News and Tips on structured settlement transfers.


Selling your Structured Settlement: Basic Q & A

Here, in this article, we are going to go back to some basic questions and answers people often have when thinking about selling their structured settlement payments.

Q) Can I legally sell my payments?

A) Yes. However, most states have a Structured Settlement Protection Act which outlines the requirements that need to be met in order to sell future payments. Some of those requirements are as follows:

1. The company purchasing structured settlement payments must provide full disclosure about the financial terms of the transaction.
2. A hearing is held where a judge decides whether the transaction is in the best interest of the structured settlement recipient. Such factors such as the discount rate of the transaction, reason for selling the payments, and other income sources are taken into consideration before approving such a transaction.
3. The judge must issue a court order approving the sale of the transaction.

The list above does not stipulate all of the requirements of a structured settlement factoring transaction.

Q) What happens if the Settlement Agreement has anti-sale or anti-assignment language?

A) First of all, anti-assignment or anti-sale language means that the annuity payments cannot be sold or transferred. However, as mentioned above, most states have a Structured Settlement Protection Act which states that a judge must approve the transfer of such payments. A judge has the power to approve the sale even if anti-assignment language exists in the Settlement Agreement or Annuity Policy.

Q) Can an annuitant sell a portion of their structured settlement payments?

A) Yes, Yes, Yes!  I can not stress this fact enough. Considering that on one hand you do need to solve a financial problem immediately or you wouldn’t be looking to sell your settlement payments, but on the other hand you want to protect a portion of your future earnings; this is often thought of as having the best of both worlds. You have the option to sell all or some of their structured settlement payments. Some companies will purchase the rights to a portion of  your structured settlement payments, but instead of allowing the insurance company to continue to service the rest of their payments, the funding company will service the payments to the annuitant taking control of future sales of that annuity policy.

Q) Is the Lump Sum Payment received from the sale of a structured settlement tax free?

A) In most cases the lump sum payment received from selling the rights of a structured settlement are tax free. The same tax treatment is applied to the lump sum payment that was given to the previous structured settlement payments. If an annuitant’s previous payments were tax free, then the money received from the sale of future payments will be tax free as well.

If you need help selling your structured settlement, annuity or lottery payments,
contact us today. We are here to answer your questions and help you obtain the
highest possible price for your payments.

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