Selling a structured settlement is an option if a lawsuit settlement is paid out in installments. In such a case, a plantiff, instead of receiving the payment once-off, may receive payments on a monthly or annually. Payments are often sent via a physical check by the annuity issuer but also in some cases can be directly deposited to decrease any issues.
There are many benefits of a structured settlement that you should consider. You are protected from overspending, and you cannot be influenced by family members or receive bad advice.
Many of us have very different needs, and our cash flow from a structured settlement can be a fixed to meet those needs. However, once put in place, structured settlement are often not adjustable. But being able to original design a structured settlement to meet ones anticipated future needs can be a huge advantage.
These cash flow needs can include an extensive range of things. You can customize the payments to meet educational need, house purchase, or other anticipated life events. Depending on the size and your need, you may be able customize your cash flow to meet your daily living expenses.
Guaranteed Source of Income
The Defendant or defendants in a lawsuit will, on a general level, pay the Cash for structured settlement upfront to a highly rated company that in turn will guarantee that you receive the payments over time that you were promised. This payment structure will copy in amounts and timing the payments you agreed to accept as part of the lawsuit settlement. Sometimes the agreed period can last the plaintiff’s lifespan (i.e, the agreed payment stream has a life contingent payments provision).
These payments are guaranteed from the financially strongest insurance companies. You do not have to worry about any mishaps or problems occurring with your payments. Your structured settlement payments are generally speaking very secure. Although there have been a few very limited exceptions where the company that was obligated to make structured settlement payments couldn’t fulfill its obligations. This is a very rare event and should not be considered as a motivation to liquidate a structured settlement.
Sometimes, paying taxes might mean that we send a large portion of our income to the federal and state governments. We all know what the difference between what the gross amount on a paycheck looks like compared the net amount you ultimately put in your bank. The great thing about structured settlements is that your payments are generally 100% tax-free. This is the result of a special Internal Revenue Service law that specifically excludes a structured settlement from being taxable.
To Sum It All Up
Unfortunately, just as everything with benefits, a structured settlement may be considered to have its own drawbacks. Of course, in many (if not most cases) the benefits of this settlement do outweigh the disadvantages. There are liquidity and access issues that may make the structured settlement less desirable in the event of unexpected events, financial hardship or opportunities when you may want money earlier than it is due under the terms of the structured settlement.