If you cannot wait to receive tiny, spread-out payments over a substantial period of time thanks to a atrocious monetary situation or wide doctor's bills and / or lawyer costs. Many of the circumstances that will cause a structured settlement can also stick the individual with such requirements.
If you and your folks decide this is the time to ultimately make that giant purchase that you have had your eye on. For instance, if you have formerly been denied mortgages or loans and want to use this opportunity to buy that dream home you've always wanted. structured settlements
The already mentioned common law states have decided to include structured settlements in their approved tort laws. These four nations handle tort law and the settlement packages a touch differently, but the general overall definition applies generally. In brief, a structured settlement by legal definition is an approved agreement to pay a cited sum of money over a period of time, on a payment system.
Structured Settlements for a serious amount of clients are the perfect solution. Payments spread evenly over a period allow clients to balance their finances and pay bills in the years yet to come. Some folks get their settlement payments $300, $1000 or perhaps more each month. Yet, circumstances infrequently get in the way, and people need the one-off sum cash right away to unravel some issue which has come up in their lives.
If you've been hurt in an accident, chances are you have employed a solicitor to follow your claim for compensation for your wounds, agony and suffering. This is a reasonably common occurrence for those who have been put through the harrowing trial of having to endure an accident for which they weren't at fault. For a number of years when a settlement was awarded to the victim, the quantity of money that was awarded would go to the victim in the form of a lump sum. this is generally not the case anymore. Today the commoner demeanour of paying money to the hurt party is in the form of a structured settlement. structured settlements
In the most straightforward of terms, a structured settlement is a payment to the injured party made in regular payments over a period. This is dissimilar than getting a cash award in a lump sum up front. For example, if someone was in an accident and that was ruled the other party was to blame, the other party might need to pay damages. For instance, a 1,000,000 dollar settlement paid out monthly over 10 years would mean a check paid to the inured party in an amount just over eight thousand greenbacks per month. A structured settlement can alter as to how it is paid out. Some forms of structured settlement are paid out monthly and others annually.
- Think twice before you make a decision. Do you really need that money or you want to feel rich, secure, powerful etc'
- Take only part of the money not all of it, in case of an injury claim the Court needs to approve your request, the judge will want to know what do you need the money for.
- Some Funds will try to convince you that due to Inflation and rising cost of living your annuity payments have less and less buying power over time. Remember that if the Structured settlement was done properly it has a cost-of-living adjustment (COLA) feature build into it in order to offset the effects of inflation over time. So the funds claim on this issue is only partially true as the cost of living index is an artificial and biased measure of the actual inflation over time. Still even 70% protection is reasonable.
- When you get a large sum of money take into account that each bank is F.D.I.C. insured for up to $ 100,000 only! That means that if your sum of money is bigger than that you will need to open additional Account/s in a different bank/s in order to be covered.
In addition take into account that as long as you deposit your money in C.D's (e.g. Certificate of Deposit) you are covered, but if you invest your money In fixed income, stocks, bonds, and mutual funds. These securities are NOT F.D.I.C. insured!
- In case you transform Lottery winnings payments or a large sum of money from structured settlement, keep it as discrete as you can, It is not recommended to go and buy a Rolls-Roys or any other flashy car, that will bring the criminals and the charity people to chase you. That might even cause your children start to ask for money. Try to keep it a secret.
- It is a good Idea to get more than one or two offers from various private funds before making a decision, remember you are a very lucrative customer, the funds should fight over you! Don't be timid to negotiate and manipulate them to maximize your money.
Before you enter into any agreements, you should consider your options to ensure that the financial position of the company is good to avoid the risk of default of your cash after you sign over your annuities.
Professionalism, style and experience are the key factors to be considered in choosing a structured settlement company.
One should work with companies which conduct business professionally and in an ethical manner, be experienced and demonstrate results in what they do and provide comfort and peace of mind.
Structured settlement is beneficial to users as it is a loophole for tax avoidance while, settlements funds are also saved for future use.
Before you sell your settlements, you should consider the following factors. First, ensure that there are no legal restrictions as well as contractual limits which make selling of your settlements impossible.
Secondly, look at the tax considerations since most of the settlements offer tax savings as compared to cash settlement.
It is advisable to seek professional help from either your accountant or your lawyer who will advice you on the consequences of your decision.
Cash for structured settlement enables individuals to sell part or all of their annuities for a sum of cash. This enables people to meet financial emergencies. Individual also use the cash to pay off their debts or buy a home.
Since it takes time for one to sell annuities, you should plan ahead to avoid disappointments and unnecessary delays.
The lump sum value of your payments usually depends on the amount and when it is due. The schedule of payments is usually outlined in the structured settlement agreement.
Settlement transaction factoring is the best interest used for the Cash for Structured settlement. However, courts can determine the interest rates on a case by case basis since there is no 'best interest'.
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Although it is a very natural feeling and sometimes even a real life need or deep inner quest for power and control, it is not in their best financial interest to say the least.
It is no wonder that the U.S federal laws encourage long term payments in both cases like Structured settlements and lottery winnings. There are many good reasons for that and I'm going to spell them out as clear as I can.
- In some countries around the world it is legal to pay for lottery winning in one lump sum. Experience shows many of these people lose most or all of their money in a few years time, due to the following reasons:
- Ordinary people who get into their possession a very large sum of money don't really know how to manage their treasure or how to invest it wisely, they are not prepared for it and they are overwhelmed with a delusion of over abundance of wealth, they become totally careless on how and on what they spend their money.
- Even if they invest their money, they go for high risk speculative investments as they try to get high yields. Instead of going for a much solid and safer, "widows & orphans" type of investment portfolio. Neither do they go for the golden middle way in between of a mixed portfolio. They don't use investments advisers or financial consultants.
