Why would a company want to purchase a structured settlement from a person receiving regular installments in compensation for a personal injury? The answer is clear: the company is guaranteed a steady, safe cash flow that is generally not taxable in return for a lump sum of money of about half the value of the full-term settlement. When companies buy a structured settlement they are always getting the better end of the deal, no matter how appealing the quick cash may seem to the seller. These companies are generally not out to make life better for injured persons, but instead are seeking to profit from those persons' pressing financial needs or eagerness to be free from what may seem to many like an allowance. This is why persons wishing to sell settlements need to be very, very careful about who they sell those settlements to.
First of all, exactly what are structured settlements and how do such arrangements work? When a person wins a lawsuit based on worker's compensation, personal injury, or medical malpractice, often the court will rule that compensation be paid in installments, either in small, regular amounts or a few lump sums over the years. Often, these payment plans will cease upon the death of the payee, whether or not there are dependents involved. Before accepting a compromise, injured persons need to work closely with lawyers to ensure that the settlement is going to benefit them to the fullest possible extent in order to prevent future financial distress and the loss of well-deserved compensation. This careful planning will prevent the undesirable necessity of finding a company to purchase a structured settlement from its possessor when he finds that waiting for a monthly check isn't a tolerable system.
If, however, a person has already settled a legal case and finds that the periodic payment plan is not working for him or decides that larger amounts of money are needed immediately in order to purchase medical equipment, a customized vehicle or home to accommodate injuries, or similar items, or does not expect to live long enough to benefit from long-term compensation, may want to consult various companies that offer to buy a structured settlement. Such companies will allow him to sign over annuities in exchange for immediately accessible cash. Persons considering this option should know that while their annuities are not subject to taxation, the lump sum received from a third party may very well be, causing them to lose even more well-deserved money. This is a decision that requires long, hard thought and should not be entered in to hastily or lightly, as its consequences can be disappointing at best and catastrophic at worst. If a person is confident in his investing and money-handling skills, he might be able to pull off the sale of his annuities aptly, but this is not always the case.
In general, this option is a very bad investment decision, as it is possible to lose up to half of one's settlement money in the process. Plus, persons on a periodic payment are often unable to work and need the regular installments to meet their daily needs; if these payments cease and the person is unable to support himself by working due to injuries, his financial need will be much greater than before a company agreed to purchase a structured settlement from him. A Biblical proverb sums up this situation very well: "The simple inherit folly, but the prudent are crowned with knowledge" (Proverbs 14:18). This is a financial decision that could end in folly, especially if rushed into without sufficient forethought and good legal advice.
If a person is absolutely sure that finding a company to buy a structured settlement from him is the most viable option, there are a few ways to ensure that the owner receives the very best deal. First, he should compare quotes at different settlement companies to see which is going to give him the highest payoff with the fewest risks; many online companies allow customers to get a free quote over the Internet. Next, he should be sure that the chosen company has a good reputation for paying its customers in-full and on time and that it is well-funded, licensed, and insured so that it doesn't go bankrupt and leave him with nothing. After selecting a trustworthy company, the person should consult a lawyer to ensure that proceedings are in his favor and that the sum received in return for annuities is reasonable and fair; he may choose to sell the entire settlement or only a part of it--the latter, of course, is the best choice. By following these steps, selling one's settlement may be a safe, prudent, and beneficial option for a person in financial distress.
It is important to know that selling one's annuities is not always a possibility. About one-third of states have laws that do not allow businesses to purchase a structured settlement, and some insurance companies are not willing to transfer annuities to another entity. In this case, a person will have to find another solution for their financial needs besides selling. Persons who are unsure whether their state of residence restricts such sales should consult a lawyer for advice. For the other two-thirds of the country, however, finding a company to buy a structured settlement is a feasible, if not advisable, option--a last resort for the financially stressed, sure to offer immediately accessible funds in a very short time frame.
