In the United States, about 15,000 structured settlements are bought or sold in a given year. This makes up a total of more than $6 billion changing hands and it is a market that is growing.
That said, if you are not actively involved in the structured settlement market, you may not realize what they are or have too much of an understanding over how they are implemented. They typically originate out of personal injury lawsuits, wrongful death claims or other similar legal action.
When a case is wrapped up, there will often be a structured settlement reached between the winner and loser in the case. Typically, there will be a series of payments that add up to the total amount of the decision. This enables the defendant to find a way to make payments without going into total financial disarray. It can also be advantageous to the recipient if the money is needed to pay for expenses that will be continuing for a long period of time.
According to Forbes, the driving factor behind most structured settlements is taxes. More accurately, it’s avoiding taxes. As long as the structured settlement meets specified requirements, the owner or recipient of the payments can have the federal income tax on the money waived. This is possible when the structured settlement arises out of a lawsuit or an agreement for payment in accordance with damages, which can be excluded from gross income. It can also be the case when there is a structured settlement arising from a workman’s compensation claim.
When the periodic payments are made, they must go to someone who was a claimant in the suit or who has been given a qualified assignment of those payments after the fact.
Essentially, all of that just means that money received in a structured settlement may be tax free when those conditions are met. Whether it comes from the end of a lawsuit, or from a settlement to avoid court all together, these requirements could potentially be met.
Complicated Parts of the Process
In order to get the full tax benefits, there must be a third party set up to be the assignment company. This company buys the annuity that is used to create the structured settlement, and receives a lump sum of money from the defendant. They then administer the policy and pay the recipient in accordance with the agreement in place.
This is a complicated structure, but it is necessary in order to receive the tax benefits that are mentioned above. As a result, it is commonly used to provide benefits to both parties involved.
When you have a settlement from a legal case, it can take quite some time for all of those payments to arrive. Depending on the arrangement you have for your case, you might be getting payments monthly, or you might be getting payments yearly. Sometimes, you have a need for more money right now, and those payments just aren’t helping. Those who find themselves in this situation always have the option of selling their annuities. This can provide you with the money that you need. One of the questions that you are probably asking right now is how can I sell my annuity?
Fortunately, it does not have to be too difficult to sell an annuity today. However, you do have to take the time to make sure that you are working with a company that has a good reputation in the business. You also want to make sure that the company you choose is going to be able to provide you with the best possible deal. When you sell your annuity, you need to make sure that you are working with only the top companies who will treat you right.
Many people that have experienced damage or injury from the intentional misconduct or negligence of another individual most often is awarded a structured settlement annuity in court. Historically, courts often awarded a lump sum of cash to the victim. However, structured settlements have become the norm because of their ability to pay out a monthly, quarterly or annual payment to the claimant.
Receiving installment payments in lieu of a single lump sum of cash ensures that the claimant receives regular income for a scheduled period of time. Usually, the defendant (the one that caused the negligence or misconduct) purchases an annuity through an insurance or annuity company for a specific dollar amount. In exchange, the insurance company provides income payments on a routine schedule, following the terms of the structured settlement annuity.
Usually, through the advice of his or her attorney, the claimant will select the type of payments they choose to receive from their structured settlement annuity. They can opt to accept deferred payments, or set the installment payments to keep up with inflation, and even provide special provisions to increase funds later in life. The choices and options available through an annuity should be designed to fit the needs of the beneficiary.
Bound by the Terms
The downside to accepting a structured settlement annuity is being bound by the terms accepted in court. If the payment schedule agreed to by both parties no longer fits the needs of the beneficiary, the terms cannot be changed. However, the structured settlement annuity can be sold with the value of the policy being converted into a lump sum of cash.
For most people, the choice of taking an annuity payout seems to make plenty of sense on the surface. Whether your annuity is from lottery winnings or a life insurance policy, it offers long-term financial security and stability, right? That’s the theory, at any rate. By taking annuity payments, you’re guaranteed a specific amount of income over a set period of time, which allows you to plan for the future and not have to worry that you will be completely bereft of income. However, life has a way of changing things so that annuity payments don’t always work the way you anticipate.
Why cash out an annuity? Many people find that one reason they need that money right now is so they can pay off mounting bills – medical or otherwise. A simple medical problem can cause havoc with your finances and while those annuity payments will help pay off your bills over time, there’s nothing they can do about your immediate need. This is particularly true in situations where you might have lost your job and creditors are hounding you, or your mortgage company is threatening you with foreclosure. Those annuity payments only offer so much help.
Where to Find Help
The real issue here is how to cash out your annuity. What should you do? You can’t just go to the bank and ask for money upfront. Technically, all the money remaining to you is held by the payer – it’s officially theirs until they have to pay it to you, despite your annuity agreement. You do have options, though. There are companies that will buy your annuity in exchange for a lump sum of money. This gives you access to almost all of your funds right away, to use as you see fit. You can pay bills, repair your home, repair your car (or get a new one), or put the money towards your children’s education.
