Cash for Structured Settlement
People who need cash for structured settlement must follow specific protocol and obtain court authorization to sell all or part of future annuity payments. Many states prohibit the sale of structured settlements altogether, so the first thing Annuitants should do is find out if this practice is allowed within their state of residence.
While obtaining cash for structured settlement provides Annuitants with lump sum cash, this can place them at financial risk in the future. Selling future annuity payments reduces the amount of funds Annuitants receive because annuities are sold to funding sources and fees are assessed for completing the transaction. Funding sources can include cash advance companies, annuity brokers, private investors, and investment groups.
Structured settlements are commonly used to compensate individuals engaged in lawsuits. When individuals are seriously injured in an automobile accident, sustain injuries in the workplace, or are injured due to negligence such as medical malpractice, structured settlements are used to provide long-term compensation to cover lost wages and ongoing medical expenses.
Structured settlements are often used to compensate jackpot lottery winners. When individuals win mega Powerball or Lotto games, they can elect lump sum cash payout or annuity payments which extend for 20 years. Lottery winners should consult with a tax lawyer to determine which option is best suited for their needs. Lump sum lottery winnings payouts are usually substantially less than entering into structured settlements.
When structured settlements are sold Annuitants assign payment rights to the funding source. Annuitants receiving compensation for injury are rarely allowed to sell future payments in their entirety. Since annuity payments are devised to provide income for living and medical expenses, courts will not allow Annuitants to engage in activities that would compromise their financial future.
In addition to garnering court approval for the sale, Annuitants are also required to obtain approval from the life insurance company backing annuity payments. Most providers discourage selling future annuities because the transfer of payment rights requires additional paperwork and payment tracking.
When entering into annuity sales it is best to work with structured settlement brokers or attorneys. These professionals can help Annuitants throughout the process and obtain the best price for future annuity payments.
Annuitants are required to provide specific information about their structured settlement to the funding source. Annuitants will need to provide annuity payment amounts and dates of future payments, along with contact information for the life insurance guaranteeing the payments.
Annuitants will submit proposals to funding sources for required funds. It is important to determine exactly how much money is required from the sale. Annuitants often require cash for structured settlements to payoff outstanding debts, start or expand a business, college tuition, or for investment purposes.
Once Annuitants and funding sources come to an agreement, a purchase contract is executed and submitted to court for approval. Upon receiving court approval, funding sources transfer funds to Annuitants.
On average, selling annuities for lump sum cash requires 6 to 8 weeks for completion. Annuitants must weigh the pros and cons and calculate risks associated with selling structured settlements before signing on the dotted line.
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