Structured Settlements Authority

Cash Payments or a Structured Settlement?

In traditional settlements, compensation for damages has usually consisted of a single cash payment. History has shown that this money is often unwisely managed and quickly spent, leaving no funds available to provide for future needs. Alternative arrangements know as structured settlements were created in the 1980's. Under these arrangements the beneficiary would receive cash structured settlement payments on a periodic basis. This guaranteed stream of annuity payments could be paid over a period of months, years or a complete lifetime.

Federal and state laws have been created as part of a nationwide policy encouraging the use of structured settlements over cash payments in cases involving injuries. These structures are a favored means of providing annuity income to a beneficiary and reducing their risk of rapidly spending the capital proceeds from a cash settlement. In some cases, former recipients have found themselves with no cash flow, relying on loans for family living expenses. Others have had to rely on direct public assistance as a source of support for the rest of their life. To encourage their use, favorable tax treatment rules have been extended to the cash received under a structured settlement agreement.

Selling Future Payments

Many individuals receiving a stream of monthly payments under a settlement agreement don't realize that they can sell all or a portion of their annuity payments and be paid a cash sum. Access to this money could provide funding to meet the current life needs of your family instead of waiting for a future stream of inflexible payments structured over a period of a year or more. This process of entering into a contract to sell ones legal right of receiving future structured payments to settlement companies in exchange for the present value of the money is called factoring.

A large number of companies now offer cash for a structured settlement payment. When evaluating your options, try to work with financially sound companies that are competent and ethical. These factors are important considerations to note of when you compare the knowledge and integrity of a company or corporation as well as their dollar offers. It is a always a good idea to shop around and compare companies and offers.

Settlement Companies

In recent years, a complete settlement funding industry has been created. Companies will offer to pay for the rights to receive future annuity payments under structured agreements. These companies offer customers the benefit of direct access to cash. Discounting is not free however and the costs can be quite high. The cash price they are willing to pay is much less than the money a person would receive from the future stream of fixed payments.

You may have seen ads encouraging you to "sell a structured settlement payment", and be wondering if you should sell and cash out. This is a serious financial decision especially if you really need the money. You should carefully evaluate your options to determine if the sale of even a portion of your guaranteed settlement payments is truly in your best interest.

To gain immediate access to their money, a person can sell their right to receive all or part of their future structured annuity payments to a settlement buyer. The transaction is pretty straightforward but come at a cost with various fees and expenses. The factoring company acquires the right to receive future structured settlement monies in exchange for a cash payout. If you are considering selling your settlement payments it is wise to call or go online for several free quotes and information from settlement firms you can trust. Then compare the terms, costs and services provided in the offers to guarantee you are receiving top dollar.

While it may be appealing and sometimes even in the recipients best interest to sell one of more future payments, keep in mind that annuities are often sold at a discount. Because of this, it's usually not a wise solution to sell your settlement to access funds for luxury items such as purchasing a new sports car or to finance a vacation. More responsible reasons to sell a series of payments would be to gain access financial capital in during a family emergency. Some people choose to repay a debt or to use the cash for investment purposes such as starting a business or buying a home. Others use the money to fund an entire college education.

The choice is yours, but the implications of a decision to sell should be seriously considered. In this situation you are the customer and should receive great service. As a client you are free to ask the settlement company real questions in total privacy about selling payments and your rights. Use your good judgment and experience but also feel free to ask your attorney for expert legal advice. You may also want to consult with a financial professional to discuss the impact on your taxes and your estate before you accept any cash offer for your structured settlement payments. Remember you are in control. There is no guarantee you will you have enough money to live on after the cash lump sum payment has been spent. Only sell a structured settlement payment if you are sure that you can meet all your future needs.

What Is a Structured Settlement Payment?

Formally recognized by the federal government since 1983, structured settlement payments are specified in voluntary settlement agreements between and injury victims and defendant(s). A settlement payment or annuity comes as the result of a contract between a victim and a defendant whereby the injured victim receives a stream of tax-free settlement payments as an annuity tailored to meet their future needs instead of receiving one lump sum. Once a structured settlement payment agreement is reached, the plaintiff cannot make changes.

Structured settlements payments are used more frequently these days because they offer substantial benefits to all parties involved in the structured settlement agreement. Victims receive tax-free payments and defendants get an end to litigation as the result of reaching a structured settlement agreement.

Structured settlement payments are an innovative solution in that the amount of the settlement payments and the timetable for settlement payments is completely up to the negotiating parties. The personal injury victim gains the ability to custom tailor their structured settlements payments to meet their individual needs over an entire lifetime.