Annuity payments can be lifesavers – they provide ongoing financial support and stability. However, there can be times when those payments are simply not enough to help you meet your financial obligations. It would be nice to have the entire lump sum that your annuity entitles you to, but how can you go about doing that? One option available is to sell your annuity. Below, you’ll find information to understand when deciding whether to sell annuity payments or not.
It Will Take Time
One of the factors you’re going to have to consider here is time. If you’re pressed for cash right now, then selling your annuity might not be the right decision. The process does take time – generally about 30 days, though sometimes it can be longer depending on your situation, local jurisdiction and the court’s decision about selling the payments. When deciding whether to sell annuity payments, the time factor should certainly be considered. If you cannot wait, then you should look into other options.
A Range of Options
When deciding whether to sell annuity payments, you should also take the time to determine exactly what you want to do. Do you need a small amount of money to make ends meet? If this is the case, then you can sell only part of your annuity. If you need a larger sum of money, you can sell a larger share of your annuity, up to the entire amount due you over time. If you decide to sell your entire annuity amount, you will no longer be entitled to any payments beyond the lump sum offered by the purchaser.
Your annuity payments certainly help offset your financial situation, but sometimes they might not be enough. If only there were a way you could get a lump sum instead of small, ongoing payments. Actually, there is a way to do just that. You can sell your annuity. However, that’s not necessarily the best choice for you – there are things you need to know before you sell your annuity to ensure that you’re making the right decision.
Check Local Laws
One thing you need to do before anything else is check your state laws in regards to annuity sales. Each state has its own requirements, in addition to federal laws governing the transfer of annuities, and you’ll need to make sure you’re in compliance with all of them. If necessary, contact an attorney to help you understand the process, your obligations and the laws that apply to you.
How Much Money?
Another consideration here will be the amount of money you can get for your annuity. Don’t think that you’ll get 100% of the money remaining to you – it doesn’t work that way. Most funding companies offer a percentage of what you have coming, but there are other mitigating factors, including how your payments are set up, the total amount of the annuity and more. You’ll also find that funding companies vary just like banks in regard to the terms they offer, so shopping around is pretty important. Just as you would compare lenders, you need to compare funding companies to arrive at the best choice for your needs.
Selling annuities is not new – it’s been happening as long as structured payments have been around, though it has become more common in recent years. For those who find that their structured settlement doesn’t help with a crippling financial situation, finding annuity buyers is important. How do you go about doing that, though? Actually, it can be as simple as going online to find annuity purchasers, but there are a few things you should know.
Go Armed with Information
Before you hit the Internet to find a buyer, it’s important to arm yourself with information. For instance, don’t believe all the hype from late night infomercials. Selling annuity requires more than just a phone call. The entire process can take more than a month, and is subject to a judge’s decision on whether the sale can move forward. Going online to find annuity purchasers should only be done after you have thoroughly researched your situation.
Don’t Search Alone
Another important tip for those going online to find annuity purchasers is that the process is simpler and more efficient when you have help. Don’t look for help from the purchasers themselves, though. Rather, you should work with a brokerage that can help you connect with the most reputable buyers out there. Not only does working with a brokerage ensure that you are able to start receiving offers immediately, but that you can work with some of the better buyers in the market. Going it alone means that you’ll have to rely on your own expertise, which is likely not as robust as it should be.
What Is the Difference between an Annuity and a Structured Settlement?
It’s tempting to lump both annuities and structured settlements into the same category. After all, they have quite a few similarities, including regular payments over a specified period of time. However, they’re actually very different and the way federal and state laws handle these two financial products is also very different. What is the difference between an annuity and a structured settlement? Let’s take a closer look.
A Look at Structured Settlements
Structured settlements are exactly what they sound like. These are generally the result of a lawsuit involving personal injury or liability, and represent an award in the plaintiff’s favor. The defendant has been found guilty or has chosen to settle rather than go to trial. The settlement amount has been converted from a lump sum into a series of payments over time. These are called deferred payments.
A Look at Annuities
The difference between an annuity and a structured settlement is that annuities are generally financial tools available through insurance companies or investment firms. Lottery winnings often fall into this category too, if the individual opted for the annuity choice rather than the lump sum payment. An annuity is an investment on which the investor earns a return in addition to the original investment amount, and can have various beneficiaries. Annuities come in a wide range of types, as well.
A structured settlement is a financial vehicle including periodic payments, provided to the plaintiff during a personal injury tort claim in replacement for the lump sum settlement. This type of financial tool can only be setup by a licensed settlement planner. (Settlement Quotes does not create these insurance products.)
A structured settlement is setup by purchasing an annuity through a life insurance company such as Metlife or Monumental Life Insurance company. This annuity can payout monthly, semi-annually, annually, or for the lifetime of the claimant. These periodic payments are tax free and are a great source of fixed income for an individual after a personal injury tort case.
