Are you the recipient of a settlement from a lawsuit? If so, the judge may have issued you a structured settlement, in which your settlement is paid out over time. This is great for some-those who are financially challenged, but for those who have financial wherewithal, this is a nuisance.
The Periodic Payment Settlement Act of 1982 (Public Law 97-473) created structured settlements to assist injury victims by spreading out lump sum payments over time. Structured settlements are favorably accepted and a significant piece of the legal landscape. In the U.S. alone, $6 billion is paid out each year to fund structured settlements.
Why Sell Your Structured Settlement?
If, having received payments for a few years, you’ve finished medical care or digested your injury and are ready to move forward, selling your structured settlement may be an option. If you’re like me, if something traumatic happened and you’re reminded of it frequently, you’ll look for ways to put it behind you. This may be the case when you receive payments from your structured settlement-you’re reminded of the hurt and pain. It can also be that you’re in a financial bind or tired of receiving a set amount of money each month.
Who Can You Sell To?
Apparently, the U.S. restricts some two-thirds of states from selling structured settlements. Check with your state and federal laws to ensure you can sell your settlement. If you’re state doesn’t restrict you from selling your structured settlement, search “buyer of structured settlement payments” on any major search engine. Talk to several and find out what each offers before deciding on one.
Are there Tax Implications?
If you sell all or a portion of your structured settlement rights, the IRS defines this as a structure settlement factoring transaction, and may be subject to an excise tax. Contact your tax professional to find out more.