While it may be tempting to save money and sell your structured settlement on your own, considering the importance of the decision and the long term effects it will have on your finances, you would be wise to consult an attorney who is well-versed in the laws governing the sale of structured settlement annuity payments. In many states, the law requires a person wishing to sell a structured settlement to have legal representation.
An attorney will provide you objective advice about selling your settlement and protect you from any unanticipated situations that may arise. One common obstacle to completing the transaction is the insurance company that underwrote the annuity. Insurance companies are concerned that the sale of structured settlements will expose them to additional tax liability. Your attorney will work on your behalf to obtain the cooperation of the insurance company.
In 2002, federal law concerning the sale of structured settlements was changed. As a result, sellers must now obtain court approval before the transaction is initiated. The function of the court is not only to protect the seller from unscrupulous buyers, but also to shield the insurance company from undesired tax liability. The court will consider the needs of the seller both short and long term, and decide if selling the future annuity payments is in the seller's best interests. An attorney will prepare the necessary documentation that must be filed and work to gain court approval. If you decide not to retain legal counsel, most structured settlement buyers will be eager to help you to gain court approval and expedite the sale.
When selling a structured settlement, your lump sum will be quite a bit less than the future value of the annuity, because the cash amount is based on the present day value, not the interest that the annuity would have earned in the future. The structured settlement buyer will also charge a fee for their services. In the end you will probably receive less than 50 percent of the amount of the future payments. You should definitely compare quotes from several buyers of structured settlements to insure that you get the largest possible lump sum.
If you have elected to sell your structured settlement payments, you probably have some financial need which calls for money quickly; unfortunately, factoring in the time required to gain court approval, it could take up to 90 days, assuming you don't run into any roadblocks from the insurance company. Be wary of any structured settlement buyer that promises you cash in less than 60 days. Their questionable claims of fast money should be regarded with suspicion, and should cause you to look elsewhere for a more reputable buyer.
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