According to the National Association of Settlement Purchasers, each
year some 50,000 Americans receive tax-free structured settlements for
personal-injury claims in place of single, lump-sum payments. That adds
up to about $5 billion in structured settlements annually. More than
half of those settlements have a present value of $30,000 or less. Today
the average structured settlement lasts for over 20-years and the
payments cannot be altered regardless of changes in the recipient's
needs or life circumstances.
This inflexible payment plan has both advantages and disadvantages.
One key advantage is the tax benefits associated with a properly set-up
settlement. If done correctly, a structured settlement could very well
reduce the recipient's tax obligations, and in some cases the settlement
payments could actually be tax-free.
Another advantage is that the structured settlement could also prevent a
recipient from spending all their money all at once on unnecessary or
frivolous purchases. The structured settlement’s regular payments can
help the recipient budget wisely, ensuring that they will always have
funds available for essential costs like housing, food and medical care
for as long as the settlement continues.
However, the advantage of this steady, inflexible payment schedule
could very well be seen as a disadvantage to many. Some people want to
make big purchases, such as a car or home, and may find it frustrating
that they only receive a little of their settlement money at a time.
They may prefer a large one-time lump sum payment so that they can just
buy what they want instead of having to take out a loan.
And someone facing a major financial situation, like helping with
their children's education, starting their own business, dealing with
unexpected job loss, or paying for a medical emergency, might find it
more helpful to receive their payment immediately in a single check
rather than having a continuous small income every month.
Finally, some people may simply feel that they should get all of
their money at once so that they can invest it themselves. For these
people, the small periodic payments are an annoyance that keep them from
using their money wisely and force them to miss profitable
opportunities.
In short, for all their advantages, structured settlement payments
can certainly cause problems when people want or need to have money
immediately. Fortunately it is possible to sell most types of structured
settlements for a one-time payment. In fact medical malpractice
settlement, personal injury settlement, product liability settlement, or
from a wrongful death settlement can all be sold.
In order to sell a structured settlement, however, it is very
important that the payment recipient have all of the necessary
documents. These typically include the annuity policy documents, the
extended release or the settlement agreement, a recent copy of the
annuity check or stub, tax returns, proof of identification, marriage
license if applicable, divorce decree if applicable, a copy if the Will
and Probate document if applicable, and copies of any assignment,
revisions, and other papers that are related to the structured
settlement annuity.
Once all of the documentation has been gathered, the next step is to
meet with a company that specializes in buying structured settlements so
that all of the legal and financial paperwork to sell the annuity can
be completed properly. In fact, it is a good idea to approach several
companies in order to find the one that will purchase the structured
settlement at the highest rate. And it is also important to check with
the Better Business Bureau and other consumer agencies to be sure that
the companies involved with buying the structured settlement have no
complaints or other problems pending against them.
Selling a structured settlement can be complex process that can take
up to 2 months or more to complete, but with the right company to help
it can be a rewarding and relatively stress-free process. In fact, a
recent study by the National Association of Settlement Purchasers found
that 92% of payment recipients were "satisfied" or "very satisfied" with
the refinancing they were able to accomplish with the help of the
settlement-purchasing industry.
