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Selling your Structured Settlement Payments
By OnTopic | December 13, 2009
Owning a structured settlement annuity gives you a lot of benefits. Structured settlement payments are advantageous in providing financial security on a long term basis for you and your family and the payments as well as interest earned are free from taxes. In case you need the money for any emergent situations or you find that you can invest this money in a better way you are entitled to do it as per law.
The federal law HR 2884 permits you to sell your structured settlement payments without paying any taxes. ) About two-thirds of the states in the United States also permit sale of structured settlement payments. However, you must keep in mind that the tax free status is possible only if the court approves such a transaction.
Selling Your Structured Settlement
In case you are in a position to convince the judge about your actual requirement of funds for your use it is not all that difficult to sell all or part of your structured settlement payments. The approval or otherwise will be given by the judge after reviewing your case to decide whether you require this money for a transaction that will benefit you and your dependents.
Under normal circumstances, the judge might not reject your case if you can prove that you and your dependents stand to benefit from this transaction; this also requires that you should be an adult with sound mind. Keep in mind that appearing at the hearing may help your cause. Sale of structured settlement payments is permissible without court approval but you will be taxed on the payments and also its interest.
In most cases, the purchasing company you are working with will still buy your structured settlement payments. They will simply do some extra legal work to get the sale finalized. They will not charge you for this extra effort they have taken for this; however, in the absence of court approval, you are liable to pay taxes on the money you receive.
It is necessary for you to get quotations from interested parties. You will always get benefitted if you have multiple quotations. In case you find a suitable purchasing company out of the various quotes received, you should send to the purchasing company copies of the structured settlement policy. You will receive from the purchasing company a disclosure document which you are expected to sign. This document contains the clauses and conditions of the transaction. This should be signed and returned after your checking.
The court hearing will be the next step in this process. The duration for court approval depends on your state of residence and also the state of residence of your insurance company and this will normally be about 90 days. After receipt of court approval it takes 10 days to receive your money.
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