- They become over generous with their family and friends, they buy their children homes, cars or any other materialistic requests, they " lend " money to a friend in need...
- They listen to shrewd business people who talk them into investing into all kinds of business adventures that seems to them very profitable but in a short while turn into total failures and the money is gone.
- All kind of addictive behaviors like betting horse races or going to play the roulette in the casino are now intensified with the feeling of power and wealth, it might drive the person to gamble high sums of money as if there is no tomorrow.
- Believe it or not but criminal elements might engage in putting pressure to extort monies from the overnight rich poor guy. They might threaten to harm his family etc'
- Charity institutions start to call all day and night asking for donations to a very noble causes, they even send some slick reps to convince him to donate money.
- His own children, some times his spouse becomes very greedy and exert emotional pressure to give them more and more money. In some cases the sudden riches literally ruined the families.
As I have shown you above, getting a large lump sum of money might be a risky thing, this is In addition to the fact that you are loosing a lot of money which was Tax free, that alone might be a difference of anywhere between 35% - 65% , add to it the profits of the fund who bought the annuity from you and you are loosing big time. It is not recommended for an injured or a disabled person, to transform the whole Structured Settlement long term payments into one big lump sum or you might find yourself one day without the money and facing high medical expenses and other bills you cannot afford.
There are few bullish arguments on the stock, but let's address them anyway. First, Vector occupies probably the most attractive niche of the cigarette business: the discount end. Discount cigarettes have been about the only sector of this market to experience volume growth in the last decade, as premium brands are being priced out of the range of lower income smokers. Also, the 1998 litigation settlements with 46 states require only the 3 largest cigarette makers to pay the costs. Vector's Liggett Group is 5th, and as a byproduct has gained a valuable cost advantage against bigger makers like Altria (MO) and RJ Reynolds (RAI). The "big boys" are handcuffed by these costs if they decide to compete in the deep discount cigarette market, a significant competitive advantage for Vector Group.
The second positive is the dividend. Vector Group currently pays a massive 11.4% yield, and they have maintained such a high payout for several years now. It is unlikely that this dividend is sustainable over a long-term period, as last year it represented 122% of free cash flow. Management has been funding it with debt, a bad idea (I'll discuss financial health later). However, I believe it is more likely than not that a one-year Magic Formula investor would probably be able to collect the full yield, as Vector has been able to sustain operating profits even against some difficult challenges. Dividend investors with a long-term horizon would want to steer clear, though... this is not a yield that is going to hold, and it certainly will not go up over the long term.
So that's the case for the stock... now let's get to the negatives, which dwarf the positives, keep Vector Group far out of the MagicDiligence Top Buys portfolio, and in fact should keep MFI investors out of the stock. First and foremost is the government's shadow war on smoking. Having mostly failed in direct litigation in the 1990's, federal and state governments are now using a more effective stick: excise taxes. In April of this year, the federal excise tax on a carton of cigarettes was raised from $3.90 to $10.07, a crippling 158% increase. Some states tack on as much as an additional $4/carton. In response, Vector had to increase the wholesale price of their cartons by an average of about $7.50. As a result, revenues have spiked significantly (over 60%), but gross margins have plummeted from the low 40% range to the mid-20's. The net effect has been almost break-even - operating profits have been about flat against pre-increase levels.
The problem, though, is the effect going forward. Higher excise taxes hurt discount brands more than premium ones like Marlboro, as discount customers buy based almost solely on price, while premium brands enjoy customer loyalty and are less price-sensitive. When discount cigarettes get more expensive, it is likely that the low-income buyers they attract will buy fewer packs, or look to alternatives like smokeless tobacco. Vector's volume numbers bear this out: last quarter, Liggett Select suffered a 31% decrease in unit volume, while Grand Prix fell 13%. This is quite the conundrum for Vector, as all of their sales are inside the U.S., and cigarette volume growth (and tax freedom) is almost exclusively overseas.
There are other reasons not to like Vector. The balance sheet is aggressive: about $355 million of debt vs. $300 million in cash, with another $142 million in convertible debt derivatives. Interest is covered by operating earnings just 2 times over, well below the 5 times MagicDiligence likes to see as an absolute minimum. As previously mentioned, free cash flow is not sufficient to service the dividend, yet alone debt obligations. Debt and dividend are being financed with... debt. When you combine shaky financial footing with a very unfavorable regulatory environment, it is a recipe for trouble.
Finally, the company is just ugly to analyze. I count no less then 16 non-operating line items in the income statement (for the past 5 years), with a history of restructuring, unconsolidated side-businesses, and confusing financing. Vector does a bizarre 105:100 stock dividend every year. It engages in the completely unrelated business of residential real estate brokering. In short, it is a difficult business to fully understand, and the ability to understand a business is Warren Buffett's #1 requirement for an investment.
With all of these negatives, MagicDiligence recommends MFI investors steer clear of Vector Group and look elsewhere.
You will find that there have been known cases where people who purchase structured settlements are conned by unscrupulous dealers.
This is because of the fact that many of the people who buy these structured settlements are not able to differentiate a fake document from an original one.
Care should be taken when you want to purchase structured settlements. There is an incidence of some con men who tricked a buyer of structured settlements into paying them the lump sum that they had.
They forged documents saying that a colleague of theirs, had won over five million dollars in the lottery.
These people were so professional that they set up offices and even had the use of a court room. The process they used was that they made an office that looked like a branch of the said lottery company.
This was to confirm that the lottery company had indeed given the prize to the person who wanted to sell his structured settlement.
From this point, they managed to set up a court setting next to the local court house. They got people to act as judge, attorneys, bailiffs etc.