Many individuals ask whether they can receive a lump sum settlement after they start receiving their structured settlement annuity payments. The answer is no you cannot switch back to a lump sum settlement. You do have options though. Settlement Quotes provides services to individuals in this situation. We factor structured settlement annuities offering you a lump sum of cash for your structured settlement.
This is not always the best option for many people. A discounted rate will be applied to your structured settlement to figure out your present day value of your structured annuity to calculate your lump sum settlement. Due to the time value of money you will only receive a partial amount in your lump sum. After a court approval process your lump sum payment will still be tax free.
Settlement Quotes only recommends using this financial option if you have other financial assets that can provide financial support for your family. Many individuals pay off debt, send a child to college or put a down payment on a home with the money that they receive from the factored structured settlement.
There are many advantages to keeping your structured settlement. Settlement Quotes recommends seeking the advice of a financial professional before factoring any payments through a structured settlement factoring company. A structured settlement can be used as a source of income when trying to apply for a loan. This option should be tried first before attempting to receive a lump sum.
If you have no other options and would like to receive multiple quotes from top structured settlement funding companies please complete the short form above or call 888-665-1257.
- Receive competition between our network of funding companies..
- Annuity purchasers will compete to buy your payment stream
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Are you looking to cash out an annuity for a lump sum of cash? Are you tired of receiving those small monthly payments and would like to receive a large lump sum payment?
Structured settlements are designed to provide a steady stream of income over a long period of time. This time can annuities allocated time period. If bad investments are made with a lump sum settlement, then vary from a few years to a lifetime. A benefit to receiving a structured settlement over a lump sum settlement is that a steady flow of income is divided up for you during the structured it will be difficult to spread it out over several years.
A structured settlement is tax free through federal and state levels during its payout periods, but a lump sum settlement payout that is invested is not tax free. As stated before, a few bad investments could mean a lump sum settlement will not last the duration of a lifetime. A million dollars in an account looks like it could last forever but after medical expenses and daily living expenses this lump sum settlement may not last nearly as long as a structure settlement annuity would.
The second benefit to a structured settlement is the vulture factor. Many individuals prey upon elderly people who have a lump sum of cash. A lump sum settlement can be dangerous if precautions are not taken to protect a loved one. With a structured settlement this factor will not come into play. A fixed income will provide a worry free atmosphere for the individual receiving the periodic payments.
The third benefit to a structured settlement is the expense for the defendant. Many defendants will settle outside of court to avoid the large attorney's fees usually created by an ongoing court battle. The argument is that the defendant could win the case. This is true, but the defendant could also come out much further behind than if they just settled outside of court with a structured annuity.
The benefits of a structured settlement listed above are not the only benefits of a structured settlement. This article is meant to outline the important facts of a structured settlement.
Settlement Quotes does not create structured settlements. We are a structured settlement factoring company. Financial times change for different people at different times, we provide a service to cash out a structured settlement, offering a lump sum in return for those future payments. There are many reasons to use this option, but it is not recommended from Settlement Quotes to use this financial route if it is not needed.
If you would like to receive a lump sum of cash for your structured settlements please complete the form on the left or call 888-665-1257.
Annuitized payments can help offset your bills by providing a stable, reliable source of income over the long term. Most annuities are paid out over a significant period of time (including lifetime payments), which can offer considerable peace of mind for those with a limited income. However, that doesn’t mean that structured payments are ideal for all situations. If you’re asking yourself how do I sell my annuity, chances are good you’re dealing with this type of situation.
Is Your Need Applicable?
First, understand that you cannot sell your annuity for just any old reason. You can’t sell your payments so you can afford a nice vacation. You can’t sell just because you want to buy an RV or want to invest in a second home. All structured settlement sales (including your annuity) have to go before a judge who will determine if there is a need for the sale. That means that the first criteria you have to meet is need – your financial situation must be such that selling your annuity will be beneficial (or vital).
Once you determine if your need is likely to be applicable for sale approval by a judge, you need to find companies that buy annuities. There are plenty of them out there, but it can be hard to locate and contact them on your own. This will require significant legwork and time invested. Once you find several companies, you’ll need to get them to submit an offer and then vet the various offers.
Work with a Reputable Structured Payment Company
There’s an alternative to going it alone in this tricky situation. You can work with an experienced structured settlement company that has connections to the most reputable companies that buy annuities. When answering the question of how do I sell my annuity, having a helping hand in the process is invaluable. With the right brokerage, you can start receiving offers to buy your payments within mere minutes of submitting your information.
It’s not all about speed, though. Another benefit of working with a brokerage is the fact that you benefit from their experience and connections. This company works on your behalf to ensure that not only do you receive offers fast, but that those offers come from reputable buyers rather than unscrupulous companies. As you can imagine, that helping hand can provide some significant peace of mind, as well as a faster process.