- 03:51 - 0 comments

The Pros and Cons of Taking a Lump Sum Settlement

You may come across such a situation, where you have won a compensation case. In such a case, you might be offered a choice as per the settlement, which is being made to you. So you might be offered a structured settlement that makes a sequence of regular payments over a fixed period of time as long as your agreement does not get fulfilled. You might also be offered the option of a lump sum payment.

It depends upon you own suitability and personal preferences, as to which option, you would choose. As it is, most people would advise to opt for a lump sum amount of payment. However, before, you reach a conclusion; you need to consider the pros and cons of the situation.

One of the major benefits of opting for a lump sum settlement instead of a structured settlement is that you have your money in hand. Thereafter, you are done with the situation and do not have to be bothered any more. You may then use this lump sum, in a way as it might seem fit for you. In case of larger lump sums you might simply invest them, in order to provide you with an income on a regular basis. It may also be used for modification of your house, so as to make your life comfortable.

Apart from that, personal circumstances are also a major factor in the kind of settlement, which suits you in such cases. So, in case, you or your loved one got disabled due to an accident, or got critically injured, requiring extensive medical expenses, then in that case, a lump sum payment would go towards purchasing of equipments, incurring medical expenses etc.

Similarly, in case you feel that you may no longer carry out the same career, then in that case, a lump sum payment would prove to be very helpful to you in changing jobs. You might also use it for setting up for yourself a business in case you feel so.

However, accepting a lump sum has its own disadvantages as well. The first and foremost disadvantage is that of lavish spending, or spending over unnecessary items. You may, end up spending the entire amount, with very little actually put up in for productive purposes.

Another major disadvantage is that of tax burden. As a matter of fact, a lump sum payment tends to attract more in terms of tax than in case of a string of structured settlements.

When it comes to deciding as to whether to opt for a lump sum payment, or structured settlements, you may consider the above points, along with your own suitability in regard to the issue.

- 03:15 - 0 comments

How to Find a Reputable Buyer of Structured Settlements

There are plenty of examples of structured settlement buyers that participate in shady or unethical business practices, but the following guidelines should help you to avoid some of the major pitfalls when looking for a buyer.
  • First, make sure you have all your paperwork in order. Keeping careful records of everything that has happened since the structured settlement payment was set up will help you and the buyer see eye-to-eye on the value of your annuity. Armed with this knowledge, you can make sure you are receiving a competitive quote.
  • A reputable buyer of structured settlement payments will encourage the client to work with a lawyer to review all agreements made before signing over payments.
  • The buyer should be able to provide valid references from previous sellers of structured settlements to ensure that the transaction was handled in a fair manner.
  • The buyer should be able to walk the seller through the process of selling a structured settlement step by step, and explain what is expected from each party at each step of the process. This information should be obtained up-front before any paperwork is signed.
  • Do not be surprised by the discount value of your structured settlement payment. Due to the eroding value of money over time from inflation, and the power of compound interest were that money to be invested, the value of an up-front payment will be much lower than the total value of your settlement payments. As a general rule of thumb, the seller of the structured settlement should expect to receive 50% or less of the total value of the settlement payments in the form of a lump-sum payment.
  • With this in mind, do not be afraid to shop around for quotes. The value of lump-sum payments can still vary quite a bit from buyer to buyer. You may wish to use a broker to help you find the most competitive quote from a variety of structured settlement buyers.
  • Finally, check with your local Consumer Affairs Office and the Better Business Bureau to see if any complaints have been filed against the buyer. If you use a broker, also check to see if any complaints have been filed against him/her or his/her company. If so, why? Weigh these factors in your decision to choose this buyer or broker.

- 03:14 - 1 comments

Two Types of Structured Settlement Brokers

People are often confused by the title “structured settlement broker,” as this term can come up in two completely different situations.

The first person often referred to as a structured settlement broker is an agent agreed upon during the trial phase, while the structured settlement is still being established. Since a structured settlement is often established to provide extended benefits or compensate for long-term costs, a third party is often required to determine what these costs will be. An experienced structured settlement broker agreed upon by both parties in court will attempt to determine a monetary value based on expected long-term medical costs, cost of living adjustments, life expectancy of the parties involved, and so on.

The second person with the title “structured settlement broker” is an agent who finds interested buyers of structured settlements. If you are interested in selling your structured settlement and wish to use a broker, make sure you are dealing with a reputable broker with experience and a good track record. Just as you would when dealing with a structured settlement buyer directly, check the broker with your local Consumer Affairs Office and the Better Business Bureau to see if any complaints have been filed.

