Structured Settlement Buyouts

A structured settlement buyout may be an attractive option for you if you are someone receiving structured settlement payments because of a legal financial agreement resulting from a personal injury claim from an accident, whether personal or industrial.

The size of your structured settlement payment is a pre-defined amount of guaranteed payments made over varying defined periods of time (usually years), designed to help you pay for your current as well as future cost of living expenditures.

It often becomes the case, however, that the amount of the periodic payment that you receive from these structured settlements becomes insufficient over time to actually pay for your living expenses. This is simply because inflation causes food, housing, medical and transportation costs to increase while your structured settlement payment does not increase. In addition large unexpected expenses may arise which cannot be covered by your structured settlement payout. When this situation occurs, you may consider selling your structured settlement, thereby getting cash for structured settlement.

Is selling structured settlements legal and is this option available for you? Legally, this option is available in all 50 states, but you may need court approval before you can sell. There are many structured settlement companies and structured settlement brokers available to purchase structured settlements. However, despite the obvious attraction of getting an immediate and large structured settlement lump sum buyout, you should consult a professional, preferably a certified public accountant or cpa who specializes in structured settlement funding. They will be able to determine whether the structured settlement quote you receive is legitimate and whether it is the best option for you as it pertains to your living situation and potential tax liability.

If you decide to sell, you can submit your information online and wait for a structured settlement company to make you an offer. You can choose to sell all of the structured settlement payments, some of the payments, or a percentage of the payments. You can use an online structured settlement calculator to determine whether their offer is fair, but before making your final decision you should once again consult your tax professional. Another option for you is to consider a company that makes structured settlement loans, using your future payments as collateral. This can give you immediate cash, yet still retain the ongoing settlement payments.

The obvious advantage of selling structured settlements is the cash lump sum amount that you receive. That structured settlement buyout lump sum can be used to pay off debts or expenses, fund a college education for a son or daughter, buy a home or perhaps even to start a business. Obviously this option provides for maximum financial flexibility, and if you are in dire need of immediate income this may be your best choice.

There can also be disadvantages however. Taxes may greatly reduce the amount you actually get from your structured settlement buyout. You need to also carefully consider whom you deal with because a potential structured settlement buyer may attempt to take advantage of your financial situation and give you a low offer, knowing that you are under financial pressure and perhaps even desperate. Make sure that the structured settlement company that you are dealing with has a good record with the Better Business Bureau and can provide you with good local references. You can expect however, that a structured settlement offer will end up being approximately fifty percent (50%) of the current value of your ongoing payments. Ideally you will consult with your cpa before making such a an important financial decision.

Whether your payments are coming from a structured settlement annuity or a personal injury structured settlement, the result is the same: a series of guaranteed constant payments over a pre-determined period of time. You should consider whether you are likely to manage the money from a structured settlement buyout wisely or whether you may spend the money quickly and foolishly and then end up broke.

It may be that because of the potential costs, penalties and tax liabilities that you may incur by taking a structured settlement buyout that the dollar amount that you end up with is not sufficient to take care of your living expenses. Your structured settlement was likely originally set up in a way that was best for your tax situation. Selling your payments to a structured settlement broker for a lump sum may likely result in a significant tax penalty.

Though legal, selling structured settlements is not often easy. There are both federal and state regulations that place limitations on buying structured settlements. You may very likely need to get court approval to sell your settlement payments. The issuer of your structured settlement, often an insurance company, may have legal language in the settlement documents that limits your ability to sell your ongoing payments for a lump sum.

The structured settlement buyout process can be very complicated and is often the most important financial decision someone can make. Getting good legal and financial advice is highly recommended before making such a life changing decision. Lawyers and cpa’s who specialize in structured settlement buyouts can determine whether you are a good candidate for such a buyout and whether the offers you receive are fair and legitimate. A lawyer knows your legal rights and the legal responsibilities of the structured settlement company that you are dealing with and will be able to protect you and make sure you are dealt with fairly.

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