The sale of a structured solution
With countless, web sites, advertisements, legal jargon and complex issues that surround the structure of settlements, it is easy to feel overwhelmed and frustrated when you are simply looking for answers and direct information. If you have received a solution already structured, or if you are trying to better understand them, you’ve come to the right place for sifting through the dirty details.
What is a structured solution?
A structured solution is a series of guaranteed payments (annuity) during a certain period of time and is usually the result of an agreement injury or other situation in which gives you access to a substantial amount of money.
Structured settlements are individualized plans meant to help cover current and future expenses. Working closely with an experienced attorney can help you determine an effective structured solution to give you the income security fixed in a certain period of time.
Example – how could work: Melissa is injured in a serious car accident and now cannot work for next year. As a single mother, he has two young children to look after, not to mention her mounting medical expenses. She knows that he has to pay $25,000 in medical expenses at the present time, and knows that he will need surgery in a few months that will have an additional cost of $20,000. Its structured solution can be configured to give a lump sum to pay the medical expenses at this time, and is structured to give him an additional sum to both raised at the time of your surgery. You can also give to your monthly payments additional equal to their salary for the year that she can not work, including an additional monthly payment to hire someone to help her care for her children while she is recovering from her injuries and medical procedures. Once Melissa goes back to work, the monthly payments may cease or reduce.
Types of structured settlements
Designated period period annuities: annuities with a period of time designated for payments to be paid. They can be monthly, quarterly, semi-annual, annual, etc to his death, all remaining payments are made to beneficiaries.
Life annuity: Periodic payments for a guaranteed number of years (based on your life expectancy) or for life, whichever is first. Once again, the beneficiary receives payments remaining must die until the full amount is paid.
Temporary life annuity: Pay for a certain number of years, if you’re still alive, so your pension ends when you die. There is no provision to a beneficiary to collect remaining payments.
Life contingent lump sum: you will receive a sum to both lump sum, provided that they are living on the due date. If you die before this date, the beneficiary has no right to the amount.
Lump sum: can be configured to receive the lump sum at a certain date, for example, fifteen years from now. Your beneficiary will receive the lump sum in the future if they have died before that date.
Although the structure of settlements contain a high degree of flexibility during the process of decision making (how much money do I need now, how much money will I need in the future, what are my current needs?), one time that you agree to the terms and sign the agreement, you may not modify the provisions. It is highly recommended that you have a lawyer and trusted agent will help to determine the best payment methods for your situation. It is possible to make the corridor to get to different scenarios and payment schedules so you can get a complete view of your options.
Therefore, even if your situation changes in the future, payments do not. That is why it is very important to be thorough and careful when creating your payment plan.
Unfortunately, life has a way of throwing out our thought good and well-intentioned plans. Even if you have done all their homework, shop around for the best runner, many lawyers interviewed and carefully planned a schedule of cash payment, it is possible that an unexpectedly large expenditure incurred.
If such situations arise, and is short you of money, which you would love to be able to make some adjustments to your settlement plan. Of course, this is prohibited. But you have another option. You might consider selling part or all of the remaining payments structured to a third party solution.
The decision to sell
The sale of a structured solution
Until you decide to sell, think about what you want or need the money. An expenditure immediate medical, the purchase of a house or the decision to return to school tend to be considered buenasrazones. Examine your needs and the needs of your family. Maybe you want a new home. Do you have children near college age? If so, not only will incur significant tuition fees, you will also have less need for a larger House.
The sale of your payment will result in a loss of the amount due. Consider if it is or is not important for you to sacrifice security and the total amount of future before making a decision. You have to understand the implications, benefits and difficulties so that you can feel comfortable making an informed decision.
I will receive the full amount that was going to receive over one period of time?
No. The amount that you will receive for a period of time is calculated by adding the interest to the capital. Instead, you can get the current value of the amount. This current value may have to be more favourable for the costs of making the deal. The rest will be sent to you in a single payment. You might want to shop around to find out where you can get the best deal.
To ensure that it will be no advantage in this delicate process, the Government introduced a new federal law in 2002 which requires that you seek the approval of the Court when you sell your structured solution. This law works in conjunction with state laws to address the form of the transaction will be completed.
Not only this law to protect, the seller, but it also helps the insurance companies, who fear they will face the tax consequences that arise from the sale. The law establishes very clearly that annuity owners and providers do not and you will not have to pay taxes as a result of this transaction. This breaks the barrier that would normally face a reluctant insurance company.
You don’t have to sell all of the remaining amount or any amount in particular, if desired. Here are your options:
Total amount: The purchaser calculates the present value of the payments and offers a deal to both lump sum
Part of the payments: only a specific number of future payments are sold to its current value
Percentages: You can sell a percentage of each payment and keep the rest for yourself
Traps for sale
Shady brokers. The sale of your payment you will need to contact a broker who can help take care of the proceedings. This means that you could find yourself with a set of roles and / or tactics of manipulation if it happens to you it is a corridor of shadow. It is possible that they promise a high quote, only to come back and say that they can not make the agreement as it is, unless they get more money from you. Other brokers may claim to be “qualified” when they have just completed a week-long course. Make sure that you are dealing with a broker who has a couple of years of experience in the structure of settlements and is a member of the Better Business Bureau.
That you end up losing money. As mentioned above, you will not receive the full amount that would over time if you opt for the sale of their payments. Therefore, lose some money and the security of future payments.
Takes his time. Although the federal law that requires judicial supervision in this procedure helps to protect you, but it also delays that receive the money as soon as he could have hoped. If you need the money immediately, this could thwart and hinder their plans for the cash. Normally, once you decide to sell your payments the process it can take as little as 4 weeks and up to 12 weeks to obtain the court order and for which you can receive your one-time payment.
The proceeds from the sale
The main benefit of selling your structured settlement payments is obviously that he will receive a lump sum of money in cash which can be used in any way you choose. This gives you greater flexibility in the use of their money, and can provide peace of mind, if you have an immediate expense that can not pay otherwise.