Great Advice For Structured Settlements

Introduction

Structured settlements are payments given at predetermined intervals. Structured settlements are generally the result of a law suit. The payments from structured settlements are also called periodic payments. These are different from lump sum payments, which are paid all at once, rather than over time as structured settlements are. Often annuities are purchased which guarantees that the money to pay for structured settlements will be there when the payments are due.

Step 1

Structured settlements may be more beneficial than a lump sum payment since it is not taxed. While you will not be taxed with a lump sum payment, you will be taxed on the interest earned and taxed on any money made from investing this payment. For this reason structured settlements may work out better than a lump sum payment.

Step 2

Structured settlements provide long term security. With lump sum payments, you will have to determine how and where to spend and invest your money. Investments that may sound good today, could fail tomorrow and take your money along with it. With structured settlements you have the security of knowing that you have income coming in, you know exactly how much you will be receiving and when you will get it.

Step 3

With structured settlements, you can determine how much money you receive and when you receive it. You can have payments sent to you monthly, annually or at any other time frame that you determine. You can also have a larger lump sum scheduled to be sent to you at a predetermined time. While the words structured settlements may sound rigid, you actually have a large amount of flexibility.

Step 4

You can sell structured settlements. You are able to sell the entire structured settlement or just part. Usually this is done when a person is in need of a larger sum of cash. There are companies who buy structured settlements. Before working with any such company, do your research. Check with the Better Business Bureau. Be sure that you understand exactly what you are getting into. Compare companies before deciding on the one that is best for you to work with.

Step 5

Structured settlements cannot be purchased by a company without court approval. Some states also require you to get financial advice, as well as tax advice. Check with your state's laws and regulations regarding structured settlements before selling yours. If your state does not require getting financial and tax advice, it may require that you sign a waiver declining such advice.

Tips

If you are sure that you want to sell your structured settlement, it is helpful if you are in court when the judge approves the sale.

The process of selling structured settlements can take up to 90 days. This will depend upon several factors, including the state where you live. It is not a quick answer to an immediate need for cash.

It may be better in the long run to hold on to structured settlements if at all possible. It is nice to have some financial security. Knowing that you can count on money coming regularly is a good feeling.

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