|
|
|
|
|
|
Selling a Structured Settlement
With the countless web sites, advertisements, legal jargon and
complex issues surrounding structured settlements, it is easy to
become overwhelmed and frustrated when you are simply searching
for answers and straightforward information. Whether you've
received a structured settlement already, or if you are just
trying to better understand them, you've come to the right place
for sifting through the messy details.
What is a structured settlement?
A structured settlement is a series of guaranteed payments
(annuities) made over a certain period of time and is usually
the result of an injury settlement or another situation in which
you are awarded access to a substantial amount of money. It is
the alternative to accepting an upfront lump sum.
Structured settlements are individualized plans meant to help
you cover present and future expenses. Working closely with an
experienced attorney can help you to determine an effective
structured settlement to give you the security of a fixed income
over a set period of time.
Example - how it might work: Melissa is injured in a serious
car accident and is now unable to work for the next year. As a
single parent, she has two young children to care for, not to
mention her mounting medical expenses. She knows that she has to
pay $25,000 in medical bills at the present time, and she knows
that she will need surgery in a few months that will cost an
additional $20,000. Her structured settlement can be set up to
give her a lump sum to pay the present medical expenses right
now, and be structured to give her an additional lump sum at the
time of her surgery. It can also give her additional monthly
payments equal to her salary for the year that she is unable to
work, including an additional monthly payment to hire someone to
help her care for her children while she is recovering from her
injuries and medical procedures. Once Melissa goes back to work,
monthly payments might cease or be reduced.
Types of Structured Settlements
- Designated Period / Period Certain Annuities: Annuities
with a designated period of time for the payments to be paid
out. They can be made monthly, quarterly, semi-annually,
annually, etc. Upon your death, all remaining payments are made
to you beneficiary.
- Life Annuity: Periodic payments for a guaranteed number of
years (based on your life expectancy) or for life, whichever is
up first. Again, the beneficiary receives any remaining payments
should you die before the full amount is paid.
- Temporary Life Annuity: Pay you for a designated number of
years if you are still living, so your annuity ends when you
die. There's no provision for a beneficiary to collect
remaining payments.
- Life Contingent Lump Sum: You'll receive a lump sum, provided
you are alive on the due date. If you die before this date, your
beneficiary is not entitled to the amount.
- Lump sum: You can set it up to receive the lump sum on a
particular date, say, fifteen years from now. Your beneficiary
will receive the lump sum on the future date if you have died
before then.
The Details
Though structured settlements contain a great degree of
flexibility during the decision-making process (how much money
do I need now, how much money will I need in the future, what
are my present needs?), once you agree to the terms and sign the
agreement, you can NOT alter the provisions. It is highly
recommended that you have an attorney and trusted broker help
you to determine the best payment methods for your situation.
You might want to ask the broker to come up with several
different scenarios and payment schedules so you can get a
comprehensive look at your options.
So, even if your situation changes down the road, your payments
will not. That's why it is extremely important to be thorough
and careful when creating your payment schedule.
Inadequate Payments
Unfortunately, life has a way of throwing off our
well-thought-out and well-intentioned plans. Even if you've done
all your homework, shopped around for the best broker,
interviewed many attorneys and carefully planned an effective
payment schedule, you may still incur a large unexpected expense.
Should this kind of situation arise, and you are strapped for
cash, you would love to be able to make some adjustments to your
settlement plan. Of course, this is prohibited. But you do have
another option. You might consider selling a portion or all of
your remaining structured settlement payments to an interested
third
party.
Deciding to sell
Before you decide to sell, think about what you want/need
the money for. An immediate medical expense, buying a home or
the decision to go back to school are usually considered good
reasons. Examine your needs and the needs of your family as
well. Perhaps you want a new home. Do you have children
approaching college age? If so, you'll not only incur
significant tuition expenses, you'll also have less of a need
for a larger home.
Selling your payments will result in a loss from the full
amount. Consider whether or not it is important for you to
sacrifice the security and future total amount before you make a
decision. You will have to understand the implications, benefits
and pitfalls so you can feel comfortable making an informed
decision.
Will I get the full amount that I would receive over a period of
time?
No. The amount you would receive over a period of time is
calculated by adding interest to the principal amount. Instead,
you may receive the present-day value of the amount. This
present-day value may have to be further discounted to cover the
costs to do the deal. The rest will be sent to you in one lump
sum. You might want to shop around to find out where you can get
the best deal.
Court Order
To ensure that you will not be taken advantage of in this
delicate process, the government introduced a new federal law in
2002 that requires you to seek court approval when you sell your
structured settlement. This law works in conjunction with state
laws to direct how the transaction will be completed.
Not only does this law protect you, the seller, it also helps
the insurance companies who fear that they will face tax
consequences as a result of the sale. The law states very
clearly that annuity owners and providers do not and will not
owe taxes as a result of this transaction. This breaks down the
barrier that you might normally face from a reluctant insurance
company.
Selling Options
You do not have to sell the entire remaining amount, or any
particular amount, if you so wish. Here are your selling options:
- Full amount: The purchaser calculates the present-day value of
the payments and offers a lump sum
- Part of the payments: Only a specific number of the future
payments are sold at their present-day value
- Percentages: You may sell a percentage of each payment and
keep the remaining balance for yourself
Pitfalls of Selling
Shady brokers. Selling your payments will require you
to contact a broker who can help take care of the proceedings.
