Selling Structured Settlements
Structured Settlements are used when an arrangement needs to be made to pay out a large sum of money over time. A good example of a structured settlement is when the winner of a large sum of money in a lottery takes the payments spread out over twenty years, instead of one lump sum payment upfront. Most structured settlements are purchased annuities, paying out over time on an annual basis.
Many people sell their structured settlements so they can get all the money in one lump sum payment, rather than taking it in periodic payments.
Taking a structured settlement isn’t right for everybody. Sometimes it may make more sense to take a lump sum payment. There are many companies and individual investors that will give you one big payment up front for your settlement. They will discount the amount to reflect the time value of money.
Federal structured settlement laws include sections of the (federal) Internal Revenue Code. State structured settlement laws include structured settlement protection statutes and periodic payment of judgment statutes.
Facts to think about if you want to Sell Your Structured Settlement
Let’s say for example that the courts have recently awarded you a settlement of a million dollars for injuries that you incurred when using the Widget Company’s product. The settlement require that The business reimburse you a small amount today, with the remaining funds to be dispersed over the subsequent twenty years. This type of “structured settlement” may work tremendously for some folks, however you may have medical bills or other financial needs that need be paid at once. What can you do about it? Answer: you can sell your structured settlement and receive additional cash now.
So, exactly what’s a “structured settlement?” The Center for Justice and Democracy describes it as follows:
Additionally referred to as “periodic payments,” structured settlement laws either mandate, allow defendants to request, or permit courts to require that some or all payments awarded by a judge or jury be made to the injured party over a protracted interval of time. In other words – the injured party is prohibited from receiving payments in a lump sum.
These provisions may increase the hardships of critically injured people who are quickly hit with massive medical fees and also may need to make changes in their transportation and housing situations.
There are firms whose primary purpose of business is to buy your structured settlement and provide you with a lump sum payment instead. Of course, you need to pay a big up front fee in order to get the money now instead of waiting. Still, it is an option for some individuals especially if they want the money instantly.
Lawsuit settlements are not the only types of structured settlements that you could be receive. In addition, you might receive a settlement for:
- Lottery Proceeds.
- Business Notes.
When deciding whether to cash in your structured settlement or not, you want to contemplate that your proceeds — if taken over time — tend to be eroded by inflation.
A million dollars received over time might be worth a lot less in future dollars due to inflation! In addition, you may not live long enough to receive all of the proceeds, although typically the remaining unclaimed funds would go to your property as an inheritance.
So, must you cash your structured settlement in? Good question! Sit down with a calculator and determine what charges you are willing to pay and what expenses must be addressed immediately. If you have immediate financial needs, then speak to a settlement firm and get more information.