Before I Sell My Structured Settlement for Cash, I Want to Understand It Better

In the past, and in most cases today, when a personal injury case is settled, the plaintiff often receives a one very large sum settlement payment from the defendant. Once the plaintiff receives this payment, it is up to her or him what to do with the money, what to spend the money on, if anything, and how much, if any, to save for future security and opportunities. This type of budgeting can be difficult. One needs to anticipate future expenses as well as map out what goals they will want to accomplish in the future and the costs of attaining those goals.

One of the purposes of a structured settlement, in part, is to avoid the issues that may arise with budgeting errors. As the term suggests, a structured settlement is a "settlement" and therefore generally arises, not by a court order or judgment, but through an agreement; i.e., settlement between the parties to the lawsuit. It is in essence, an agreement between the parties to the lawsuit whereby the plaintiff consents to dismissing his or her pending lawsuit in exchange for the defendant agreeing to make a fixed set of future payments. Generally speaking, you agree to accept the structure and any cash at the time of settlement and release the Defendant and its Insurer from all past or future claims. In most cases, although not all, the court is not a part of the negotiation or approval of the ultimate settlement.

Frequently, once the structured settlement is agreed to, an annuity is purchased to fund the obligation. The Defendant, its insurance company or a related entity, will often be the one responsible to purchase the annuity. While in many situations, you will not be the legal owner of the annuity funding the structured settlement, the settlement arrangement will require the that owner has the annuity payments sent directly to you.

While the laws in every state differ as does the language in the underlying settlement and annuity contract, you may be entitled to receive the structured payments, but not be the named owner of the annuity. As a result, there can be technical issues if you elect to sell or part of your structured settlement payments.

Nevertheless, as a result of relatively recent legislation, there are companies out there that can get you a lump sum of cash for your structured settlement payments. In light of the technical and legal knowledge required to effectuate such a transaction to get you a lump sum payment of cash, if you elect to sell your payments, it's critical you select a company with a lot of experience in this area. Their expertise will ensure the process of selling your structured settlement goes smoothly and you get the cash quickly.

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