Structured Settlement

If you are awarded a settlement from a personal injury lawsuit, you may have the option of receiving the award in a single lump-sum payment, or in the form of structured monthly payments. If you choose the structured settlement, you will receive tax-free payments over a specified period of years.

Selling a Structured Settlement

You may be permitted to sell your structured settlement to a financing company for various reasons, such as monthly payments that do not allow you access to the amount of money you need. For you to sell all or shares of your structured settlement, a financial service company needs to define the terms of the sale in a legally enforceable contract. The transaction must be in your best interest and those of any of your dependents. You can then control your money without having to wait for court-ordered monthly or annual payments.

You Have Rights

The purpose behind the creation of the structured settlement may no longer be ideal for a variety of reasons, such as unemployment or divorce. It is crucial that you understand your rights before you agree to sell all or a portion of your structured settlement.

  • A judge must approve the transaction in advance.
  • It must be in your best interest and those of your dependents.
  • A full disclosure of all fees and costs, including the discount rate, showing how much of a loss will result from the sale must be provided.
  • You must be given the ability to cancel within a certain time frame.
  • There must be an opportunity for professional advice on the financial advantages and disadvantages of a lump sum payment.

Companies may try to encourage people to waive essential rights and advice, but that is people make critical mistakes. Steer clear of companies that are in a rush to have you sell your structured settlement.

Protecting Yourself

About two-thirds of the U.S. states places restrictions on the sales, so make sure you can legally sell your structured settlement by seeking the court’s approval prior to initiating the sale. Here are some tips for protecting yourself when selling a structured settlement:

  • Negotiate with reputable finance organizations
  • You can choose to sell all or a portion of your structured settlement
  • Beware of contractual restrictions that you agreed to
  • Watch out for tax consequences which can spell an overall loss
  • Check with several different companies to get the best offer
  • Hire a financial consultant or a lawyer for advice

You might be surprised to discover that you are better off financially with the structured settlement plan that you initially received.