Annuities Cash Flows With Payments That Are Not Contingent Is It Time To Sell Your Structured Settlement Payments?

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Is It Time To Sell Your Structured Settlement Payments?

Structured settlements are financial agreements that allow compensation to be paid through an annuity in regularly scheduled payments, either for a fixed period of time or for the life of the claimant. As it is suitable for individual plaintiffs, a structured settlement may include an upfront payment to cover any contingencies.

Structured settlement payments are usually funded through an annuity. These annuities are established to protect legal awards, insurance settlements and lottery winners. A large percentage of structured settlements are predicated on providing long-term care and living expenses for plaintiffs who are injured and unable to work.

Structured settlements are not always accessible. The Periodic Payment Settlement Act of 1982 was enacted to give greater agreement to all parties and to protect claimants. It also provides some tax benefits to the insurance company and the plaintiff.

Certain situations are suitable for a structured settlement. For example: Cases involving catastrophic injuries Wrongful death cases involving replacement of lost income of a deceased disabled person, either permanently or requiring substantial recovery time Workers’ compensation cases Gambling and lottery winnings

Many people choose structured settlements over lump sum payments, and courts often award them in civil actions where long-term living and health care costs are involved. A structured settlement agreement takes into account the anticipated need for cash at some future date.

Depending on the needs of the injured party, structured settlements can be set up in a number of ways. The most basic structured settlements provide regular periodic payments for the life of the contract; For example, a fixed payment every month for 10 years. Structured settlements do not pay interest, so the expected profits in the underlying annuity are included in the periodic payment amount and are not taxable.

Claimants choose structured settlement agreements over lump sum awards for several reasons. The idea of ​​guaranteed regular payments gives a sense of security to many people who are injured and unable to earn a steady income. Instead of worrying about how to invest large sums of cash, the details are handled by lawyers and insurance companies.

An important advantage of a structured settlement agreement is that it is tax free. The tax implications of receiving a lump sum can be staggering, turning it into an amount that cannot cover future living expenses. A structured settlement relieves the claimant of the responsibility of planning a tax shelter for their award.

Because a structured settlement offers many benefits to both the plaintiff and the defendant, the case can often be settled out of court, saving both parties significant costs. Since the agreement is beneficial to both parties, the process is usually completed quickly, and no time is lost in protracted court battles.

There are certain cases for which structured settlements are not suitable. An award for a minor injury in an accident may not warrant using a structured settlement. In situations where long-term hospitalization or long-term treatment is not necessary, a lump sum award may be sufficient to meet the needs of the injured party.

Once a structured settlement agreement is in place, the terms are fixed and no allowance is made for unforeseen circumstances. This is one reason many people choose to sell their structured settlement payments. Life circumstances change and people may decide to buy a different home, start a business, or go back to school and train for a new career. A lump sum payment offers more flexibility and more control over money than a structured settlement.

Perhaps the most persuasive argument for selling structured settlement payments is that over time, inflation can seriously reduce the value of periodic payments. A dollar today is worth more than the same dollar in the future. Cash properly invested today can exceed the future value of a structured settlement.

When selling your structured settlement payments, you can choose to cash only a portion of your future payments. This option provides immediate cash while retaining some of the long-term security of a structured settlement. If you decide to pay cash in a structured settlement, sell only the portion of your future payments needed to meet your financial needs.

Finally, you should carefully choose a structured settlement buyer who has been in business for at least several years. Check potential buyers with the Better Business Bureau and do some research to determine if past customers have been happy with the company’s services. Doing research now will ensure you get the most cash for your structured settlement.

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