Now the purchaser of the structured settlement had all the assurance he needed that the structured settlement was indeed genuine.
He did not need to search further or make any inquiries as the person he was dealing with seemed to know little about the structured settlement issue.
Furthermore, the so called "colleague" of the owner of the structured settlement had told him that the person who had won the lottery would be happy with a settlement of only 3.5 million.
This meant that he had over 1.5 million shillings on that particular settlement only. This greed blinded him and he ended up purchasing the structured settlement.
To make matters worse, he paid it in cash. By the time he realized, there was no such thing and all the buildings and offices that he entered were gone.
To make matters worse, the names the con artists used were of people who had died in the previous month.
Next time you want to purchase structured settlements, be sure to make thorough and verifiable inquiries. This would help you avoid such cons and scams.
There are advantages to this for both parties. The injured party may require constant medical care, and the regular payments of a structured settlement guarantee that income will be available to cover the medical expenses. For the paying party, the settlement can be paid by purchasing an annuity, which allows an upfront payment to accrue interest, thereby producing a larger long-term yield from a minimal investment. In many cases, a structured settlement is viewed as a win-win situation for both parties.
There are restrictions on structured settlements that may not suit everyone. Once you agree to accept a structured settlement, you cannot trade it back in for a lump sum payment, nor may you use it for collateral for a loan. What if you want to buy a home and pay cash? What if some other unexpected expense comes up and you simply do not have the cash available? Under certain circumstances, you may be able to sell your structured settlement to a third party.
There are companies that are interested in purchasing structured settlements for investment purposes. Perhaps one or more of these companies has already contacted you. They will agree to pay you a lump sum, in cash, in exchange for you signing over your future annuity payments to them. Be aware that any party that offers to buy your annuity is interested in doing so for investment purposes. They wish to make money on the transaction, and for them, that profit will be spread over the long time that it takes to receive all of the payments that constitute the settlement. Once you combine the factors of time, interest, inflation, and the buying party's profit, you will find that the offer made to you will seem quite small. The amount you receive will be an amount equal to the present day value of the settlement, minus whatever sum the investors require for their profit on the transaction.
You should also know that some states prohibit the sale of structured settlements, that some insurance companies who handle the annuities prohibit sales to a third party, and that you will probably need to go to court to arrange the sale. In addition, there may be tax considerations involved in the sale, and the taxes due on large sums of money are not insignificant. If you are interested in selling your structured settlement, you will definitely want to discuss the sale with an attorney and a tax advisor beforehand.
While structured settlements are designed to benefit those who receive them, there are times when it may be desirable or necessary to sell them. If you are considering selling your settlement, make sure that you weigh all of your options carefully. Once you agree to sell, you cannot get it back.
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That's where dumping your 'Structured Insurance Settlement Payment' comes into play. The need for money might be anything from financing a business to buying property to clearing bills to just paying for a holiday.
It would look after your immediate financial issues, but be certain to remember that you are essentially losing out on money in the middle. The lump sum will be really less compared to what you are supposed to get over a time period. So, it's important to remember some things before you sell your structured payment.
The advantages of selling must be weighed carefully first. If your desire for immediate money is bigger than losing some of the money by selling then go ahead and do it. But if the'need' behind selling is just to have a gala time or go on a luxury cruise or buy something, then hold it! Do you actually need to put yourself in this situation? People without fiscal difficulties can sell the payments and spend it as and when they love it but if you haven't any steady income or make little, then these structures payments can help you a good distance.
While an one-off sum can also be invested in someplace which might give you more return over a period of time. Though, there is also the choice of selling part of your structured insurance payment instead of the whole thing. This gives you cash in hand and also some security of earnings for the future.
It is extremely important that you follow the legal route to avoid ending up in trouble later. Some states like Texas, Kentucky, Virginia and Illinois apply plenty of restrictions on sellers.
If correct care is taken, selling can be quite simple and worthwhile. .
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A fiscal planner or the plaintiff's confidant possibly will assist in making the settlement much more feasible. Allotment being purchased are normally the projected method of making sure to facilitate the settlement is paid off in a timely manner.
Why annuities you possibly will ask? If you don't have the medium of exchange to reimburse off the settlement currently, you can without difficulty produce a cycle of disbursements. Annuities are a fantastic means of handling settlements and may offer a tax-deferred growth of interest and much more. It possibly will be likely to even receive a death benefit that will reimbursement the beneficiary a protected low amount. It possibly will be profitable to discuss how annuities work with your counsel and uncover out what will work unsurpassed in support of you.
What's Your fiscal Situation?
Depending on your pecuniary circumstances, you may need to find the structured settlement, that best fits what you can afford to pay on installments. You might be able to pay in periodic lump sums every couple of years or you may be able to pay over a number of years. Know your options and look at each one carefully. Make sure to research all you can about structured settlements first, then write out your questions for your counselor or financial planner. Within life it's what you don�t know and what you don't ask that gets you in the ending.
Researching the Internet is one of your utmost allies, when it comes to accurately handling a structured settlement to your benefit. Albert Einstein once said, You have to understand the rules of the game. And then you have to play better than anyone else. You may need a good authority, patience, and the spirit of a true investigator of the Internet to acquire the right enlightenment you need to succeed.
Why do a structured settlement? The simple answer may be tax avoidance and who would not be open to this strategy! Imagine a structured settlement that is tax-free! This may not always be the case, but it's certainly worth investigating.
The workable Benefits Of A Structured Settlement
The benefits of a structured settlement may be many, but you need to find out what your options are. A high-quality structured settlement may protect you from quickly losing all of your settlement funds from bad decision making.
