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Getting Cash Now for your Structured Settlement
by David Springer
If you've agreed to accept a structured settlement, it's likely that you felt a
sense of relief that your financial uncertainties were being resolved, and that
you'd have the funds necessary to pay your bills, support your family and go on
with your life. When you agreed to the terms of the settlement, hopefully with
the help of a financial advisor, you accepted a series of financial payments
that made sense for you at that time.
“
maybe you may want to spend more of the money now instead of later
”
Perhaps you'd suffered personal injury in an auto or other accident, you were
awarded damages in a product liability case, or you were the victim of medical
malpractice or were even the plaintiff in a wrongful death suit. You agreed to a
periodic (usually monthly) payment, maybe in the form of a lifetime income
stream, that seemed to be the answer to paying your ongoing living expenses and
perhaps your medical costs. You made the best decisions you could at the time,
with the information you had - based upon how life was then, and what you
expected for the future.
But life seldom works out as we expect. Maybe you're on the road to recovery
from the accident or other event for which you received the settlement, and want
to move and buy a house, get married, go to school, or buy a business. Maybe
medical bills or high interest debt is an undue burden on you that you need to
resolve now. Or, if your family has grown, and your children no longer need for
you to provide for their education or other expenses, you may want to spend more
of the money you have coming to you now, instead of later.
What can you do to match your finances - specifically your structured settlement
- with the life you now have or want to have? You should always consult an
attorney or a financial advisor, but here's a basic overview of your rights and
options in assigning your structured settlement:
Settlements are funded by single premium annuities, issued by insurance
companies. Instead of paying you a lump sum amount, the party found responsible
for injury or damages to you has paid a one-time lump sum to an insurance
company, which has, in turn, invested it.
The insurance company has projected the interest rate or securities dividends
they will receive on the lump sum, and based upon the length of time and number
of payments you chose or were offered for the structured settlement, they
calculated the periodic payment amount you're now receiving.
So who owns what? The insurance company owns the annuity, and you, as the
beneficiary, are entitled to an income stream, or the series of periodic
payments. Because you don't own the underlying asset, the annuity, you therefore
can't sell the annuity contract to another party to receive your money.
However, under federal and state law you can, with court approval, sell all or a
portion of the payments you are entitled to receive in the future. In doing so,
you can receive a lump sum cash payout now.
What are your options? As an annuitant, or the beneficiary of the structured
settlement annuity, you are, in most instances, able to assign to a third party
the payments you are entitled to receive in the future.
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