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Selling your Structured Settlement Payments

January 1, 2010

People who own a structured settlement annuity benefit a lot from it. 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. Also there is no legal hurdle in using this money either for your emergency situations or for high yielding investments.

You can sell your structured settlement payments legally in US as per the federal law HR 2884, and this sale can be made without your paying any tax. The sale of structured settlement payments is allowed not only in federal laws but also in the state laws of the two-thirds of the states in the United States.  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

It is not difficult to get approval of the court for selling part or full quantum of your structured settlement payments provided you are able to prove your genuine requirement for money. Your proof will be examined by the judge to find out whether this transaction is in the interest of you and your family.

The judge might not refuse court approval for selling your structured settlement payments if you are an adult with a sound mind and also if you can prove that this sale is beneficial to you and your family. You ensure that you attend the hearing in the court on that day which may help your cause much. You can sell your structured settlement payments even if the court does not approve of it; however, this will deprive you of the tax free status for this payment and its interest.

The purchasing company with whom you are having discussions might be interested in purchasing your structured settlement payments. They take the responsibility of doing the necessary legal work to ensure that the sale finalized. They refrain from charging any fees for this effort they have taken; however, you are liable to pay tax on the money received without court approval.

It is necessary for you to get quotations from interested parties. Getting quotations from a number of companies will be in your interest because you could select the best one for you. If you like a quote that is given, you will send in copies of the structured settlement policy to the purchasing company. The purchasing company will send you a disclosure document to sign. This document contains the clauses and conditions of the transaction. This should be signed and returned after your checking.

In order to proceed further it is essential that the court approval is got and this is 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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