A paid settlement in which the defendant, plaintiff’s attorney, and financial representative agree to pay the settlement in installments instead of paying a large sum all at once is called a structured settlement. This usually happens when the plaintiff decides to settle the case through a large sum of money. Most of the time, settlement is done by purchasing one or more annuities that guarantee the future payments that need to be made.
Paying for the settlement only depends on how both parties agree on the payment to be made. For example, repayments can be made in annual installments over several years, or periodically all at once every several years.
One of the benefits of having a settlement is the ability to avoid taxes. With the right arrangements, a settlement like this can significantly reduce a plaintiff’s tax liability as an offshoot of the settlement itself. There are even cases when it becomes completely tax free.
Settlement can also protect plaintiffs from wasting funds intended to meet future needs. There are times when structured settlements even protect the plaintiff from himself – there are people who are just bad at handling money, especially in excessive amounts; and there are also those who cannot refuse their relatives who want to take part in the wealth. Large settlement payments usually run out easily and quickly.
People who own settlements are often approached by companies interested in buying settlements, or may want to know if you have any intention of selling structured settlements in exchange for a lump sum purchase. A rough two-thirds of all states have laws prohibiting people from selling their structured settlements, while tax-exempt settlements are also subject to some federal restrictions on their sale to third parties.
There are insurance companies that have a policy of not giving or transferring annuities to third parties and prohibiting sales altogether. However, you can still sell structured settlements as long as your country of residence allows it.
Always keep in mind that companies that buy structured settlements from people have only one goal – to profit from their purchases, which is why sometimes their offers are a bit low. However you can try to approach more than one company if you want to sell structured settlements, just to make sure that you get the highest return.
Make sure that the company you are selling your settlement to is established, reputable, and well-funded. You don’t want to entrust your money to a mediocre and unreliable entity that can easily disappear and go bankrupt before even paying you the entire purchase money.