- 03:12 - 0 comments

Top 5 Tips for Selling Structured Settlements

You may have received structured settlement payments through personal injury or workers’ compensation claims. You may be wondering if you should try to sell your settlement payments in exchange for a lump sum of cash. Be aware, however, that despite the claims of advertisers, that selling your structured settlement may not always be possible - and even if it is possible, it may not be an economically wise decision. There are some benefits to selling structured settlements, but also some hidden costs to be aware of.

Tip #1: Make a Wise Settlement Decision from the Beginning

If you have the option, it is always best to make a decision about receiving structured settlement payments before you agree to a settlement. You may, from the beginning, choose to press for a lump sum payment vs. periodic payments. This is not just black and white, either - you may negotiate for a combination agreement. You may want to get a smaller lump sum plus periodic payments, or decide that you will need a lump sum at a f

uture date. You may want to consult with a tax adviser and see what arrangement makes the most sense from a tax perspective. If you are in this stage of the settlement, remember: now is your best time to decide . Should you decide to sell your structured settlement at a future date, you will be losing a percentage of your money to companies that buy structured settlement payments.

Tip #2: Watch Out for the Tax Man

Although you may be considering selling your structured settlement, it is important to consider that it was probably structured from the beginning to provide you with significant tax advantages. As a result, you may be in for an unpleasant surprise if you decide to receive a lump sum payment. Check with a competent tax adviser to see what the ramifications are in your situation.

Tip #3: Beware of Hidden Restrictions on Selling Structured Settlements

Many people do not realize that federal regulations can limit and restrict the sale of structured settlements. In addition, approximately 60% of the states have some laws on the books which restrict the sale of structured settlements.

Find out which laws apply to your situation. You may have to obtain court approval for the sale, and the process of transferring settlement payments to a buyer can be highly regulated by your state. Also, if your structured settlement was issued by an an insurance company, watch out for hidden clauses in the agreement. They may state that payments cannot be sold to another party due to language in their policy.

Tip #4: Don’t Take the First Offer You Get

This tip almost seems like common sense, but many people attempting to sell structured settlements are excited by the prospect of receiving a huge lump sum of cash. But it obviously pays to shop around. Even if your first offer seems excellent, get quotes from at least 2-3 other buyers of structured settlements to see if the first offer can be topped. Due your research, however, and make sure you are dealing with a reputable buyer of structured settlements . If one buyer’s offer is way better than the others, be on alert - if it seems too good to be true, it probably is.

Tip #5: Get a Good Lawyer

When dealing with such a large amount of money, consulting with a lawyer can pay for itself many times over. A lawyer experienced in dealing with settlements can tell you if your buyer’s offer is reasonable, as well as if the terms of the purchase agreement are right for your situation. He or she can also protect your rights, in case any of the parties in the transaction are not cooperating or sending payments according to the agreed contract.

- 03:08 - 0 comments

Selling a Structured Settlement

If you have a structured settlement, you may have been approached by a company interested in purchasing your settlement, or may be curious about selling your settlement in return for a lump sum buyout. About two thirds of states have enacted laws which restrict the sale of structured settlements, and tax-free structured settlements are also subject to federal restrictions on their sale to a third party. Also, some insurance companies will not assign or transfer annuities to third parties, to discourage the sale of structured settlements. As a consequence, depending upon where you live and the terms of your annuities, it may not be possible for you to sell your settlement.

Keep in mind that companies which buy structured settlements intend to profit from their purchase, and sometimes their offers may seem quite low. You may benefit from approaching more than one company in relation to the sale of your settlement, to make sure that you obtain the highest payoff. You also want to be sure that the company which wants to buy your settlement is established, well-funded, and reputable - you don't want a fly-by-night outfit to obtain the rights to your annuities but to disappear or go bankrupt before paying you the buyout money. You may have to go to court to get a judge to approve the buyout. It is usually a good idea to consult with a lawyer before entering into an agreement to sell your settlement.

- 03:08 - 0 comments

Potential Disadvantages of Structured Settlements

Some people who enter into structured settlements feel trapped by the periodic payments. They may wish to purchase a new home, or other expensive item, yet be unable to muster the resources because they can't borrow against future payments under their settlement.

Some people will do better by accepting a lump sum settlement, and investing it themselves. Many standard investments will give a greater long-term return than the annuities used in structured settlements.

- 03:05 - 0 comments

Benefits Of A Structured Settlement Over A Lump-Sum Payment

A long-term structured settlement has several advantages. First, there is security. A structured settlement provides guaranteed long-term income. That is often invaluable, as it gives the victim (or the victim's family) the ability to adapt and/or recuperate without spending time and resources determining investment strategies.

A second benefit is financial: When Congress amended the federal tax code to encourage structured settlements, it explicitly provided that 100 percent of every structured settlement payment would be exempt from federal and state income taxes.