A structured settlement scheme/annuity refers to a financial compensation plan, especially awarded to personal injury victims. This scheme is opted for if the beneficiary is a minor or is considered unable to manage the lump sum of the money they are awarded. The compensation is not given as a lump sum. Instead, the award is broken down into a series of periodic payments receivable over a long period of time. The compensation can be in small monthly payments or yearly payments, depending on the plan agreed upon. For instance, a beneficiary might be entitled to a structured settlement plan worth $300,000 to be paid in equal annual installments over a period of 10 years.
The terms of structured payments are agreed upon by the parties involved. These terms are subject to being violated by the beneficiary over time. For instance, the needs or priorities of the beneficiary might change at one point in life, thereby requesting for more or all the funds in the payments scheme. Such scenarios happen, especially when the beneficiary attains the age of 21 years. When the beneficiary wants more or all the money in the plan before the scheduled time elapses, the available option is to sell all or part of the future payments and receive a lump sum payment.
How to Sell a Structured Settlement Plan
As indicated earlier, the priorities and needs of the beneficiaries might change. For example, one might need cash to fund college studies, start a business, pay off a debt, buy a home, etc. When such issues knock, one would prefer to have an immediate lump sum payment rather than the periodic installments. The only option is to sell the settlement scheme in return for the lump sum. However, you have to face one fact as you sell your structured settlements; you won’t receive the full amount of the scheme. Part of the full notional amount will be lost as interest rates. The interest rate is usually about 12% on average, you can get a quote here at StructuredSettlementExperts.net.
The process of selling structured settlement is quite simple. It involves the following steps;
- Have a valid reason as to why you need to sell your settlement scheme. It’s very important to make a sound decision so as not to affect your future financial status.
- Perform a thorough research on the market interest rates by different companies. This involves searching for the best rates as well as a reputable funding company. It’s advisable to work with the company directly, not with brokers.
- Begin the selling process. This step involves organizing your paperwork and submitting for review by the funding company. Some of the papers involved include the settlement agreement, your application, and ID.
- Seek a sale approval from the judge. Once the paperwork is reviewed and bears the relevant signatures, you need to file the papers with the court through an attorney. When the court hearing is scheduled, you are required to justify and testify your decision before the judge.
- After the sale is approved by the judge, you will sign a contract with the funding company and wait for the cash. You will wait for an average of 45 days to receive the cash.
A common practice is selling the settlement schemes on the investment markets. Most people like to sell their structured settlements on investment markets because they are considered as Secondary Market Annuities (SMAs). Investors are interested in SMAs because of their low risk and high returns.
Finally, are you ready for the good news? The money received from the sale of structured settlements does not have similar tax treatment as payments from other types of annuities. The payment is treated the same way as those periodic payments from a structured settlement plan. Sell your structured settlement annuity today and flee away from financial struggles.