are Structured Settlements?

Historically, personal injury or product liability lawsuits were settled by the exchange of a single lump sum cash payment in return for the release of claim in a lawsuit. Under this arrangement, it was up to the individual and their families to manage the large initial sum and to use it to provide for the victim's medical and income needs over their entire lifetime. Structured settlements laws were created to help reduce the difficulties faced in these types of situations and to help provide the claimant and their families with long-term financial security.

Structured settlement payment agreements are unique in that they focus more on the beneficiary's financial needs and may provide payments for a certain period of time or throughout the injured persons life time. Formally recognized by the U.S. Congress in 1982, structured settlements are voluntary compensation agreements between the injured person and a defendant(s).

Structured settlements enable the beneficiary to receive a series of periodic payments instead of a cash lump sum. Most settlement agreements are entered into privately (e.g., a pre-trial settlement) while others, usually involving minors or persons deemed mentally unfit, may be created by a court order.

Structured settlements are a creative solution in that the payment amounts and the future annuity timetable are completely up to the parties negotiating the structured agreement. Rather than receiving a single lump sum, victims can receive a customized stream of annuity payments. Using structured settlements, annuity payments may be in equal amounts at regular intervals, or they may be paid in periodic lump sums. Larger intermittent payments are sometimes used to provide for anticipated future needs such as funding; a college education, medical equipment replacement (motorized wheelchairs), or planning for retirement. It is important to note however, once the parties have agreed to the structured settlement annuity amounts and timetable, the plaintiff cannot make changes. When unexpected financial emergencies arise individuals may consider selling all or some of their payments for a lump sum of cash. To receive more information please fill out the form on the right.

Properly structuring payment benefits is very important. Most victims and their lawyers know that structured settlements are tax-free to the injured party. There are other factors however that you and your financial advisor should consider. Special tax ramifications on the investment income of the settlement proceeds need to be considered. In some cases, receipt of a large sum can result in loss of public benefits. It is important for the victim that the structured settlement benefits are properly structured so that the principal can be invested, and that the investment income remains tax free to the injured party. Structuring payments properly can also avoid the loss of public benefits. These are all important financial considerations.

source www.structuredsettlementauthority.com