What is a structured settlement?
Structured settlements are a contemporary and sure mechanism of paying damages to injury victims in legal resolutions. It is a deliberate agreement made between the injured victim and the defendant. It establishes a regular and periodic stream of payments paid to the injured party through the purchase of an annuity by the defendant and issued by a premium rated life insurance company. Or, an alternate funding option can be accomplished through the purchase of U.S. Treasuries.
Favorable tax treatment by the IRS is one of main reasons that injury victims are encouraged to use structured settlements as opposed to a lump sum payout. Attorneys, legislators, judges and disability advocates are also proponents of this financial instrument for injured parties. The Periodic Payment Settlement Act of 1982 was enacted by the U.S. Congress (Public Law 97-473) and formally recognizes and encourages the use of this type of instrument to settle physical injury cases and wrongful death suits to provide security and guaranteed long term, tax free income to victims.
Structured Settlement Annuities are Safe, Secure and Highly Regulated in
South Grafton, MA
These annuities have a long history of being highly secure. Over the past twenty years their security has improved in numerous ways. Some examples are; minimum capital and reserve requirements, mandatory and spontaneous audits, and homogeneous investment guidelines to name just a few. It is a State responsibility to regulate life insurance companies doing business within the State. Each State implements rules that minimize the risk that an issuer of these vehicles will become insolvent. The rules are set forth in such a way as to maximize the safeguards for annuitants in the unlikely case of an insurance company going under.
Structured Settlements funded by annuities and all brokers of these policies are also regulated by the state insurance commissions. In addition, structured settlement consultants and the companies that provide them comply with at least seven Sections of the U.S. Tax Code that pertain to these vehicles (Section 104(a)(1), 104(a)(2) and 130. 451, 461(h), 83 and 5891).
Structured Settlement Minor Child in South Grafton, Massachusetts
Structured Settlement specialists or consultants provide services to the defendants and their counsel, plaintiff attorneys and the injured parties and their families through the whole settlement process in order to determine the needs of the injured victims and, if appropriate, the fitting amount of money to award the injured. Structured Settlement Annuity Companies in Hill, NH 03243
Benefits of Selling Your Structured Settlement Annuity
A structured settlement is especially designed to meet the financial needs of the plaintiff or injured party at the time it is created. But what happens if the installment arrangement no longer works for the injured victim? If you need cash for a large purchase or other expenses, you may want to consider selling part or all of your settlement. Many companies purchase partial or all remaining periodic payments for a lump sum payout. This can boost your cash flow by providing funds you can use immediately to buy a home, pay college tuition, invest in a business, pay off debt or whatever you might immediately need.
What to Know Before Selling Your Structured Settlement in South Grafton, MA
If you are considering cashing out your income stream for a lump sum payout there are some important considerations that you should make beforehand. First of all, ask for counsel from a trusted attorney. If you do not currently have an attorney, then at the very least, call the firm or lawyer that originally negotiated your case. If you are not able to get in touch with that individual, then try contacting your State Attorney General.
Currently, 48 States and the Federal Government have invoked consumer protection statutes that create strict requirements for these sales. Under the Federal law, court approval and oversight are required for injured parties who wish to sell their payment streams to a third party company.
Understanding Discount Rates
Before you decide to cash out, make sure you are aware of the fact that you will be discounting your future payment stream. For example if the future value of your settlement is $100,000 and you decide to sell today, you will be offered something less than $100,000. The discount rates can vary wildly from one company to the next. You may see discounts as low as 10 to 12 percent and as high as 30 percent. Obviously, you will want to make several side by side comparisons before making your decision. And, as mentioned earlier, the law requires that all sales be court approved in advance of the sale taking place. Typically judges tend to safeguard the interests of the selling party and avoid approving predatory discount rates charged by some of the less reputable buyers. As a seller, the judge also has the right and obligation to ask you questions with regard to your motivations for wanting to sell. The judge will make a determination about whether the transfer or sale will serve your individual needs as well as the best interests of any affected dependents and other family members.