If you're not good at managing your cash, then a structured settlement may help give you control over your unhealthy spending habits. Let's face it, we all can use some solid structure in our lives and some thoughtful planning. The structured settlement that you choose all depends on your circumstances and your priorities.
The downside to a structured settlement is having to pay a set amount according to the agreed upon pay schedule. Say you want to buy a new home or get an expensive automobile, unfortunately, your locked into your cyclical payments. Maybe you wanted to get a dream boat to go on the lake, but you can't afford it because of your structured settlement payments. Not being able to borrow against future payments, may put you in a bad state of affairs that you wish could be changed. The laws may have changed as of this writing, so please consult an lawyer.
Is it wise to acknowledge one large lump sum for a settlement? If your not a good investor, you may want to think twice about this option. Investing is not like it use to be and most people are now investing in gold or silver. Again, research your contribution options and find out where other smart people are putting their money!
Should You Sell Your Structured Settlement?
Should you sell your structured settlement? At first, this sounds like a lucrative hypothesis and one that may be quite beneficial to you, but getting the money may depend on wherever you live. There are states that restrict the selling of structured settlements, making this choice out of the question. So, you will need to find out what laws apply to your structured settlement in your state. If you do sell, it is wise to compare notes with your lawyer and investigate the company who may be bartering for your annuities before entering into an agreement.
Remember, the company that plans on buying your annuities will be looking to make legal tender as well, so it's in your best interest to make sure the company is legit. The biggest mistake most citizens make when selling their structured settlements, is not researching the buyer or consulting with their lawyer! You know the old saying, haste makes waste.
If you have not thought out your structured settlement with the appropriate counsel, you may very well be in for a war, but it may be avoided. Be alert for those who may try to take advantage of you as you enter into an agreement. Make sure you are aware of the terms and obligations of your structured settlement. Watch out for unwarranted commissions by insurance companies and the overstated worth of a structured settlement by the defense.
Make Sure You Get The plump Value Of Your Structured Settlement
Of the maximum of importance, is making sure you're getting full price for your structured settlement. It may be useful to do a caparison with other insurance companies to make sure your getting full payments. Make sure your lawyer is not in the insurance business, because this may mean more money for your lawyer and less for you.
Smart investors use to put their medium of exchange into multiple stocks, as an alternative of putting all their eggs in one basket. Choosing to use many assorted insurance companies for larger settlements, may protect you from a few of the insurance companies going bankrupt.
As you can see from this article the correct understanding is power and having a well-prepared plan with your lawyer is for your own protection. When you get the facts for your structured settlement, make sure you do your own calculating and that way you'll have a pleasant idea how much money your getting. It's your right to know and it's your period to put the law on your side.
The upside to buying this type of investment is if the market does stabilise and you have been able to buy the settlement at a heavily discounted price and the settlement agreement is from a financially secure institution, then you and your bank manager will be very happy customers.
On the other side, if you buy a structured settlement from a less than financially secure institution, and you paid almost face value price minus interest costs, you could end up minus your shirt and with a very unhappy financial advisor along with a very unhappy bank manager. Not to mention that if you live in the northern hemisphere, you will quickly feel the cold tickling around bare ribs.
Ben Bernanke has been probably one of the most financially influential listened to gurus for a number of years now and if he's advising caution to financial institutions and investors, then why disregard his advice at this point in time? Yes, I do hold him partially responsible for the mess the world's economy is in now but I do think perhaps he isn't all bad and now he is looking for the best way for all of us out of a failed financial system.
If you are seriously considering buying a structured settlement contract at this point in time then you will need to carefully research the financial institution who has issued the contract and do a severe due diligence on their viability.
Don't forget, AIG and Bear Sterns may have been 'too big to fail' but how many times and how many other insurance and financial institutions are the Tax payers around the world prepared to bail out of corporate greedy decisions, especially when today we see in the Guardian Newspaper in the UK that the British Government has had to legislate a special "Bonus Tax" because the banks are still giving their corporate governors multi-millions in bonus payments.
Buying a structured settlement agreement today is still risky business and you need more information available to you rather than just listening to what the hawkers of financial products are 'talking up' around the world.
Perhaps you'd suffered personal injury in an auto or other accident, you were awarded damages in a product liability case, or you were the victim of medical malpractice or were even the plaintiff in a wrongful death suit. You agreed to a periodic (usually monthly) payment, maybe in the form of a lifetime income stream, that seemed to be the answer to paying your ongoing living expenses and perhaps your medical costs. You made the best decisions you could at the time, with the information you had - based upon how life was then, and what you expected for the future.
But life seldom works out as we expect. Maybe you're on the road to recovery from the accident or other event for which you received the settlement, and want to move and buy a house, get married, go to school, or buy a business. Maybe medical bills or high interest debt is an undue burden on you that you need to resolve now. Or, if your family has grown, and your children no longer need for you to provide for their education or other expenses, you may want to spend more of the money you have coming to you now, instead of later.
What can you do to match your finances - specifically your structured settlement - with the life you now have or want to have? You should always consult an attorney or a financial advisor, but here's a basic overview of your rights and options in assigning your structured settlement:
Settlements are funded by single premium annuities, issued by insurance companies. Instead of paying you a lump sum amount, the party found responsible for injury or damages to you has paid a one-time lump sum to an insurance company, which has, in turn, invested it. The insurance company has projected the interest rate or securities dividends they will receive on the lump sum, and based upon the length of time and number of payments you chose or were offered for the structured settlement, they calculated the periodic payment amount you're now receiving.
So who owns what? The insurance company owns the annuity, and you, as the beneficiary, are entitled to an income stream, or the series of periodic payments. Because you don't own the underlying asset, the annuity, you therefore can't sell the annuity contract to another party to receive your money. However, under federal and state law you can, with court approval, sell all or a portion of the payments you are entitled to receive in the future. In doing so, you can receive a lump sum cash payout now.
