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How can I sell a structured settlement payment?
By George Hostetler
The first step to selling a structured settlement payment is to have an idea of the amount to be sold and finding a suitable buyer. The internet is the best resource for obtaining quotes and Read more...
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cash advance on structured settlements
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Cash For Structured Settlements
By ALISON COLE
The structured settlement system began in the early 1970’s in Canada, and it spread to United States and Australia within a few years. A compensation agreement between a plaintiff and insurance company (defendant) for long term and tax-free payments at a time of personal injuries or damages is called a structured settlement. The insurance company will make the payment either to the claimant, surviving family member or beneficiary.
The main benefit of structured settlements is the tax-free nature of the payments over a period of time. There are times when the claimant may insist on a lump sum instead of periodic payments. This might be because the claimant wishes to purchase a new house or cover large medical bills. If the insurance company needs to pay a lump sum, it will generally sell the settlement contract to a financial institution. The defendant will pay the periodic payments to the financial institution along with handling fees including interest.
If the claimant wishes to have a structured settlement, the settlement contract needs to be sold off. If
the credit rating of the insurance company is higher in the market, the claimant will achieve a higher profit margin in the sale. Thus, the claimant should be very careful choosing the defendant company, making sure it is financially sound. Before selling the settlement, the claimant needs to consider legal restrictions like tax considerations and lower purchase price offered by the buyer, etc. For instance, cashing the structured settlement makes the beneficiary liable for a tax payment; where as the same beneficiary may get tax savings as an injured plaintiff. However, it is advisable for the plaintiff to take the advice of a lawyer before deciding the sale. The lawyer will analyze the financial consequences of the sale and guide the plaintiff accordingly. Sometimes a court's approval is needed for the sale depending upon the nature of the settlement contract. The plaintiff has another option of selling a part of the total structured settlement, so that monthly income will be received on the remaining portion. These days, people consider the structured settlement as a funding option for lawsuits.
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Additional
Resources
How Cash for Settlement is Taxed
By Joshua Shapiro
Generally, income as a result of personal injury is not taxable, depending on the specific type of award. However, some areas are taxed as income. For this reason, and the fact that Read more...
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Additional
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The Advantages and Disadvantages of Structured Settlements
By Caroline Smith
A structured settlement is an arrangement where instead of a lump sum of cash being awarded to a claimant, a tax-free periodic payment is agreed. Structured settlements are often used in guardianship Read more...
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