Thursday, 6 January 2011
Purchase Structured Settlements
Purchase Structured Settlements
Purchase Structured Settlements
Purchase Structured Settlements
Purchase Structured Settlements
Purchase Structured Settlements
Purchase Structured Settlements
Purchase Structured Settlements
Purchase Structured Settlements
Purchase Structured Settlements
Purchase Structured Settlements
Purchase Structured Settlements
Purchase Structured Settlements
Purchase Structured Settlements
Purchase Structured Settlements
Purchase Structured Settlements
Purchase Structured Settlements
Purchase Structured Settlements
Purchase Structured Settlements
Purchase Structured Settlements
Purchase Structured Settlements
Purchase Structured Settlements - Advantages For the Personal Injury Victim
If you are a personal injury victim, here are three good reasons why you purchase structured settlements instead of getting a lump sum settlement.
Specifically, when you buy structured annuities, you avail yourself to considerable tax advantages; protect yourself from having funds dissipated; and, if you are disabled, the periodic payments, combined with other estate planning options, can increase your likelihood of Medicaid eligibility.
Take a look at this article to determine whether or not you should purchase structured settlement payments instead of a lump sum settlement.
Purchase Settlement Annuities For Their Tax Advantages
Many companies that sell these types of annuities tout the advantages of tax avoidance.
While you should not base your decision to buy structured settlements solely on tax consequences, it is certainly a consideration. Specifically, personal injury payments are exempt from federal income tax under federal law. However, settlements for lost wages are subject to taxation. When you settle your claim, you may avail yourself of other tax advantages under the Federal Structured Settlement Protection Act.
With appropriate tax planning, such a settlement may provide favorable tax treatment, and may in some cases be tax exempt.
Buy Annuities To Prevent Waste Of Funds
Companies that sell annuities correctly advise that they are intended to compensate the plaintiff for injuries and provide for future lost wages and medical care. But, oftentimes, structuring a settlement can protect minors, incompetent persons and financially unsophisticated plaintiffs.
Unsophisticated Plaintiffs. Face it, some people just aren't good at handling their finances. In my experience, all sorts of "shady" friends and relatives come "out of the woodwork" encouraging the plaintiff to "share the wealth." Within a sort period of time, the plaintiff is penniless. Encouraging the plaintiff to purchase an annuity settlement keeps the money from being squandered; and, more importantly, gives the plaintiff an "excuse" to refuse unscrupulous friends and relatives' requests for money.
Incompetents And Minor Children. The legal representatives or guardians of minors should consider buying annuities in lieu of cash. Many of the same benefits to unsophisticated plaintiffs also apply to minors as well. Sometimes, the parents of minor personal injury plaintiffs are unsophisticated and could waste the funds instead of saving them for the child's benefit. Instead, a guardian who decides to purchase structured annuities, can set up such annuities so that the child receives periodic lump sum payments for college expenses, the purchase of a house and possibly a business.
Purchase Settlement Annuities To Pay For Future Medical Care
Most personal injury plaintiffs look to buy structured settlements to provide for future medical care. Structured settlement calculators can be used to predict cash needs to prepare for future medical needs.
Notwithstanding the benefits of periodic payments, in some cases, severely injured payment would obtain better benefits from a special needs trust. This is because of the possibility that the plaintiff could be eligible for Medicaid because of the severity of his or her injuries.
A special needs trust can be structured so that the plaintiff can receive the benefits of a settlement without being disqualified from receiving Medicaid. Consult with an estate planning attorney or disability needs planner for more information on this particular situation.
Substantial Benefits To Plaintiffs When They Buy Structured Annuities
As a plaintiff, now that you know a bit more about the benefits obtained when you purchase settlement payments, you can decide what is right for you.
Specifically, you need to consider the potential tax advantages when you buy structured settlements. Many companies that sell structured annuities will advise that their annuities will protect the plaintiffs against waste, fraud and mismanagement.
Companies can use structured settlement calculators and actuaries to develop a plan to meet the needs of a minor child. Finally, although the benefits of buying settlement annuities are plentiful, there are times where a special needs trust might be a better alternative to a plan to purchase structured settlement payments.
In the end, you need to consult with your attorney, tax advisor and financial planners to determine whether the decision to purchase structured settlements is one that you should consider.