What are your options? As an annuitant, or the beneficiary of the structured settlement annuity, you are, in most instances, able to assign to a third party the payments you are entitled to receive in the future. Some Structured Settlement Agreements state that payments cannot be assigned, and your legal counsel will advise you of options and alternatives if yours is written with such a clause. Fortunately, state laws and recent case law have rendered contracts written with such provisions unenforceable, although other regulations may apply.
How can you determine today's lump sum value of your structured settlement payments? This depends, in part, upon the amount of each payment and when it is due. The payment amount and schedule will be outlined in your Structured Settlement Agreement. It is also affected by the financial strength of the issuer of your annuity, because the better the financial position of the issuer, the more likely it is that the purchaser of your cash stream will be paid. The current financial climate, as well as interest rates will also affect your cash-out amount. Your financing company will explain these calculations and assumptions to you.
What steps do you need to take?
- First, you really need to take a hard look at whether receiving your funds now will truly be best for you and your family. This is a big financial step, not to be taken lightly. That said, your circumstances may have changed sufficiently so that a lump sum or partial payment in the form of a lump sum makes sense, and is better for your family's current and future lifestyle and financial stability.
- Next, contact a reliable financing company that purchases structured settlement income streams. They can guide you through the process and help you consider alternatives, such as the sale of a portion of your structured settlement income stream, if this best meets your needs.
- The financing company will assist you by hiring an attorney experienced in structured settlement assignments. The attorney will explain to the court your desire to change your settlement, and any changes in your life that have caused you to make this decision. Because the attorney will be petitioning for judicial approval, he will need to understand your current finances, obligations and desires.
- Having all your documentation and agreements, and furnishing them promptly to your advisors and potential funding sources is key to receiving a cash payout in the shortest possible time. Because court approval is required, the time from the initiation of the request to the final approval is typically 45-90 days. So, just as with other large financial decisions, such as obtaining a mortgage or refinancing, it's in your best interest to begin the process with a little time to spare, before you feel a time crunch. You deserve an equitable deal, as quickly as is possible, not just the deal you can make in the very least amount of time.
- What can you expect now? Once you have chosen a finance company and attorney, the courts will put you on the docket and hear your petition for receiving your funds in a lump sum. They'll want details of the future payments due you, the proposed amount of the lump sum distribution, and any costs you will incur as a result of restructuring your settlement. Their basis for granting you an approval is satisfying themselves that the assignment of your payments to another party and receipt of current cash will be in your best interest and in the best interests of any dependents you may have.
- Once you've agreed upon a lump sum amount with your finance company, and obtained court approval, you'll receive a wire transfer or a cashier's check for your lump sum amount. You'll now have the cash you need - right when you need it most.
A structured settlement is the dispersement of money for a legal claim where all or part of the arrangement calls for future periodic payments. The money is paid in regular installments-annually, semi-annually or quarterly-either for a fixed period or for the lifetime of the claimant. Depending on the needs of the individual involved, the structure may also include some immediate payment to cover special damages. The payment is usually made through the purchase of an annuity from a Life Insurance Company.
A structured settlement structure can provide long-term financial security to injury victims and their families through a stream of tax-free payments tailored to their needs. Historically, they were first utilized in Canada and the United States during the 1970s as an alternative to lump-sum payments for injured parties. A structured settlement can also be used in situations involving lottery winnings and other substantial funds.
How a Structured Settlement Works When a plaintiff settles a case for a large sum of money, the defendant, the plaintiff's attorney, or a financial planner may propose paying the settlement in installments over time rather than in a single lump sum.
A structured settlement is actually a tradeoff. The individuals who were injured and/or their parents or guardians work with their lawyer and an outside broker to determine future medical and living needs. This includes all upcoming operations, therapy, medical devices and other health care needs. Then, an annuity is purchased and held by an independent third party that makes payments to the person who has been injured. Unlike stock dividends or bank interest, these structured settlement payments are completely tax-free. What's more, the individual's annuity grows tax-free.
Pros and Cons
As with anything, there's a positive and negative side to structure settlements. One significant advantage is tax avoidance. When appropriately set up, a structured settlement may significantly reduce the plaintiff's tax obligations (as a result of the settlement). Another benefit is that a structured settlement can help ensure a plaintiff has the funds to pay for future care or needs. In other words, a structured settlement can help protect a plaintiff from himself.
Let's face it: Some people have a hard time managing money, or saying no to friends and family wanting to "share the wealth." Receiving money in installment can make it last longer.
A downside to structure settlements is the built-in structure (no pun intended). Some people may feel restricted by periodic payments. For example, they may want to buy a new home or other expensive item, yet lack the funds to do so. They can't borrow against future payments under their settlement, so they're stuck until their next installment payment arrives. And from an investment perspective, a structured settlement may not make the most sense for everyone. Many standard investments can provide a greater long-term return than the annuities used in structured settlements. So some people may be better off accepting a lump sum settlement and then investing it for themselves.
Here are some other important points to keep in mind about structured settlements: An injured person with long-term special needs may benefit from having periodic lump sums to purchase medical equipment. Minors may benefit from a structured settlement that provides for certain costs when they're young-such as educational expenses-instead of during adulthood.
Special Considerations
- Injured parties should be wary of potential exploitation or hazards related to structured settlements. They should carefully consider:
- High Commissions - Annuities can be highly profitable for insurance companies, and they often carry very large commissions. It is important to ensure that the commissions charged in setting up a structured settlement don't eat up too much of its principal.
