Sell Structured Settlements – Should You Sell Or Not?

It’s a common question asked by those who acquire a structure settlement through personal injury or workers compensation, “should I sell my settlement now for a lump sum payment wait my settlement out?”

That answer is easy, “it depends.”

Let’s look at the case of “John”... he was awarded a $300,000.00 settlement from a work injury to be paid at $30,000 a year for ten years.

The problem was that John needed the money now to pay for hospital bills and his mortgage. Does John sell or not to sell?

Side One: To Sell

John has a real need for money beyond the annual payment. The $30,000 is not even half of what he currently owes in outstanding bills. Selling the settlement is a good option for John if his biggest need is getting the most cash possible now.

Most states have laws that allow recipients to retrieve their money through lump sums. This is done through a court appeal process where you make you case to the judge that selling your structured settlement is in your best interest. If the court/judge agrees with you, an order is issued allowing you to sell your settlement to an authorized broker.

When selling your structured settlement you can sell all or part of it. It’s also important to find an attorney who is an expert in annuity payments and to get a variety of quotes from potential buyers before making your decision.

Side Two: Not To Sell

Our friend John might be thinking selling sounds pretty good. Who wouldn’t want the most cash possible now, especially with outstanding hospital bills? However, selling a structured settlement is not always allowed by the court and not always the best option for the would-be seller.

Brokers and companies that buy structured settlements benefit and profit from the long term payments that the selling would otherwise collect. Also, if the seller’s future earning abilities are damaged, then this should be strongly weighed when making a decision.

Insurance companies that issue the structured settlement often do not cooperate with the selling of the annuity due to policy, making things difficult if not impossible for the settlement to be sold. Another note worthy fact is that most structured settlements allow for tax advantages to the awarding party and there can be considerable tax consequences associated with selling.

So what does John Do?

John does what is best for John.

Regardless of if you decided to sell or not to sell your structured settlement, the key thing to remember is to do what is in your best interest. Don’t be pressured into a decision by attorney or buyer. Consult a professional and get multiple quotes if you are uncertain of the best way to proceed.

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