Structured Settlements:Facts to consider prior to selling the payments

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Structured Settlements:Facts to consider prior to selling the payments

Thursday, April 9th, 2009    Subscribe To Our Feed

People who own a structured settlement annuity benefit a lot from it. The primary benefit that you could get from structured settlement payments is that your family and you are well covered financially for a longer period; another advantage is that these payments and also the interest earned on them are free from tax. It is legal to use this money either for any impending emergencies or for an investment with high yielding returns.

According to federal law HR 2884, you have the right to sell your structured settlement payments tax free. About 67% of the states in the United States of America also allow the sale of structured settlement payment in addition to the federal laws. In order to become eligible for selling this without paying any taxes you should get the prior approval of the court.

Selling Your Structured Settlement

Getting approval for the sale of your structured settlement payments from the court is relatively easy if you have solid reasons to prove that you require this money. The approval or otherwise will be given by the judge after reviewing your case to decide whether you require this money for a transaction that will benefit you and your dependents.

As long as you are an adult of sound mind, and you can proved that you and your dependents will benefit from the transaction, the judge has very little reason to deny your case. Your personal appearance at the trial will help in getting a positive verdict. You can sell your structured settlement payments even if the court does not approve of it; however, this will deprive you of the tax free status for this payment and its interest.

In most cases, the purchasing company you are working with will still buy your structured settlement payments. To facilitate finalization of the sale they will handle necessary legal formalities. They might not charge you for this extra effort; you must realize that you may have to pay taxes on the money received in the absence of court approval.

It is necessary for you to get quotations from interested parties. You will almost always benefit by getting multiple quotes. In case you find a suitable purchasing company out of the various quotes received, you should send to the purchasing company copies of the structured settlement policy. In return, the purchasing company will send you a disclosure document for your signature. This document basically gives the conditions of this transaction. It must be singed and returned.

The court hearing will be the next step in this process. This process takes up to 90 days depending on your state of residence as well as your insurance company. In most cases, once you are approved, you will receive your money within 10 days.