- Inflated Value - Sometimes, the defense will overstate the value of a negotiated structured settlement. As a result, the plaintiff winds up with much less than was agreed upon. Plaintiffs should compare the fees and commissions charged for similar settlement packages by a variety of insurance companies to make sure that they're getting full value.
- Conflict of Interest - There have been situations where the plaintiff's attorney has referred the client to a particular financial planner to set up a structured settlement, without disclosing he would receive a referral fee. In other cases, the plaintiff's lawyer has set up a structured settlement on behalf of a client without revealing the annuities are being purchased from his own insurance business. Plaintiffs should know what financial interest their lawyer may have in relation to any financial services being provided or recommended.
- Using Multiple Insurance Companies - It's advisable to purchase annuities for a structured settlement from several different companies. This offers protection in the event a company that issued annuities for a settlement package goes into bankruptcy and defaults.
Benefits of Selling A Settlement
A structured settlement is specifically designed to meet the needs of the plaintiff at the time it's created. But what happens if the installment arrangement no longer works for the individual? If you need cash for a large purchase or other expenses, consider selling your structured settlement. Many companies can purchase all or part of your remaining periodic settlement payments for one lump sum. This can boost your cash flow by providing funds you can use immediately to buy a home, pay college tuition, invest in a business or pay off debt.
If you're considering cashing out your structured settlement, contact your attorney first. Depending on the state you live in, you may have to go to court to get approval for the buyout. About two thirds of states have laws that limit the sale of structured settlements, according to the NSSTA. Tax-free structured settlements are also subject to federal restrictions on their sale to a third party, and some insurance companies won't assign or transfer annuities to third parties.
When selling your structure settlement, check with multiple companies to make sure that you get the highest payoff. Also, be sure the company buying your settlement is reputable and well-established. And keep in mind that if the deal sounds too good to be true, it probably is.
Structured payment schedules have an advantage in helping people manage their award money. This is a great benefit for recipients who do not have money management skills or who might e taken advantage of by family or friends and having structured payments can provide the recipient a lifetime of financial stability.
Settlement payments are except from a number of court orders or decrees including divorce and credit payments. Further, settlement payments can be added to social security benefits as they become available. Security is also found in these regulations that ensure that life events will not touch your payments.
For recipients with severe disabilities, settlement money can be put in a special needs trust fund. Doing so allows medical expenses not covered by Medicaid or government allowances to be paid without any other issues.
Injured recipients can really benefit from a structured settlement as the payments can help to fund medical equipment or customized vehicles or home features. These purchases might otherwise be impossible or be severely limited by a person's financial state. The structured settlement can provide for long term, comfortable living.
Structured settlements however, are not for everyone. Some people have found that selling some or all of their structured settlement provides a better option. Trading your settlement payments for a lump sum can help you get out of debt or allow you to invest.
There are options that allow you to see all or some of your payments from a settlement for a lump sum. This money can then be used to buy a home, car, or pay for education costs that may have otherwise been impossible.
Having your settlement in a lump sum may also help you avoid inflation as your money will be worth more now than in coming years when inflation has raised the cost of living. There are a number of companies that can help you sell your settlements without paying taxes on your award.
Before you enter into any agreements, you should consider your options to ensure that the financial position of the company is good to avoid the risk of default of your cash after you sign over your annuities.
Professionalism, style and experience are the key factors to be considered in choosing a structured settlement company.
One should work with companies which conduct business professionally and in an ethical manner, be experienced and demonstrate results in what they do and provide comfort and peace of mind.
Structured settlement is beneficial to users as it is a loophole for tax avoidance while, settlements funds are also saved for future use.
Before you sell your settlements, you should consider the following factors. First, ensure that there are no legal restrictions as well as contractual limits which make selling of your settlements impossible.
Secondly, look at the tax considerations since most of the settlements offer tax savings as compared to cash settlement.
It is advisable to seek professional help from either your accountant or your lawyer who will advice you on the consequences of your decision.
Cash for structured settlement enables individuals to sell part or all of their annuities for a sum of cash. This enables people to meet financial emergencies. Individual also use the cash to pay off their debts or buy a home.
Since it takes time for one to sell annuities, you should plan ahead to avoid disappointments and unnecessary delays.
The lump sum value of your payments usually depends on the amount and when it is due. The schedule of payments is usually outlined in the structured settlement agreement.
Settlement transaction factoring is the best interest used for the Cash for Structured settlement. However, courts can determine the interest rates on a case by case basis since there is no ´best interest´.
Discount rate was relatively high due to expenses caused by litigation but this reduced considerably after the enactment of state and federal legislation. The discount rate has been associated with home loans though a little higher rate than the home loan interest rates.
Discount present value determines the present value of payments to be made in future using most recent rates provided by the federal rate.
Cash for Structured settlement offers you a chance to receive lump-sum and acts as an alternative funding made to meet your needs.
The process of entering into a contract to sell your legal right of receiving settlement installments to some buyer company in exchange of some present value of cash is known as Factoring in legal terminology. There are several factoring companies available all over the country who offers instant cash to buy settlements. While evaluating these companies you need to make a well informed and intelligent decision by selecting financially sound, ethical and competent company.
Selecting a right company is very essential if you don't want delays in the process of selling your settlement. Compare the offers of different companies and try to negotiate with them for your terms. Clearly discuss about all the charges they are going to charge and try check for any hidden charges. Analyze and evaluate companies based on the above factors and make sure you deal only with best companies.
Though it may appear appealing to receive instant cash for your annuities, but you must consider the fact that companies will buy your settlement for certain discount rates. Sometimes, depending on the type of your settlement, these discount rates can be very high. So unless you are in desperate need of instant cash, it is not wise to sell your settlement.
