It is not uncommon for people who are beneficiaries of a structured settlement to sell some or all of the settlements for a cash payout. The reasons for selling a structured settlement vary but the process for obtaining cash for a structured settlement is the more or less the same across all states in America.

There are many settlement-purchasing companies that offer a number of plans for buying a structured settlement and offer an instant cash payout. The plans offered by these companies are useful for obtaining a lump sum for repaying debts, financing college education, or availing a business opportunity. Since there are many financial companies that purchase settlements, it is in the best interests of the seller to seek advice from his attorney and financial advisor before deciding to do business with a particular structured settlement company.

An online research should yield details on a number of structured settlement companies that one can visit online. The key factors that decide the choice of a structured settlement buyer include the rate of interest charged, the buyer’s financial standing, buyer’s reputation for fair-dealing, and his relationship with the insurance companies or the actual payers of the structured settlement installments. Since the cash payout is less than the value of the settlement sold, one should actively seek out a buyer that offers maximum cash payout for the settlements sold. Costs incurred in the sale of a structured settlement also include service fees, closing fees, broker fees, and legal expenses.

The responsibility of getting the best out of the sale of structured settlement lies with the seller. This means he has to be aware of the minimum waiting period, if any, that the state may impose on the sale of a structured settlement as well as other state and federal regulations that govern the sale of a structured settlement.

A written court order approving the sale of structured settlements is necessary for the seller to receive the cash payout. Court approval is subject to the seller being able to prove that the sale is the best means available to him for achieving liquidity. Brokers who are knowledgeable about the court procedures involved in the sale of structured settlements can offer useful help to the seller and his financial advisor. The entire process of obtaining a cash payout can take up to sixty days and includes submitting an application to the settlement buyer, signing of the closing documents by the two parties, and the legal formalities.

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If you’ve agreed to accept a structured settlement, it’s likely that you felt a sense of relief that your financial uncertainties were being resolved, and that you’d have the funds necessary to pay your bills, support your family and go on with your life. When you agreed to the terms of the settlement, hopefully with the help of a financial advisor, you accepted a series of financial payments that made sense for you at that time.

Perhaps you’d suffered personal injury in an auto or other accident, you were awarded damages in a product liability case, or you were the victim of medical malpractice or were even the plaintiff in a wrongful death suit. You agreed to a periodic (usually monthly) payment, maybe in the form of a lifetime income stream, that seemed to be the answer to paying your ongoing living expenses and perhaps your medical costs. You made the best decisions you could at the time, with the information you had – based upon how life was then, and what you expected for the future.

But life seldom works out as we expect. Maybe you’re on the road to recovery from the accident or other event for which you received the settlement, and want to move and buy a house, get married, go to school, or buy a business. Maybe medical bills or high interest debt is an undue burden on you that you need to resolve now. Or, if your family has grown, and your children no longer need for you to provide for their education or other expenses, you may want to spend more of the money you have coming to you now, instead of later.

What can you do to match your finances – specifically your structured settlement – with the life you now have or want to have? You should always consult an attorney or a financial advisor, but here’s a basic overview of your rights and options in assigning your structured settlement:

Settlements are funded by single premium annuities, issued by insurance companies. Instead of paying you a lump sum amount, the party found responsible for injury or damages to you has paid a one-time lump sum to an insurance company, which has, in turn, invested it. The insurance company has projected the interest rate or securities dividends they will receive on the lump sum, and based upon the length of time and number of payments you chose or were offered for the structured settlement, they calculated the periodic payment amount you’re now receiving.

So who owns what? The insurance company owns the annuity, and you, as the beneficiary, are entitled to an income stream, or the series of periodic payments. Because you don’t own the underlying asset, the annuity, you therefore can’t sell the annuity contract to another party to receive your money. However, under federal and state law you can, with court approval, sell all or a portion of the payments you are entitled to receive in the future. In doing so, you can receive a lump sum cash payout now.

What are your options? As an annuitant, or the beneficiary of the structured settlement annuity, you are, in most instances, able to assign to a third party the payments you are entitled to receive in the future. Some Structured Settlement Agreements state that payments cannot be assigned, and your legal counsel will advise you of options and alternatives if yours is written with such a clause. Fortunately, state laws and recent case law have rendered contracts written with such provisions unenforceable, although other regulations may apply.

How can you determine today’s lump sum value of your structured settlement payments? This depends, in part, upon the amount of each payment and when it is due. The payment amount and schedule will be outlined in your Structured Settlement Agreement. It is also affected by the financial strength of the issuer of your annuity, because the better the financial position of the issuer, the more likely it is that the purchaser of your cash stream will be paid. The current financial climate, as well as interest rates will also affect your cash-out amount. Your financing company will explain these calculations and assumptions to you.

What steps do you need to take?

- First, you really need to take a hard look at whether receiving your funds now will truly be best for you and your family. This is a big financial step, not to be taken lightly. That said, your circumstances may have changed sufficiently so that a lump sum or partial payment in the form of a lump sum makes sense, and is better for your family’s current and future lifestyle and financial stability.

- Next, contact a reliable financing company that purchases structured settlement income streams. They can guide you through the process and help you consider alternatives, such as the sale of a portion of your structured settlement income stream, if this best meets your needs.

