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Structured Settlements - Should You Sell Yours?
In recent years, it has become more common for victims of
accidental injury who accept a settlement from the at-fault party
to accept a structured settlement instead of a lump-sum payment.
With a structured settlement, the injured party receives payments
over an agreed-upon length of time - five years, ten years, or
even a lifetime, rather than receiving payment up front in a lump
sum.
There are advantages to this for both parties. The injured party
may require constant medical care, and the regular payments of a
structured settlement guarantee that income will be available to
cover the medical expenses. For the paying party, the settlement
can be paid by purchasing an annuity, which allows an upfront
payment to accrue interest, thereby producing a larger long-term
yield from a minimal investment. In many cases, a structured
settlement is viewed as a win-win situation for both parties.
There are restrictions on structured settlements that may not
suit everyone. Once you agree to accept a structured settlement,
you cannot trade it back in for a lump sum payment, nor may you
use it for collateral for a loan. What if you want to buy a home
and pay cash? What if some other unexpected expense comes up and
you simply do not have the cash available? Under certain
circumstances, you may be able to sell your structured settlement
to a third party.
There are companies that are interested in purchasing structured
settlements for investment purposes. Perhaps one or more of these
companies has already contacted you. They will agree to pay you a
lump sum, in cash, in exchange for you signing over your future
annuity payments to them. Be aware that any party that offers to
buy your annuity is interested in doing so for investment
purposes. They wish to make money on the transaction, and for
them, that profit will be spread over the long time that it takes
to receive all of the payments that constitute the settlement.
Once you combine the factors of time, interest, inflation, and
the buying party's profit, you will find that the offer made to
you will seem quite small. The amount you receive will be an
amount equal to the present day value of the settlement, minus
whatever sum the investors require for their profit on the
transaction.
You should also know that some states prohibit the sale of
structured settlements, that some insurance companies who handle
the annuities prohibit sales to a third party, and that you will
probably need to go to court to arrange the sale. In addition,
there may be tax considerations involved in the sale, and the
taxes due on large sums of money are not insignificant. If you
are interested in selling your structured settlement, you will
definitely want to discuss the sale with an attorney and a tax
advisor beforehand.
While structured settlements are designed to benefit those who
receive them, there are times when it may be desirable or
necessary to sell them. If you are considering selling your
settlement, make sure that you weigh all of your options
carefully. Once you agree to sell, you cannot get it back.
©Copyright 2005 by Retro Marketing. Charles Essmeier is
the owner of Retro Marketing, a firm devoted to informational
Websites, including http://www.StructuredSettlementHelp.com/
and http://www.HomeEquityHelp.net/
MORE RESOURCES:
Father paved way for Street's debutDenver Post, CO - Nov 17, 2008... and Nixon Coming" — on Monday, at the Austin, Texas, offices of The James Street Group, a financial firm that specializes in structured settlements. ... |
Structured-Settlements - Google News
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