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Selling your Structured Settlement Payments

December 17, 2009

 

Owning a structured settlement annuity gives you a lot of benefits. The financial security of your dependents and you are well taken care of for long periods by the structured settlement payments; further, the interest earned on the payments as well as the payments themselves are nontaxable.  However, if you need the money or simply have better investment options, you are entitled to it.

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. In addition to federal laws, more than two-thirds of states in the United States allow the sell of structured settlement payments. However, in order to get the tax free benefit it is necessary that this transaction is approved by court.

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. Your proof will be examined by the judge to find out whether this transaction is in the interest of you and your family.

Any adult with a sound mind can get court approval for selling his structured settlement payments as long as he can prove that he and his family will get benefitted by this transaction. In order to improve the chances of your getting court approval it is advisable for you to attend the court in person on the day of hearing. 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.

In all probability, the purchasing company with whom you have been discussing might be willing to purchase your structured settlement payments. However, they may have to do additional legal work in order to ensure that the sale is completed. They might not charge you for this extra effort; you must realize that you may have to pay taxes on the money received in the absence of court approval.

In order to select the right purchasing company, you should call for quotations from various purchasing companies. You will almost always benefit by getting multiple quotes.
In case you are interested in the quotation given by a purchasing company you must send the purchasing company copies of the structured settlement policy. The purchasing company will send you a disclosure document to sign. This document basically gives the conditions of this transaction. This should be signed and returned after your checking.

The next step in this is beginning of the process for court approval. The state of residence of the seller and buyer decides on the duration for completion of this process and normally it may take up to 90 days. After receipt of court approval it takes 10 days to receive your money.

 

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