Most persons receiving structured settlement payments will never need to sell their payments in the secondary market for structured settlements. However, it is likely a prudent step to find out what your payments might be worth just in case you need to sell some or all of them in the future. How do you go about doing that? Simple, just contact a legitimate structured settlement buyer and ask them what your payments are worth.
Before you call a company, assemble your documentation - including a copy of the settlement agreement and the annuity policy - this will help to speed up the process of getting a quote as the settlement purchasing company will know what the terms of your underlying annuity are.
When you speak with the company for a quote you can ask them to quote on not only the entire annuity but also for portions of the annuity payments, so you will have a good idea on the amount of flexibility you might have in shaping a transaction to fit your needs.
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With the advent of the internet it has become easier than ever to sell your structured settlement payments. Just go on-line and do a search under the term “structured settlement”. Look for companies that have been in business for at least 15 years, which are Better Business Bureau members and have handled 1,000s of transactions. Contact them over the net or by phone, and get a free quote on the payments you want to sell. If they are really net savvy, they will be able to send you the paper work over the net and quickly conclude a transaction with you.
Using the net can speed up the process of closing a transaction and make it much easier experience!
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If you are receiving structured settlement payments and are interested in selling those payments, try to deal directly with companies that will buy the payment from you. There are some persons out there that claim to be willing to act as your “broker” to get you the best deal. You can usually do much better just looking for a company that will buy your payments directly from you. The reason is that the broker will charge you a fee for his or her services and that fee could easily exceed any price improvement they might achieve.
The companies that buy direct will give you competitive price quotes and there is simple no need to use a broker.
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If you receive structured settlement payments, you might have some interest in selling all or a portion of your settlement. How do you find a legitimate and trustworthy company that will buy your settlement? If your type in the words “structured settlement” on your computer you will get thousands of hits. It is not easy to figure out which of these “hits” are for real. Here are some simple guidelines to follow:
1. Look for a company that has been in business at least 15 years – this demonstrates that they are a sound financial company and have more likely than not been providing good service;
2. Look for a company that is a Better Business Bureau (BBB) member – this demonstrates that they take their reputation seriously;
3. Look for a company that lists its real address and phone number and is not just a web site
4. Look for a company that has completed 1,000s of transactions;
If you follow these rules you will find a reliable buyer for your payments that will be good to their word and whom you can trust.
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Many years ago it became obvious to attorneys and others involved in serious tort litigation that some plaintiffs would be better off with a settlement where the payments would be made over time rather than all in a lump sum (a “structured settlement”). At that time the concern was primarily flowing from cases where the plaintiff needed to pay medical bills over their expected life. However, there were uncertainties under the IRS code on how to accomplish this without adverse tax consequences, and while creative tax attorneys felt that they had a workable solution, everyone involved realized that a clarification to the tax code would be preferable. In the mid-1980s the tax code was amended to expressly permit structured settlements of personal injury cases where the payments over time would remain tax free.
If an injured party chose a structured settlement the defendant or their insurance company, though a special purpose entity, would purchase an annuity that would fund the structured payments. The annuity is the source of the future payments dispersed at predetermined intervals for the length of the settlement agreement.
Structured settlements appear to be an acceptable financial option for the majority of people that select them. Nearly all structured settlements stay intact through the full intended term of the settlement. However, on occasion a settlement recipient my have a change in their life circumstances that requires them to have a larger sum of cash.
For this reason, states began passing legislation allow for a settlement recipient to convert their future payments into cash. The first state to pass the legislation was Illinois in 1998. Today 46 states have “transfer statutes” that allow settlement recipients in need to convert their future payments to into a lump sum.
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Nearly all structured settlement arrangements remain intact through the full intended term. Industry estimates approximate 95% of structured settlements remain whole for the length of the agreement.
This high statistic illustrates that most recipients of structured settlements are accepting of their decision to accept a structured settlement instead of a lump sum.
That means that only a minority ever encounters a situation where their needs have changed to the point where they have a more immediate need for cash and determine to sell some or all of their structured settlement payments. It is good to know that few ever have this situation but for those that do it is equally nice to know that they have options. Settlement recipients that are in need of cash can transfer all or some of their payments to a transfer company for a lump sum payment.
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When considering selling some or all of your future payments for lump sum cash you may want to consider what you can get for your remaining payments. To properly determine how much your payments may bring today you need to factor in the “time value of money.”
The time value of money refers to the calculation of how much a future payment is worth in today’s dollars. The value of a future payment is less today than in the future as funds received today can be invested and earn a return. So the value of $100 dollars today is greater then the value of $100 in ten years from today.
To learn more about the Time Value of Money click here or call a Structured Settlement Transfer company that can tell you what they would pay for some or all of your future payments.
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Most structured settlement recipients are not aware that it is possible to sell only a portion of a structured settlement and still receive future payments. In fact, it is actually common for recipients to sell only a portion of their payments to meet their immediate financial needs. This way they receive lump sum cash for the payments they transfer and maintain ownership of the remaining payments. They will continue to receive their scheduled payments for the portion of the settlement they did not sell.
One of the many benefits of selling future payments from a structured settlement is the flexibility. This option provides settlement recipients with the ability to meet their specific short term financial needs.
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This post will discuss the reasons why states passed the legislation to allow the sale of structured settlements.
The primary reasons states were petition to enable this legislation is the fact that in some cases a families best interest were no longer being served by their settlement payments. In the majority of the cases structured settlements are set up to help the recipient to manage their money over time and enable them to pay their financial obligations on a regular basis. This is particularly true when the injured party is no longer able to work and generate steady income.
However, sometimes circumstances change creating new and different priorities that may require a more immediate need for cash. This is where structured settlements are inflexible and don’t allow the recipient to switch their original settlement from a structured to a lump sum settlement within the framework of the original agreement.
States passed legislation to allow those receiving settlement payments and in financial need to cash in their future payments. This was the birth of a new industry with companies guiding recipients through the process and converting their future payments into cash.
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Structured Settlements are set up to take care of an injured parties financial needs overtime. Often the injured party is not able to work or generating regular income. The structured settlement provides income to pay bills and living expenses.
While the majority of all structured settlements remain intact throughout the intended term there are times when a recipient may need a larger sum of cash. In these cases one can opt to sell some or all of their future payments for a lump sum of cash. Those that are in need can turn to a structured settlement purchaser that will buy their future payments in exchange for the needed cash.
However, there are some instances where a recipient needs cash but would be better off not selling their structured settlement.
1. Rely on payments for everyday necessities: If your structured settlement is your only source of income and is only enough to pay for bare daily essentials then it is recommended that you keep your future payments in tact.
2. Too few payments remaining: If your future payments are set to expire in the coming 12-24 months it rarely makes sense to convert those to a lump sum payment.
3. Payments are too far out (over 30 years): For example, if you are receiving future payments that stretch over 40 years you are able to sell the first 30 years of payments but not the last ten. The future value of money will discount these payments to a level that is too difficult to predict or make a fair market value exchange.
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