Structured Settlements In The Land Of Confusion

Do you find structured settlements confusing? Are you looking to get cash for your

structured settlement or annuity but you are lost in a sea of websites and articles with conflicting information? Well I am here to set the record straight.

What is a structured settlement?

A structured settlement is money awarded by the courts as the result of a lawsuit. Paid in regular installments, rather than in one lump sum, these payments provide money for a fixed period or lifetime.

Structured settlements are often awarded to:

People with temporary or permanent disabilities

Guardianship cases involving minors or persons found to be incompetent as well as workers compensation cases

Wrongful death cases where the survivors need monthly or annual income

Severe injury with long-term needs for medical care, living expenses and family support

A little history lesson

Before 1970, when a lawsuit was settled the injured party would immediately receive a cash lump sum. Then there was a major liability case in Canada and Europe that resulted in a great percentage of catastrophically injured people. Suddenly there was a need for settlements to last throughout the injured partys lifetime. Hence, the modern structured settlement was born. In order to protect the annuitant, Congress enacted legislation that made compensation paid as a result of a personal injury tax free to recipient. Congress later enacted additional legislation which gave insurance companies tax benefits for setting up structured settlements.

Thanks for the lesson but what if I need the money now? Do I have any options?

Yes, you can sell your future payments for a cash lump sum. This type of transaction is called a structured settlement factoring transaction, lump sum buyout, structured settlement transfer or selling payments. Contrary to popular belief these transactions are not loans or investments. Nor does it have to be paid back and there are no credit checks. When the individual receives a lump sum of cash they can use it any way they desire including re-investing the money in other investment vehicles.

Are you sure that I can sell my payments?

Yes, selling structured settlement annuity payments for a lump sum is very common and the process is easy as well as hassle-free. In order to protect the rights of the annuitant in these cases, forty-six states and the federal government have enacted additional consumer protection statutes that establish strict conditions for these transactions. Under the federal law, court oversight and approval is required for individuals who chose to sell payments from a structured settlement to a third-party company. The details of the statues vary by state but the courts approval is necessary to protect the annuitant and to ensure that the annuitant is receiving a fair amount for their payments.

If you have any further questions about structured settlement and annuity transfers, visit http://blog.rescuecapital.com for definitions and articles regarding these types of transactions.

by: Dawn Anderson

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