In some cases, injured persons receive regular payments from structured settlements, which essentially compensate for the loss of income resulting from the victims’ injury or disability. If you’re one of them, you have the option to sell part of or all your structured settlement in exchange for a lump sum of payment.
It can be tempting to sell structured settlement, especially when you need money immediately for financing a business or making an investment. But don’t get too excited just yet. You have to know first what the sale of structured settlement entails and what you should do before closing the deal.
Federal laws may ban or limit the selling of structured settlements
In fact, the majority of the states don’t allow it. Before you try selling your structured settlement, check first the federal laws that apply to your case. The federal regulations in your state may require you to secure court approval for the sale. Also, the regulations may control the transfer of payments to a structured settlement buyer.
Selling your structured settlement may have tax repercussions
Although the structured settlement payments you have received are tax-free, the lump sum payment you’re going to get may be taxed. So consult a reliable tax adviser to know what tax consequences are applicable in your situation.
Look for an established, trustworthy buyer
It pays to get structured settlement quotes from at least three buyers so that you can decide which one offers the best deal. Talk to various buyers or brokers to be able to find a great offer.
Seek legal advice
Selling your structured settlement involves a great amount of money, and you might lose big time without any help from a lawyer with experience in dealing with structured settlements. A good lawyer not only advises you if a certain offer from a buyer is reasonable but also informs you if the settlement purchasing terms are favorable to your situation. That way, you make sure that your rights as a structured settlements seller are not violated.