Sell structured settlement annuity

What Is a Structured Settlement?
Sometimes when a plaintiff settles a case for a large sum of money, the defendant, the plaintiff’s attorney, or a financial planner consulted in association with the settlement, will propose paying the settlement in installments over time rather than in a single lump sum. When a settlement is paid in this manner it is called a “structured settlement”. Often the structured settlement will be created through the purchase of one or more annuities, which guarantee the future payments.

A structured settlement can provide for payment in pretty much any schedule the parties choose. For example, the settlement may be paid in annual installments over a number of years, or it may be paid in periodic lump sums every few years.

Benefits of a Structured Settlement
One significant advantage of a structured settlement is tax avoidance. With appropriate set-up, a structured settlement may significantly reduce the plaintiff’s tax obligations as a result of the settlement, and may in some cases be tax-free.

A structured settlement can protect a plaintiff from having settlement funds dissipated, when they are necessary to pay for future care or needs. Sometimes a structured settlement can help protect a plaintiff from himself - some people simply aren’t good with money, or can’t say no to relatives who want to “share the wealth”, and even a large settlement can be rapidly exhausted. Minors may benefit from a structured settlement as well, such as a settlement which provides for certain costs during their youth, an additional disbursement to pay for college or other educational expenses, and then one or more disbursements in adulthood. An injured person who has long-term special needs may benefit from having periodic lump sums with which to purchase medical equipment or modified vehicles.

In some situations, it will be better for a severely disabled plaintiff to set up a special needs trust, rather than entering into a lump sum or structured settlement. Any plaintiff who is receiving, or expects to receive, Medicaid or other public assistance, or the guardian or conservator entering into a settlement on behalf of a disabled ward, should consult with a disabilities financial planner about their situation before choosing any particular settlement option or structure.

Potential Disadvantages of Structured Settlements
Some people who enter into structured settlements feel trapped by the periodic payments. They may wish to purchase a new home, or other expensive item, yet be unable to muster the resources because they can’t borrow against future payments under their settlement.

Some people will do better by accepting a lump sum settlement, and investing it themselves. Many standard investments will give a greater long-term return than the annuities used in structured settlements.

Selling a Structured Settlement
If you have a structured settlement, you may have been approached by a company interested in purchasing your settlement, or may be curious about selling your settlement in return for a lump sum buyout. About two thirds of states have enacted laws which restict the sale of structured settlements, and tax-free structured settlements are also subject to federal restrictions on their sale to a third party. Also, some insurance companies will not assign or transfer annuities to third parties, to discourage the sale of structured settlements. As a consequence, depending upon where you live and the terms of your annuities, it may not be possible for you to sell your settlement.

Keep in mind that companies which buy structured settlements intend to profit from their purchase, and sometimes their offers may seem quite low. You may benefit from approaching more than one company in relation to the sale of your settlement, to make sure that you obtain the highest payoff. You also want to be sure that the company which wants to buy your settlement is established, well-funded, and reputable - you don’t want a fly-by-night outfit to obtain the rights to your annuities but to disappear or go bankrupt before paying you the buyout money. You may have to go to court to get a judge to approve the buyout. It is usually a good idea to consult with a lawyer before entering into an agreement to sell your settlement.

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Structured Settlement Payments – How To Know When To Sell Yours

Sydney, Steven Saunders today launched the structured settlement payments site http://www.structuredsettlementsadvice.com. Structured settlements provide injured persons with an opportunity to capitalise upon an injury suffered through negligence. The main issue is how best to manage the sudden influx of funds – whether a steady flow of instalments is best or alternatively to sell the structured settlement outright. The main reason structured settlements were introduced was because claimants rarely have the ability to manage the funds, as Tim Grant, contributor to Journal Gazette states: " A recent survey of people who had received big settlements in personal-injury cases showed more than half who took the lump-sum payment had already spent the entire amount at the time of the survey." A major benefit of structured settlements is that they are income-tax free and insurance companies can guarantee the benefits for life. Furthermore they provide residual and reliable income that provides claimants with security and ability to make repayments for various debts.

A claimant can also sell a structured settlement. This process is also known as factoring and can take between 60 and 90 days to settle and secure the lump sum payment in exchange for the remaining structured settlements. Knowing when to sell a structured settlement is a matter of personal circumstances, as Josh Shapiro, contributor to Best Syndication states: "Do you need a lump sum of money? This is the primary indicator that it is time to sell a structured settlement."

Examples how one could benefit from selling a structured settlement include: clearing a mortgage, buying a business and investing in stock.

If one is considering selling a structured settlement it is advisable to seek the advice of a trusted structured settlement broker to help negotiate the deal with the insurance company. There are various illegitimate online structured settlement companies that claim to negotiate on your behalf- one must be wary of such potential scam sites.

Interestingly as Tim Grant, contributor to Journal Gazette states in relation to the AIG American General survey:  “that 35 percent of Americans with no knowledge of structured settlements would take the lump sum, but after learning the merits of structured settlements, 73 percent of them preferred the lifetime payments”. It seems clear that there is a lack of awareness of the long term benefits of structured settlements, and how best to manage them. 

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