Purchase Structured Settlements
In order to purchase structured settlements in the U.S., investors and annuity brokers are required to adhere to state and federal regulations. Structured settlements are established to provide long-term income to individuals who have been injured due to the neglect of another. Injury settlements are often arranged for victims of automobile accidents, medical malpractice or workman's compensation injuries.
Approximately 75-percent of U.S. states prohibit the purchase of structured settlements. States allowing the sale of annuity payments require Annuitants to obtain court authorization. Since annuities are primarily used to provide funds for ongoing healthcare expenses or replace income lost for injuries resulting in disability, courts are reluctant to allow Annuitants to sell forthcoming payments.
Structured settlements are also used to payout jackpot lottery winnings. When individuals win millions of dollars they can elect to accept the winnings as a lump sum cash payout or establish annuity payments which generally extend over 20 years.
When individuals elect lump sum lottery payouts they often receive considerably less money than if they establish structured settlement annuity payments. Winning several million dollars places taxpayers into a higher tax bracket. Someone who wins $1 million can expect to pay upwards of $500,000 or more in taxes.
Establishing lottery winning payouts over the course of several years can reduce taxes and provide cash flow for years to come. If you are fortunate enough to win a lottery jackpot, consult with a structured settlement attorney to determine which financial option is best suited for your needs.
Many reasons exist for selling annuities. The most common include college tuition, paying off credit cards, home improvements, medical bills and investment opportunities. States which allow the purchase of structured settlements require Annuitants to provide convincing evidence that selling structured settlements is in their best interest and will improve their quality of life.
Structured settlement payouts can be sold in whole or part. Annuitants sell payments to private investors or annuity brokers at a discounted rate. For example, an individual receives $20,000 per year for ten years, which is paid on a quarterly basis. He receives a check for $5,000 every three months.
The Annuitant requires $40,000 to make his home handicap accessible. In order to obtain the full amount, he might need to sell three or more years of annuity payments. Structured settlement buyers do not pay face value when providing lump sum cash in exchange for transfer of payment rights.
Upon court approval, the Annuitant assigns payment rights to annuity investors or brokers through the insurance provider who issued the policy. Prior to entering into the sale of annuities, permission must be obtained from the insurance company. Annuity providers are not required to authorize settlement sales or agree to payment transfer rights.
Careful consideration should be given before buying or selling structured settlements. Obtain legal advice prior to and throughout the negotiation process. Lawyers can advise if annuity payments can be sold and determine if purchase offers are reasonable. They will advise clients of advantages and disadvantages of engaging in cash settlements.
Shop around for investors and brokers who purchase structured settlements. The most trusted resource for locating reputable annuity buyers is the National Structured Settlements Trade Association at nssta.com.
Find answers to frequently asked questions regarding buying and selling annuities in our purchase structured settlement article database. Subscribe to our mailing list for instant notification of newly published articles.
If you are interested in selling your structured settlement submit information using our structured settlements form.
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Published on November 27, 2009 at 02:08 AM
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