There are a variety of ways people come to receive structured settlement payments - personal injury claims, annuity arrangements, and so on. Whatever your situation, if you are thinking about selling your structured settlement for a lump sum of cash, there are some important factors to consider. First, you should make sure that it is even possible to sell your structured settlement; it is not always the case. Even if it is possible, make sure you are aware of the costs and penalties involved. Below are some important tips that should not be ignored.
First, if you have not settled your claim yet, consider if receiving a structured settlement is the right choice for you. It cannot be stressed enough - now is the best time to decide between a structured settlement payment plan or a lump sum. Anything that you do after the structured settlement is in place will invariably involve additional costs to you. Keep in mind that combination arrangements can sometimes be reached - a smaller lump sum up front in combination with smaller structured annuity payments, for example.
If your structured settlement is already in place, keep in mind that it was probably set up from the beginning in a way that is tax-advantaged for you. You may therefore have significant tax penalties if you decide to sell your payments for a lump sum. Be sure to see a tax adviser to get the best advice for your case.
Sometimes, sellers of structured settlements run into federal or state limitations. There are some federal regulations which limit the sale of structured settlements, and approximately 2/3 of states have similar legal restrictions. Find out which laws, if any, apply in your situation. At the very least, you may need to obtain court approval for the sale of your settlement payments. In addition - if your structured settlement was issued by an insurance company, they may have language in the settlement agreement which limits sale of the periodic payments.
Don't be blinded by the prospect of getting a huge lump sum of cash up front. Not only must you make sure you will not spend the money unwisely, you will need to check around and compare offers. The discount value of a structured settlement can vary widely from buyer to buyer, but it generally ends up being 50% of the value of the periodic payment total. Also - make sure you research each potential buyer carefully. Check with the Better Business Bureau in your area, and ask for references.
Getting good legal help can be a wise investment when it comes to selling structured settlements. A lawyer with experience in this area can help in several areas. First, he or she can tell you if the buyer's offer is a good one, given the current market conditions and their experience with other clients in the same situation. Second, he or she will be able to review the terms set forth by the purchaser of your settlement payments, and alert you if any red flags are raised. Lastly, should the transaction go sour, a lawyer can protect your rights and make sure you are dealt with fairly by all parties involved.
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