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The factoring companies are companies that buy settlements directly. They will often offer lower payouts to people that are in desperate need of money, which is why an auction can be so much better. In order to do this, you will need to plan ahead so that you are not one of the desperate sellers that have no other options.
When one uses an online marketplace auction their personal information is not shared with the bidders. They will not receive sales calls from any companies that are trying to buy the settlement or get any offers other than those sent directly from the auction. When the settlement has been sold the auction will notify the seller and the payment for the settlement will be made.
For some people selling structured settlement payments means that they will no longer have an income. It is important therefore to consider every other avenue available before embarking on this path as it cannot be undone once the deal has been completed. It is also important that one take into consideration the loss that they will incur by selling the settlement and make a knowledgeable decision of whether it is worth it to sell at all.
Most of the individuals who are awarded structured settlement plans are very unwise and do not wish to wait for the number of years for the full amount to be paid out, especially if it is a structured settlement payment plan that has been decided to be paid out over the beneficiaries entire life-time. These people want the entire amount to be paid out rather in one big sum, rather then getting however many smaller sums. This is where Structured Settlement purchasing companies found a niche to develop a market for their services. These purchasing companies help beneficiaries receive the entire full amount in one lump sum instead of receiving it over a number of years.
With Settlement Purchasing companies, they help you get cash instantly, especially if you are in a desperate, urgent situation where you need the cash almost immediately. The wonderful and possibly the fortunate thing about structured settlements is that through any stage of the actual settlement you can actually exchange your life-time or year payments for one big payout. In this regard, structured settlements are very flexible. The only thing that you now need to know is how to go about actually getting cash for your structured settlement payment plan. But why would someone with a secure investment give this up?
Usually, beneficiaries run into financial difficulties that cannot be sorted out in an alternative manner and then they would rather take their structured settlement out in a big sum, so that this can be handled with, another reason for a few people, is that they would rather invest the money in their own manner then having the money being paid out in small amounts that they believe will not provide them with a good average return. If you are financially smart and know what you're doing, taking this out won't be bad.
Structured Settlement Purchasing companies buy your structured settlements at a discounted rate. These discounted rates are equal to or, occasionally, more than the existing bank rates. A purchasing company can sometimes have a much higher discount due to that fact that they want to cover the risk involved in purchasing a structured settlement and make a profit at the same time. This is why you should be wary about selling your structured settlement to a third party. In the long run, you will lose your money, whichever way you look at it. Ideally, before you make a decision on if you should allow a company to purchase your structured settlement you should speak to a financial advisor you trust or hire someone to take a look through your financial portfolio.
The advantage of going through a purchasing company is that they can offer many different flexible plans for you to actually have your investment bought off you. Speaking to your purchasing company about all the different options you can have is especially important to make sure you are making the correct financial decision for your life. Depending on your specific needs, the purchasing company will suggest a particular course that you should take with your plan. The important thing to remember is that, in the long-term, you are doing right by yourself and your family.
If you've watched television or paged through your local newspaper or magazines, somewhere you might have heard of the phrase structured settlement, of course, in most cases, most of us will not know exactly what this phrase is.
When a party has been injured and has a bodily injury claim, an insurance company will make periodic payments to the injured party as part of their claim. So, instead of being paid out a lump sum of amount for the entire claim, this claim will be paid out annually or monthly depending on the arrangement with the insurance company. A structured settlements work out very well for both the insurance company and the person who is actually claiming the amount from the insurance company.
Simply, a structured settlement is simply a financial package that allows the settlement to be paid out over a certain amount of time. The wonderful thing about a structured settlement is that if this amount is paid over a life-time, generally, you will receive more then you would initially have gotten if you had received the lump sum. Each structured settlement is specifically made according to each person's individual situation. According to the insurance amount, the premiums that you have been paying and the standard of the injury, your structured settlement will generally be based on these constants.
Now, if you are currently in the process of getting or being awarded a structured settlement, there are a few benefits that you should keep in mind that might be worth going through the trouble of getting one.
A structured settlement annuity proves a constant supply of money over an extended period of money, regardless of the economic situation. You can always have the safety net of the annuity which provides you with a sense of security. Extending to this, your structured settlement is tax-free over a specific period of time. Due to the reliability of structured settlements, it is possibly a greater investment then most stocks, bonds and even in these hard times, real estate.
The most important to think of a structured settlement is that it is flexible and can be created in such a way that it can be paid over as many years as you would like security. A structured settlement can also be paid over your entire life-time. In most cases, there is also a clause in the insurance company that states when the beneficiary of the structured settlement has passed away, their spouse or specified relative will get a lump sum payment from the structured settlement as well.
What sort of protection do you get when you receive or buy a structured settlement? They are both protected through the regulation of the Federal and State statutes. In the long run, if you want a safe investment, then it is practical to choose a structured settlement annuity. The tax benefits and the security in having a constant amount being paid into your annual budget is a big positive if you have some extra money to spare.
If you are reading this article, you are either looking around to see whether selling your structured settlement payment plan is a good idea or you are in a desperate need for cash as soon as possible. In most cases, individuals who are considering to selling their structured settlement plans have run into financial difficulties and have no other option. Selling a structured settlement payment plan can be an easy and effective manner of getting money that you're entitled to already (even thought you would only become entitled as the years went by) immediately. This way you would not have to borrow money or put anything else up for collateral that would negatively impact your credit situation further.
If you have come to this stage, then you need to fulfill your short term requirements, without giving care to your longer-term financial situation. This is not to say that everyone who wants to sell their structured settlement plan is making a mistake. It is just generally noted that keeping your structured settlement payment plan is the better thing to do, in terms of wise money investment decisions. Luckily for you, if you are in the need to sell your structured settlement plan, there are many financial institutions that are willing to buy your structured settlement payment plans.
