Structured Settlements:Facts to consider prior to selling the payments

 

Owning a structured settlement annuity gives you a lot of benefits. 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. This money can be used for your urgent needs or for any other investment where you expect a better ROI.

The federal law HR 2884 protects individuals who want to sell their structured settlement payments to meet unplanned financial needs; this can be done without any tax implications. The sale of structured settlement payments is allowed not only in federal laws but also in the state laws of the two-thirds of the states in the United States.  In both cases, however, the transaction must be approved in court in order to stay tax free.

Selling Your Structured Settlement

In case you are in a position to convince the judge about your actual requirement of funds for your use it is not all that difficult to sell all or part of your structured settlement payments. The presiding judge will go through your case and give his judgment based on whether this sale will be in you and your family’s interest or not.

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. In order to improve the chances of your getting court approval it is advisable for you to attend the court in person on the day of hearing. Sale of structured settlement payments is permissible without court approval but you will be taxed on the payments and also its interest.

In all probability, the purchasing company with whom you have been discussing might be willing to purchase your structured settlement payments. To facilitate finalization of the sale they will handle necessary legal formalities. They refrain from charging any fees for this effort they have taken; however, you are liable to pay tax on the money received without court approval.

First, you must get quotes. It is always beneficial for you to get multiple quotes. You should send copies of the structured settlement policy to the purchasing company whom you select after running through various applications. In return, the purchasing company will be sending a disclosure document that should be signed by you. This document basically gives the conditions of this transaction. You must sign and return after you go through the document thoroughly.

Next, the court order process will begin. Under normal circumstances this takes up to 90 days and this depends on your state of residence and your insurance company. In majority of the cases the sellers get their money within 10 days after court approval.

 

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This entry was posted on Thursday, January 14th, 2010 at 12:34 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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