Tuesday, March 25, 2008

Why legislation allows for the sale of Structured Settlements?

Filed under: Structured Settlements — Structured Settlements Pro @ 11:19 am

This post will discuss the reasons why states passed the legislation to allow the sale of structured settlements.

The primary reasons states were petition to enable this legislation is the fact that in some cases a families best interest were no longer being served by their settlement payments. In the majority of the cases structured settlements are set up to help the recipient to manage their money over time and enable them to pay their financial obligations on a regular basis. This is particularly true when the injured party is no longer able to work and generate steady income.

However, sometimes circumstances change creating new and different priorities that may require a more immediate need for cash. This is where structured settlements are inflexible and don’t allow the recipient to switch their original settlement from a structured to a lump sum settlement within the framework of the original agreement.

States passed legislation to allow those receiving settlement payments and in financial need to cash in their future payments. This was the birth of a new industry with companies guiding recipients through the process and converting their future payments into cash.

Popularity: 100% [?]

Friday, March 21, 2008

When Not to Sell a Structured Settlement

Filed under: Structured Settlements — Structured Settlements Pro @ 2:27 pm

Structured Settlements are set up to take care of an injured parties financial needs overtime. Often the injured party is not able to work or generating regular income. The structured settlement provides income to pay bills and living expenses.

While the majority of all structured settlements remain intact throughout the intended term there are times when a recipient may need a larger sum of cash. In these cases one can opt to sell some or all of their future payments for a lump sum of cash. Those that are in need can turn to a structured settlement purchaser that will buy their future payments in exchange for the needed cash.

However, there are some instances where a recipient needs cash but would be better off not selling their structured settlement.

1. Rely on payments for everyday necessities: If your structured settlement is your only source of income and is only enough to pay for bare daily essentials then it is recommended that you keep your future payments in tact.

2. Too few payments remaining: If your future payments are set to expire in the coming 12-24 months it rarely makes sense to convert those to a lump sum payment.

3. Payments are too far out (over 30 years): For example, if you are receiving future payments that stretch over 40 years you are able to sell the first 30 years of payments but not the last ten. The future value of money will discount these payments to a level that is too difficult to predict or make a fair market value exchange.

Popularity: 100% [?]

Friday, March 14, 2008

Structured Settlement Industry Explained (Part 2)

Filed under: Structured Settlements — Structured Settlements Pro @ 2:52 pm

The last post described the role and benefits the “primary market” plays in the structured settlement industry. Today’s post will focus on the secondary market.

The secondary structured settlement market helps those individuals that have received a structured settlement but have had a “life change” or pressing financial need for a larger sum of cash. Examples may be someone going through a divorce or having a child that will be entering college or the accumulation of debt.

When a recipient has an immediate need for a larger sum of cash then their settlement payments provide, they have the option of converting their future payments to cash.

The secondary market not only meets the immediate need for cash but also provides flexibility so that one can choose to sell some or all of their payments depending on their situation. If they choose to sell some of their payments they will receive a lump sum payment as well as some of their continued payments for the original structured settlement.

Popularity: 67% [?]

Tuesday, March 11, 2008

Structured Settlement Industry Explained (Part 1)

Filed under: Structured Settlement — Structured Settlements Pro @ 7:27 am

There are two sides to the structured settlement industry that often cause confusion. The next two posts will examine the differences between the “primary market” and the “secondary market” and the value each provides.

Primary Market
The primary structured settlement market helps negotiate structured settlements between an injured party and the defendant (often an insurance company). If the defendant offers to settle the case with a financial award the plaintiff often will have a choice of receiving a cash settlement or a structured settlement. A structured settlement is set up to make periodic payments to the injured party to help them meet their ongoing financial needs.

A “Primary Market” broker will help negotiate the terms of a structured settlement working with the injured parties attorney and legal counsel for the responsible party.
Structured settlements are widely accepted as an excellent financial arrangement with an estimated 97% of all settlements staying intact over the life of the agreement.

However, in some cases a structured settlement recipient may have change in their life circumstances which changes their financial needs that their settlement can’t meet. In these few cases the individual can consider converting some or all of their future payments to a lump sum in the secondary market.

Popularity: 44% [?]

Wednesday, March 5, 2008

What states allow the sale of a Structured Settlement?

Filed under: Structured Settlements — Structured Settlements Pro @ 1:53 pm

The first state to pass legislation enabling one to convert future payments to cash was Illinois in 1998. Since then 46 states have passed “transfer statutes” making it not only legal but easy for one to receive a lump sum payment for their settlement.

The four states that do not have legislation allowing for the sale of a settlement are:
● Wisconsin
● North Dakota
● Vermont
● New Hampshire

If you live in one of these four states you still likely can convert your payments into cash. Accommodations can be made to allow for this, contact a structured settlement transfer company for further assistance.

Popularity: 45% [?]

Monday, March 3, 2008

Tax Implications of Selling Structured Settlements

Filed under: Structured Settlements — Structured Settlements Pro @ 2:31 pm

When an injured party agrees to a structured settlement the payments they receive are tax free of both federal and state income taxes.

One myth is that selling your settlement payments will cause your tax status of the settlement to change. This is not true. When one sells some or all of their future payments for a lump sum of cash the money remains tax free. There are no negative tax implications to selling your structured payment.

Popularity: 45% [?]