- The financing company will assist you by hiring an attorney experienced in structured settlement assignments. The attorney will explain to the court your desire to change your settlement, and any changes in your life that have caused you to make this decision. Because the attorney will be petitioning for judicial approval, he will need to understand your current finances, obligations and desires.

- Having all your documentation and agreements, and furnishing them promptly to your advisors and potential funding sources is key to receiving a cash payout in the shortest possible time. Because court approval is required, the time from the initiation of the request to the final approval is typically 45-90 days. So, just as with other large financial decisions, such as obtaining a mortgage or refinancing, it’s in your best interest to begin the process with a little time to spare, before you feel a time crunch. You deserve an equitable deal, as quickly as is possible, not just the deal you can make in the very least amount of time.

- What can you expect now? Once you have chosen a finance company and attorney, the courts will put you on the docket and hear your petition for receiving your funds in a lump sum. They’ll want details of the future payments due you, the proposed amount of the lump sum distribution, and any costs you will incur as a result of restructuring your settlement. Their basis for granting you an approval is satisfying themselves that the assignment of your payments to another party and receipt of current cash will be in your best interest and in the best interests of any dependents you may have.

- Once you’ve agreed upon a lump sum amount with your finance company, and obtained court approval, you’ll receive a wire transfer or a cashier’s check for your lump sum amount. You’ll now have the cash you need – right when you need it most.

Sovereign Funding Group is an experienced, reputable company that offers convenient, no-risk services to help you with the selling of your structured settlement.

Article Source: http://EzineArticles.com/?expert=David_Springer

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.

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.

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.

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.

David Springer is a consultant for Sovereign Funding Group. Sovereign Funding Group is an experienced, reputable company that offers convenient, no-risk services to help you with the selling of your structured settlement.

Article Source: http://EzineArticles.com/?expert=David_Springer

If you are a personal injury victim, here are three good reasons why you purchase structured settlements instead of getting a lump sum settlement.

Specifically, when you buy structured annuities, you avail yourself to considerable tax advantages; protect yourself from having funds dissipated; and, if you are disabled, the periodic payments, combined with other estate planning options, can increase your likelihood of Medicaid eligibility.

Take a look at this article to determine whether or not you should purchase structured settlement payments instead of a lump sum settlement.

Purchase Settlement Annuities For Their Tax Advantages

Many companies that sell these types of annuities tout the advantages of tax avoidance.

While you should not base your decision to buy structured settlements solely on tax consequences, it is certainly a consideration. Specifically, personal injury payments are exempt from federal income tax under federal law. However, settlements for lost wages are subject to taxation. When you settle your claim, you may avail yourself of other tax advantages under the Federal Structured Settlement Protection Act.

With appropriate tax planning, such a settlement may provide favorable tax treatment, and may in some cases be tax exempt.

Buy Annuities To Prevent Waste Of Funds

Companies that sell annuities correctly advise that they are intended to compensate the plaintiff for injuries and provide for future lost wages and medical care. But, oftentimes, structuring a settlement can protect minors, incompetent persons and financially unsophisticated plaintiffs.
Unsophisticated Plaintiffs. Face it, some people just aren’t good at handling their finances. In my experience, all sorts of “shady” friends and relatives come “out of the woodwork” encouraging the plaintiff to “share the wealth.” Within a sort period of time, the plaintiff is penniless. Encouraging the plaintiff to purchase an annuity settlement keeps the money from being squandered; and, more importantly, gives the plaintiff an “excuse” to refuse unscrupulous friends and relatives’ requests for money.
Incompetents And Minor Children. The legal representatives or guardians of minors should consider buying annuities in lieu of cash. Many of the same benefits to unsophisticated plaintiffs also apply to minors as well. Sometimes, the parents of minor personal injury plaintiffs are unsophisticated and could waste the funds instead of saving them for the child’s benefit. Instead, a guardian who decides to purchase structured annuities, can set up such annuities so that the child receives periodic lump sum payments for college expenses, the purchase of a house and possibly a business.

Purchase Settlement Annuities To Pay For Future Medical Care

Most personal injury plaintiffs look to buy structured settlements to provide for future medical care. Structured settlement calculators can be used to predict cash needs to prepare for future medical needs.

Notwithstanding the benefits of periodic payments, in some cases, severely injured payment would obtain better benefits from a special needs trust. This is because of the possibility that the plaintiff could be eligible for Medicaid because of the severity of his or her injuries.

A special needs trust can be structured so that the plaintiff can receive the benefits of a settlement without being disqualified from receiving Medicaid. Consult with an estate planning attorney or disability needs planner for more information on this particular situation.

Substantial Benefits To Plaintiffs When They Buy Structured Annuities

As a plaintiff, now that you know a bit more about the benefits obtained when you purchase settlement payments, you can decide what is right for you.

Specifically, you need to consider the potential tax advantages when you buy structured settlements. Many companies that sell structured annuities will advise that their annuities will protect the plaintiffs against waste, fraud and mismanagement.

Companies can use structured settlement calculators and actuaries to develop a plan to meet the needs of a minor child. Finally, although the benefits of buying settlement annuities are plentiful, there are times where a special needs trust might be a better alternative to a plan to purchase structured settlement payments.

In the end, you need to consult with your attorney, tax advisor and financial planners to determine whether the decision to purchase structured settlements is one that you should consider.

Douglas Manning is an attorney and financial consultant. Find out more about how to buy structured settlements at Purchase Structured Settlements Now.

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