Specifically, when you buy structured annuities, you avail yourself to considerable tax advantages; protect yourself from having funds dissipated; and, if you are disabled, the periodic payments, combined with other estate planning options, can increase your likelihood of Medicaid eligibility.
Take a look at this article to determine whether or not you should purchase structured settlement payments instead of a lump sum settlement.
Purchase Settlement Annuities For Their Tax Advantages
Many companies that sell these types of annuities tout the advantages of tax avoidance.
While you should not base your decision to buy structured settlements solely on tax consequences, it is certainly a consideration. Specifically, personal injury payments are exempt from federal income tax under federal law. However, settlements for lost wages are subject to taxation. When you settle your claim, you may avail yourself of other tax advantages under the Federal Structured Settlement Protection Act.
With appropriate tax planning, such a settlement may provide favorable tax treatment, and may in some cases be tax exempt.
Buy Annuities To Prevent Waste Of Funds
Companies that sell annuities correctly advise that they are intended to compensate the plaintiff for injuries and provide for future lost wages and medical care. But, oftentimes, structuring a settlement can protect minors, incompetent persons and financially unsophisticated plaintiffs.
Purchase Settlement Annuities To Pay For Future Medical Care
Most personal injury plaintiffs look to buy structured settlements to provide for future medical care. Structured settlement calculators can be used to predict cash needs to prepare for future medical needs.
Notwithstanding the benefits of periodic payments, in some cases, severely injured payment would obtain better benefits from a special needs trust. This is because of the possibility that the plaintiff could be eligible for Medicaid because of the severity of his or her injuries.
A special needs trust can be structured so that the plaintiff can receive the benefits of a settlement without being disqualified from receiving Medicaid. Consult with an estate planning attorney or disability needs planner for more information on this particular situation.
Substantial Benefits To Plaintiffs When They Buy Structured Annuities
As a plaintiff, now that you know a bit more about the benefits obtained when you purchase settlement payments, you can decide what is right for you.
Specifically, you need to consider the potential tax advantages when you buy structured settlements. Many companies that sell structured annuities will advise that their annuities will protect the plaintiffs against waste, fraud and mismanagement.
Companies can use structured settlement calculators and actuaries to develop a plan to meet the needs of a minor child. Finally, although the benefits of buying settlement annuities are plentiful, there are times where a special needs trust might be a better alternative to a plan to purchase structured settlement payments.
In the end, you need to consult with your attorney, tax advisor and financial planners to determine whether the decision to purchase structured settlements is one that you should consider.
Douglas Manning is an attorney and financial consultant. Find out more about how to buy structured settlements at Purchase Structured Settlements Now.
Purchase Structured Settlements - A Guide
The idea of buying structured settlements is quite very interesting. The settlements made by insurance companies against the claims or any damages that are awarded by the quotes for the lawsuits that have been filed either in installments or in lump sum annuities. The damages that are paid in installments are known as structured settlements.
It is basically an arrangement that one makes with the financing agency or the third-party, bearing the financing agency or the third-party pays the money on the half off the person or the insurance company, who is obliged to pay for the damages. Whether the receiver of the money needs to lump sum money to meet its financial urgencies or to invest in an alternative plan would depend on his personal requirements. In any case, he will have to approach willing agencies to purchase them.
Method of obtaining the Structural settlement:
Some experts believe that purchasing settlements have drawbacks and many legal hurdles. Another factor is inconsistency of different legal formalities between various states and provinces. It have to be obtained or purchased with a lot of care and after carefully examining all the legal niceties associated with the intended purchase.
Brokers:
There are always some brokers who are willing to buy Structured Settlements. In case you're willing to sell Structured Settlements, you must carefully watch all the conditions and terms that the broker offers you. The broker you sell the Structured Settlements to must be a reputed one. He should be a registered broker and must have authentic certificates to buy your settlements.
Trade Association:
Different states have Settlement Association. The association has authority to safely trade structured settlements either with private investors or agencies. These associations make sure that the entire process is carried on smoothly and it benefits both parties -- the seller and the buyer.
