Selling Structured Settlement
Selling structured settlements is sometimes a better financial move for anyone who has received a cash award of any kind. Sometimes awards are received as court judgments in negligence cases or other law suits. Other times, large cash awards are received by winners of contest and lotteries that can climb into the millions of dollars. For the company or individual that must pay off the judgement, oftentimes it is impossible or an extreme hardship to pay an entire amount in one lump sum. Court awards allow legal contracts to be drawn up that provide for monthly or yearly payments to be made to the recipient over a certain period of time. Many prize awards are already stipulated before contests so that winners know they may receive several million dollars stretched out over a period of 20 to 30 years.
Many times recipients of a court award or of prize winnings never really see the change in lifestyle they wish if they rely on the monthly or yearly payments. Even though hundreds of thousands of dollars or even millions may seem like a lot of money, when its stretched out over part of a lifetime, there is no real significant change to a persons lifestyle. It may not provide enough income to allow a recipient to quit a job, buy a house, send a child to college or for the many other important things that big money awards are expected to provide. A recipient may consider selling structured settlement in order to get enough cash out of an award to make a real difference in their lives. "But seek ye first the kingdom of God, and his righteousness; and all these things shall be added unto you." (Matthew 6:33)
There are companies that specialize in purchasing cash awards from people who are interested in selling structured settlements. It is legal in all states to provide this option for those who prefer a lump sum over periodic payments that are stipulated by a contract. Selling settlements may require the approval of a court, but in most cases it is approved with no problem. The company or individual that must pay the award is not affected in any way since the transaction is between the recipient and a third party. For those who are interested in selling settlements of any kind, he or she must only contact a company that deals with this type of financial transactions.
An individual who would like to explore the option of selling structured settlement, there are many online professionals that can be contacted by email or phone to discuss this type of legal process. It is relatively easy to check with a few companies in order to compare their requirements and financial arrangements. In short, most companies will offer the recipient of a cash award, a lump sum pay off in order to assume the contract. The business will be the legal party that receives the monthly or yearly payments by purchasing the contract agreement from the legal recipient.
The advantages of this arrangement can be substantial for all parties even though companies that buy out this type of contract end up receiving the full amount of the payoff. In order for a business to make money, a lesser amount for the payoff will be offered to an individual in return for the legal claims to the entire amount. For example, if an award is for 5 million dollars to be awarded in yearly increments of 250,000 dollars for 20 years, a company may offer an individual a lump sum pay off of 3 million dollars. The person will receive 3 million dollars, sign over the contract to the company and enjoy a large sum that can literally change a lifestyle dramatically. The company makes a very good profit 2 million dollars with the only drawback of yearly payments for several years. However, selling structured settlements is not unusual and companies that specialize in this usually have many contracts they have processed and can make money while calculating payoffs over the long haul.
There are several ways of selling structured settlement that can be beneficial to a client. Parts of an award can be purchased such as a certain amount of payments or partial payments, while the recipient of an award still retains legal rights to a portion. In very large awards, an individual may prefer to sell off part of the overall sum for cash, while still receiving monthly or yearly payments in lesser amounts over the years. Selling structured settlements can be configured in many ways that will make money for both the client and the business in the long run.
For those who have received large cash awards for any reason, selling cash award contracts may be the best way to enjoy the most capital during their lifetime. Age may have a lot to do with motivation to negotiate with a company since some agreements can be stretched out over a lifetime of payments. In order for an individual to enjoy the complete benefits of his or her winnings, selling structured settlement can be the most sensible way to make a dramatic impact on income, family needs and personal fulfillment.