In most cases, you will find a firm that specially specializes in buying and selling of structured settlements. These types of companies are your safest bet. The reason for this is that they have the experience and knowledge to quickly, easily and professionally attend to your structured settlement needs. The beautiful thing about these financial institutions is that they can cater to any amount or any need. It doesn't matter if your structured settlement is only worth a few thousand dollars or even millions of dollars. They will be able to quickly and efficiently handle your needs.
Another positive of selling your structured settlement, as is keeping it, is that when you sell your structured settlement plan you are not taxed on any of the money that you receive from your payment plan. However, before plunging into buying your structured settlement, you should keep in mind that you should do research. Because of the difficulty of the laws surrounding the structured settlement payment plans, you should make sure that you are dealing with a reputable and well-established firm. If you do not go through a reputable firm you might not get the full benefit of your structured settlement plan.
When looking into a firm you should check their past payment records and get testimonials about their working relationships with the various insurance firms. Make sure that the payments have gone through in a quick and professional manner. Don't be afraid to ask for previous customer testimonials and ask to speak to the staff if you feel uncertain about something. The purchasing company should always, without a doubt, be licensed, insured and bonded. If they do not have all three of these requirements, then stay clear away from them.
As with any decision, make sure you are do the correct background checks to make sure your future decisions are not influenced. If you are reading this article, you are either looking around to see whether selling your structured settlement payment plan is a good idea or you are in a desperate need for cash as soon as possible. In most cases, individuals who are considering to selling their structured settlement plans have run into financial difficulties and have no other option. Selling a structured settlement payment plan can be an easy and effective manner of getting money that you're entitled to already (even thought you would only become entitled as the years went by) immediately. This way you would not have to borrow money or put anything else up for collateral that would negatively impact your credit situation further.
If you have come to this stage, then you need to fulfill your short term requirements, without giving care to your longer-term financial situation. This is not to say that everyone who wants to sell their structured settlement plan is making a mistake. It is just generally noted that keeping your structured settlement payment plan is the better thing to do, in terms of wise money investment decisions. Luckily for you, if you are in the need to sell your structured settlement plan, there are many financial institutions that are willing to buy your structured settlement payment plans.
In most cases, you will find a firm that specially specializes in buying and selling of structured settlements. These types of companies are your safest bet. The reason for this is that they have the experience and knowledge to quickly, easily and professionally attend to your structured settlement needs. The beautiful thing about these financial institutions is that they can cater to any amount or any need. It doesn't matter if your structured settlement is only worth a few thousand dollars or even millions of dollars. They will be able to quickly and efficiently handle your needs.
Another positive of selling your structured settlement, as is keeping it, is that when you sell your structured settlement plan you are not taxed on any of the money that you receive from your payment plan. However, before plunging into buying your structured settlement, you should keep in mind that you should do research. Because of the difficulty of the laws surrounding the structured settlement payment plans, you should make sure that you are dealing with a reputable and well-established firm. If you do not go through a reputable firm you might not get the full benefit of your structured settlement plan.
When looking into a firm you should check their past payment records and get testimonials about their working relationships with the various insurance firms. Make sure that the payments have gone through in a quick and professional manner. Don't be afraid to ask for previous customer testimonials and ask to speak to the staff if you feel uncertain about something. The purchasing company should always, without a doubt, be licensed, insured and bonded. If they do not have all three of these requirements, then stay clear away from them.
As with any decision, make sure you are do the correct background checks to make sure your future decisions are not influenced.
Structured settlements are payments that are made when grievous bodily injuries have been sustained by a person; these payments are then made out by the specific insurance company or by the company responsible for the injury sustained. In most cases, a structured settlement broker will help you negotiate the deal with your insurance company or help you sell your already negotiated structured settlement. Let us begin with possibly the easiest of their roles that they play in this financial sector.
Selling your Structured Settlements
If you are desperate for cash and need the money by selling your structured settlement, then you must find yourself a structured settlement broker who will be able to organize you a specific insurance company or financial institution that will be able to buy your structured settlement from you. Actually finding a company that will buy your structured settlement, for the best possible value might be a difficult procedure. A broker will be able to organize you the best deals and handle all of the paper work and legal matters that you need to be attended to. Paying a little bit extra to have someone handle this part of your business is worth it considering the amount of hassles you will be able to avoid in the long term.
Negotiating a Structured Settlement for you
If you have not as of yet finalized your structured settlement and are still in court, then this is the best route for you to go. We would definitely suggest finding a structured settlement broker to negotiate the financial aspect of your court case for you. There are a few important reasons to take into consideration when finding one. A broker is a specialist in their specific field. A broker will be able to guide you through the process of getting your structured settlement, informing you of all the legal requirements and problems that might occur from the procedure. They will be able to give you financial estimates for the court case and ideally should work with your attorney to build a strong case for you.
A structured settlement broker will look at the financial situation that you were in while going through this court case, this will include looking at your medical expenses, loss of income and even debt that you might have incurred due to these procedures. All of these financial implications have to be discussed to make sure that your structured settlement comes out to a fair amount in the end. Your broker, also called an annuity broker, will be able to plan and schedule a payment plan that must be followed by the insurance company. The broker will decide on whether these payments must be made on a weekly, monthly or yearly basis depending on the financial needs of the plaintiff.
However, the most important for a broker is to deduce what medical expenditure the plaintiff is going to have to incur due to the problems that were created by the injury that was sustained by the plaintiff. By doing this, he will adequately be able to provide for the plaintiff in regards to any medical needs he might have in the future.
If you are in the situation where you are getting your structured settlement sorted out, please find a broker. It's important to your emotional and financial well being that a professional organizes these affairs.
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