This means that you might run into some game-playing and/or
manipulation tactics if you happen to be dealing with a shady
broker. They may promise you a high quote, only to come back and
say that they can't do the deal as is unless they get more money
from you. Other brokers may claim to be "qualified" when they
have only completed a week-long course. Make sure you're dealing
with a broker who has a couple of years experience in structured
settlements and is a member of the Better Business Bureau.
It takes time. Though the federal law requiring court
oversight in these proceedings helps protect you, it also delays
you from receiving the money as soon as you might have hoped. If
you need the money right away, this could frustrate you and
hinder your plans for prompt payment. Normally once you decide
to sell your payments the process can take as little as 4 weeks
and as long as 12 weeks to obtain the court order and for you to
receive your lump sum.
You end up losing money. As mentioned earlier, you
will not receive the total amount you'd receive over time if you
opt for selling your payments. Therefore you lose some money and
the security of future payments.
Benefits of Selling
The main benefit of selling your structured settlement
payments is, obviously, that you will receive a lump sum of cash
for which you can utilize in any way you choose. This gives you
increased flexibility in using your money, and can provide peace
of mind if you have an immediate expense that couldn't be paid
any other way.
About the author:
David Springer is a consultant for Sovereign Funding Group an
experienced, reputable company that offers convenient, no-risk
services to help you with the selling of your deferred payments,
including those from structured
settlements.
|
|
|
|
|
| National Structured Settlements Trade Association (NSSTA) |
| Provides structured settlements using periodic payments to resolve claims. |
| www.nssta.com |
|
| Structured Settlements |
| Setting up structured settlements for personal injury claims. |
| ilf.hartfordlife.com |
|
| Structured Settlements, Structured Annuity, Structured Settlement ... |
| Full-service plaintiff structured settlement firm since 1986, providing services and strategies for personal injury lawyers and clients during the ... |
| www.structuredsettlements.org |
|
| Structured Settlements | Annuity Purchasers |
| Structured Settlement Buyers. Purchasers specializing in structured settlements and lottery winnings. Site contains attorney, broker and investor ... |
| www.ppicash.com |
|
| Structured Settlement Cash for Structured Settlement Annuity ... |
| Annuity Transfers Homepage - Buyer of Structured Settlements · Home | Sell Your Payments | Brokers | Investors | Testimonials ... |
| www.annuitytransfers.com |
|
| EPS Structured Settlements Group: A Structured Settlements Company ... |
| EPS Settlements Group is located in Denver, Colorado and is a founder of the structured settlements industry. |
| www.epssettlements.com |
|
| Mckellar :: Structured Settlements |
| News. ... Skip Intro Always >> |
| www.mckellar.com |
|
| The Structured Settlement - What You Need To Know |
| About two thirds of states have enacted laws which restict the sale of structured settlements, and tax-free structured settlements are also subject to ... |
| www.expertlaw.com |
|
| Settlement Capital Corporation - sell structured settlements,sell ... |
| Direct purchaser of structured settlements and other annuities. |
| www.setcap.com |
|
| John Hancock Insurance and Financial Services :: Explore Our ... |
| A structured settlements annuity provides injury victims or the victim's ... John Hancock Structured Settlements and Attorney Fee Annuities are just two ... |
| www.johnhancock.com |
|
| Structured Settlements - Prudential Financial |
| Your company may become liable to pay a settlement as the result of a legal proceeding. A Structured Settlement Annuity provides ongoing periodic payments ... |
| www.prudential.com |
|
| Finance - Structured-Settlements Ezine Articles |
| EzineArticles.com allows ezine or email list publishers to upload or download free expert content that can be used within email newsletters or websites. |
| ezinearticles.com |
|
| Understanding Structured Settlements: A Novice's Guide to the ... |
| Learn what a Structured Settlement is in plain English. Find Structured Settlements company, payments, broker, annuity and loan info. |
| www.noendpress.com |
|
| structured settlements, personal injury, annuity, disability, accident |
| Structured Settlements allow income to be spread over time, which is safer ... Structured settlements are often ideal under the following circumstances: ... |
| www.structuredsettlementhelp.com |
|
| Structured settlement - Wikipedia, the free encyclopedia |
| Structured settlements were first utilized in Canada and the United States ... Structured settlements are now part of the statutory tort law of several ... |
| en.wikipedia.org |
|
| Structured Settlement vs. Lump sum - What to do? |
| More and more claimants are choosing structured settlements. ... Most structured settlements come in the form of an annuity, which is sold by a third party, ... |
| injury.freeadvice.com |
|
| Welcome to The Halpern Group, experts in structured settlements ... |
| Offers structured settlements, consulting and negotiation services to attorneys representing injured clients. |
| www.halperngroup.com |
|
| Structured Settlements Leader J.G. Wentworth, JG Wentworth ... |
| Structured Settlements Leader JG Wentworth, JG Wentworth Settlement Funding - More than 25000 individuals have come to JG Wentworth to finance their dreams ... |
| www.jgwfunding.com |
|
| DOG BITE LAW - Structured Settlements |
| For those reasons, changes were made to the Internal Revenue Code that enable knowledgeable attorneys to create "structured settlements." ... |
| www.dogbitelaw.com |
|
| Structured Settlements Law – Lawyers, Attorneys & Free Legal ... |
| I am confused by the number of internet sites that plug offers of structured settlements, sale of structured settlement annuities, and attorneys who offer ... |
| injury-law.freeadvice.com |
|
|