Quote:
It is important to obtain the best quote before selling the settlement. Make sure that the quote is sufficient enough for your future planning.
Commission:
The company that is purchasing the Settlements may charge a high amount towards commission. This can be a major disadvantage in selling your structured settlement. In order to offset the loss, you must ensure that the commissioned amount is not excessive and retains its margin.
It is basically an arrangement that one makes with the financing agency or the third-party, bearing the financing agency or the third-party pays the money on the half off the person or the insurance company, who is obliged to pay for the damages. Whether the receiver of the money needs to lump sum money to meet its financial urgencies or to invest in an alternative plan would depend on his personal requirements. In any case, he will have to approach willing agencies to purchase them.
Method of obtaining the Structural settlement:
Some experts believe that purchasing settlements have drawbacks and many legal hurdles. Another factor is inconsistency of different legal formalities between various states and provinces. It have to be obtained or purchased with a lot of care and after carefully examining all the legal niceties associated with the intended purchase.
Brokers:
There are always some brokers who are willing to buy Structured Settlements. In case you're willing to sell Structured Settlements, you must carefully watch all the conditions and terms that the broker offers you. The broker you sell the Structured Settlements to must be a reputed one. He should be a registered broker and must have authentic certificates to buy your settlements.
Trade Association:
Different states have Settlement Association. The association has authority to safely trade structured settlements either with private investors or agencies. These associations make sure that the entire process is carried on smoothly and it benefits both parties -- the seller and the buyer.
Quote:
It is important to obtain the best quote before selling the settlement. Make sure that the quote is sufficient enough for your future planning.
Commission:
The company that is purchasing the Settlements may charge a high amount towards commission. This can be a major disadvantage in selling your structured settlement. In order to offset the loss, you must ensure that the commissioned amount is not excessive and retains its margin.
Brian Sibet also writes about Retirement Planning and Annuities including Lump Sum Annuity and Personal Injury Settlements
Why Companies Purchase Structured Settlements
A lawsuit that's settled out of court is often paid to the claimant in a single lump sum, but sometimes the award is parceled out in an installment plan called a structured settlement. This arrangement is usually formed by liability insurance companies that buy annuities that guarantee regular payments to the plaintiff.
Despite the advantages of arranging a schedule payout (the monies are tax free, and some people don't trust themselves to save the full amount received at once), there are times when recipients regret not taking the lump sum, which in most cases is the more financially sound option in the first place. An emergency medical expense, investment opportunity, or other situation might come their way where they need cash faster than they're receiving it on an annual basis. Since the deal was cemented in legally binding contract, there's no way to undo the decision. But they can sell the settlement.
Settlement purchasers buy structured settlements to make money on the margin between what they pay for them and the full amount of the remaining payments they'll receive long term. For this to be profitable, they need to buy for less than its "retail" value. This isn't always a viable business model, since the federal tax advantages are voided when structures are transferred to third parties, and some insurance companies impose their own restrictions on the these transfers in the initial settlement agreement; so whether you're actually able to sell your structured settlement is something you'll have to research, since regulations vary from state to state.
Despite the advantages of arranging a schedule payout (the monies are tax free, and some people don't trust themselves to save the full amount received at once), there are times when recipients regret not taking the lump sum, which in most cases is the more financially sound option in the first place. An emergency medical expense, investment opportunity, or other situation might come their way where they need cash faster than they're receiving it on an annual basis. Since the deal was cemented in legally binding contract, there's no way to undo the decision. But they can sell the settlement.
Settlement purchasers buy structured settlements to make money on the margin between what they pay for them and the full amount of the remaining payments they'll receive long term. For this to be profitable, they need to buy for less than its "retail" value. This isn't always a viable business model, since the federal tax advantages are voided when structures are transferred to third parties, and some insurance companies impose their own restrictions on the these transfers in the initial settlement agreement; so whether you're actually able to sell your structured settlement is something you'll have to research, since regulations vary from state to state.
This list of 17 Settlement Purchasers is a good place to start your research. Find out more about companies who Purchase Structured Settlements.
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