Sell Structured Insurance SettlementTo buy or sell structured insurance settlement annuities requires the supervision of the courts. This is a legal process designed to protect the annuity recipients from being victimized by greedy scammers. People who receive these types of annuities have often been severely injured. The injuries may cause either a permanent disability or a temporary disability that will require a lengthy recovery period. In some cases, the settlement is the result of a wrongful death case or on behalf of a minor or incapacitated adult. Negotiated structured settlements benefit both the injured party, the plaintiff, and the party that may be held responsible for the injury, the defendant. When the case is negotiated, the plaintiff is assured of receiving a specific amount of money paid in periodic installments. This income can pay for future medical expenses and basic living expenses. The defendant has some control over the expense and is released from future liability to the plaintiff. Typically, the defendant purchases an annuity from an insurance company who then sets up the periodic payments according to the negotiated agreement. The person receiving the payments, often referred to as the annuitant, may need a lump sum of cash for a specific financial reason. The annuitant may decide to sell structured insurance settlement payments to a third party in exchange for the lump sum.
In 1982, Congress passed the Periodic Payment Settlement Act to regulate the legal process of negotiating these types of agreements. To encourage defendants to settle with plaintiffs, Congress included a provision that the revenue is considered tax-free income. But the legislation also requires a court review should the annuitant wish to sell structured insurance settlement future payments. As previously stated, this review helps protects annuitants from scams, but may also protect them from spending the revenue on frivolous expenditures. Actually, the annuity itself cannot be sold because it belongs to the insurance company and not the annuitant. But because of legal restrictions, the insurance company cannot change the payment structure. However, the future payments are considered an asset that belongs to the annuitant. These can be sold to third party buyers as long as the federal and state regulations govern the process. The courts ensure that the sellers are protected in the process. The psalmist advised: "Be wise now therefore, O ye kings: be instructed, ye judges of the earth. Serve the LORD with fear, and rejoice with trembling" (Psalm 2:10-11).
As an example, let's say that Joe was permanently injured at his place of employment five years ago. Under a negotiated agreement, he received a workers compensation settlement that provides a specific amount of money that is paid to him four times a year (quarterly). As Joe's health has deteriorated, costly modifications need to be made to the family home. Joe may choose to sell structured insurance settlement future payments for a lump sum of cash that can be used to pay for these modifications. Joe's wife researches several different third party buyers to find a reputable company that specializes in the purchase of annuities similar to the one that Joe has. The couple talks to an experienced individual at the company who helps them through the legal process of making the sale. This employee advises the couple that they don't, and shouldn't, sell the entire annuity. Annuitants are able to sell only the number of future payments needed to meet the financial goal. The employee assists the couple in determining exactly how much money is needed to make the modifications so that the company can calculate the number of future payments that will need to be sold. Joe can use this information to sell structured insurance settlement future payments to the third party company.
Because of an accounting concept known as the time value of money, and the need for the third party buyer to make a profit, this calculation is more complicated than dividing the amount of money needed for the house modifications by the amount of money Joe receives every quarter. The time value of money concept means that, primarily because of inflation, a future dollar is worth less than a current dollar. Even with an annuity that is structured so that each periodic payment is exactly the same amount of money, the payment received today has more value than a payment that will be received in five years. Annuitants need to understand the ramifications of this concept before they sell structured insurance settlement future payments to third party buyers. Again, these companies also need to make a profit to stay in business and to continue offering this service to annuity recipients. Returning to the example, Joe may have expenses relating to the sale. As part of the court review process, Joe may be required to hire an attorney to oversee the transaction.
The process to sell structured insurance settlement annuities to third party buyers often takes six to eight weeks. Though it's in both the buyer's and seller's interests to expedite the transaction, the court review takes time. Some third party buyers may provide the cash to sellers before the transaction is approved, but this cash will almost always be a type of loan. Except in extreme circumstances, the seller should probably wait for the court's approval before accepting cash from the buyer. Of course, the buyer doesn't give the seller actual cash. The money is often given to the seller in the form of a cashier's check or a wire transfer. Let's say that Joe received a cashier's check to fund the modifications to the family home in exchange for five future payments. This means that Joe's next six payments, for the next six quarters, will go to the third party buyer. The loss of this future income, for the next eighteen months, is something that Joe needs to consider before beginning the process. To sell structured insurance settlement future payments for a lump sum may be very tempting to annuitants, but should only be done for a very good reason.