Are you receiving money from a structured settlement or annuity but need quick cash instead? Did you know that it is possible to sell structured settlement payments and receive a lump sum? Many companies specialize in the purchase of structured settlements and annuities for those who cannot wait out the terms of their settlement. Effectively, you can sell your future payments for cash now. Perhaps you’re receiving regular payments from a court ordered settlement, wrongful death suit, or insurance claim, but you would rather have cash now. You might want to consider your option to sell structured settlement payments.
Drawbacks and Options of Selling Structured Settlements
It sounds too good to be true, right? You can receive a lump sum of cash today if you sell structured settlement payments. But there’s a catch: the lump sum of money you can receive today is much less than what the total payments would be over time — sometimes as little as 50 percent.
There can also be legal difficulties, and you may have to wait several months for your lump sum of cash. Some annuities are easily assignable, such as an annuity set up to provide equal monthly payments for a family member after your death, and can usually be transferred in less than 30 days. Other annuities, such as lottery winnings, court ordered settlements or wrongful death suits, require a judicial review and can sometimes take up to four months. Finally, some states do not permit the transfer of annuities at all.
If you decide to sell a structured settlement or annuity, you have several options. First, you do not have to sell all of your future payments. You can choose to sell only a portion of the future payments and keep the rest. For example, you can sell the first half of your payments for cash and keep the latter half. If you decide to sell structured settlement payments, experts advise selling as few payments as possible to meet your current needs, since your payments will ultimately pay you more money over time as compared to a lump sum today.
Lump Sum Amounts vs. Regular Payments over Time
The many companies that offer to buy your settlement for cash understand that most people would prefer a cash payment over monthly installments. It is true that these companies provide a service for those who need it. Financial experts, however, warn that you will typically receive only 50 to 80 percent of the original settlement amount if you choose to sell a structured settlement for cash. Unless you’ve had a life-changing event, such having a baby, the death of a spouse, or anything else that would change your monetary needs, you should just keep receiving your regular settlement payments.
Why are structured settlements so popular?
Whether you’ve won the lottery or a lawsuit, chances are you’re receiving monthly or quarterly payments. Today’s trend has gone away from large cash payments, mainly because it’s much more financially beneficial for the payer to pay you over time. Furthermore, judges often use structured settlements to meet the future medical needs of an injury victim, instead of awarding a lump sum of cash that can be blown if the victim is not wise.
By Aaron McCullough