Structured Settlements Authority

Getting Cash for Future Annuity Payments

People receiving structured payments as the result of a lawsuit or personal injury settlement have other options including receiving an immediate cash payment if they choose to sell their structured settlement payments.

How to Sell Structured Settlement Payments

Many people who receive monthly annuity payments under a settlement agreement do not realize they can sell all or a portion of their stream of annuity payments in exchange for a cash lump sum. Getting paid this money can be a way to help fund the current life needs of your family. Receiving the cash now rather than waiting a period of a year or more for a stream of inflexible payments structured in the future can be a big advantage to some people. Factoring is the name of the process of selling ones legal right to receiving future structured payments in exchange for a the present value of that money. This sale becomes a legal contract with the settlement company.

Many companies now offer to pay for your rights to receive future annuity payments under structured agreements. An entire settlement funding industry has been created in recent years. The settlement companies offer annuitants the benefit of direct access to cash. However, there is a cost for getting this access to your cash, and discounting is not free. The actual costs can be quite high because the cash price companies are willing to pay is considerably lower than the money a person could receive if they waited for the future stream of fixed annuity payments.

There has been much controversy and legislation regarding selling the future payment rights associated with structured agreements. On January 22, 2002, President George W. Bush signed new protective legislation. This law was designed to protect any individual who has received a settlement annuity as part of a lawsuit or settlement that wishes to sell their structured payments. Under the law a court would have to authorize a transaction to sell future settlement payments. A transaction must in the best interest of the annuitant, their family, dependents or estate to be approved. If a court order and approval is not received, a federal excise tax of 40% would be paid on the total payments sold. This law is intended to help people who receive offers of cash for their annuity payments from being defrauded or taken advantage of by settlement buyers or even their own families.

States nationwide have also created laws regulating the sale of structured settlements. These regulations guard sellers against the past abuses and false statements of unprofessional settlement companies. Under the various state settlement protection acts, the buyer has a legal requirement to disclose the total value of the transferred payments. This amount is compared to the net cash value the selling party will receive. Normally, the discounted present value of the transferred payments is used in this comparison. The interest rates used by investors in this calculation are of particular importance. Failure to use a competitive market based interest rate from the start of the calculation can significantly impact the valuation. It is good ideas to work with finance professionals you trust that have experience in this area. These experts can provide you with personal information, specialized services, and a solution designed to meet your specific situation.

You have probably seen advertisements urging you to "sell a structured settlement payment". Many beneficiaries wonder if they should sell and cash out, especially if they are in a situation where they need the money. This is a major financial decision and you would be well advised to carefully evaluate your options before making a decision. You need to determine if selling all or even a portion of your guaranteed settlement payments is in your best interest. When you receive a cash offer for your structured payments, you need to realize that the money you obtain from the payout will be less than the total of the future settlement payments you would have received over time.

There a many companies who offer will offer you cash for a structured settlement payment these days. As you evaluate the alternatives, try to select competent and ethical companies that are financially sound. These are important considerations you should factor in when you evaluate the integrity and knowledge of a corporation or company. There is more than just the dollar amount of the offers to consider.

Are you considering selling all or part of your periodic payments? A good way to start would be to compare several offers and their terms to make sure you get the best deal for your settlement. There is no obligation to get a free quote and it is fast and easy. It just takes a quick phone call or you can go online to get a specific dollar amount quoted. It is a good idea to compare offers. When you request an offer to see what your settlement is worth, it usually helps to have any supporting documentation. Having copies of your settlement agreement and your annuity policy available will help. You should receive a quick and accurate quote of money you would receive if you sold your structured payments.

A settlement broker can help their clients with the sale of future structured payments. The right settlement company can be invaluable since they have experience dealing with annuity purchasers. Knowledgeable brokers understand taxes and the settlement claims processes. They will also support your right to privacy when a payment is purchased. These companies can answer your specific questions as well as providing the necessary paperwork and forms. These brokers have already established relationships in the legal community and with settlement buyers, which can be a valuable asset.

It usually takes about two months from the date you start to complete a sale and for you to actually receive the cash when you sell insurance payments. This process will go more quickly with the aid of a legal professional who specializes in making settlement agreements and knows how to sell payment structures. You may also wish to consult your tax advisor.

Even when it is in the recipients best interest to sell one of more future payments, you must keep in mind that annuities are sold at a discount. The money received in a sale will be far less than the total of the structured payments you would have received through the life of the annuity. It is usually not the best idea to gain access funds for luxury items such as purchasing a new sports car or to finance a vacation thought the sale of your settlement. Financial or family emergencies are typically the reasons cited when a person decides to sell a series of payments and gain access their financial capital. Whether you choose to use the cash for investment purposes such as starting a business or buying a home, repay a debt, or use the money to fund an entire college education, the choice is yours. You get to make the decision, but remember the implications of your decision should be seriously considered. You want to make sure there is enough money to live on after the cash lump sum payment has been spent.