Many times, when a person is awarded damages from an lawsuit settlement or wins the lottery, their winnings are given to them as a structured settlement. A structured settlement is a series of payments each month over several years (sometime the life of the awarded), rather than a single, large lump sum.
Sometimes the structured settlement is created voluntarily by the awarded party, or sometimes it’s court mandated, commonly because the awarded party is a minor. If it becomes more advantageous to get cash for your settlement now rather than to get a series of small payments over the course of several years, you may opt to sell your structured settlement.
Since many structured settlements are valued at hundreds of thousands of dollars, it is essential that you do your research before you get cash for your settlement now. Some essential questions that you should ask before deciding to get cash for your settlement now are:
What are the benefits of receiving smaller payments for the life of the settlement?
Sometimes when your awarded a large lump sum, it is difficult to adjust to your financial windfall, especially if you do not have the experience of managing large sums of money. In this case, receiving structured settlement payments over for a long time will help ensure that you have the financial stability you need to meet your medical and living expenses for years to come.
When is it more advantageous to sell my structured settlement?
Many times, settlement recipients choose to cash in on their settlement for the following reasons:
- To eliminate debt
- When cash needs for living expenses exceed the monthly payments
- To invest in the future, such as starting a business or getting a college degree.
Can every structured settlement be sold for a lump sum cash payment?
Whether you are able to sell your settlement depends on the terms of your settlement and the state you live in. In every state except for New Hampshire, Wisconsin, and Washington DC, there are some sort of government regulations in place. You will need to read your contract of your structured settlement or talk to a lawyer to confirm whether or not your structured can be sold. Many times, before selling your structured settlement, you will need to go before a judge and justify your request. This is for your own protection, to ensure that it is in your best interest to get a lump sum some instead of long-term payments.
Will I get the full value of my structured settlement?
Companies who give cash or structured settlements are doing so to make a profit, so you will not get the full value of your structured settlement. Commonly you’ll get 50-80% of the full value. The lump sum payment you would get from selling your structured settlements depends on the size and number of payments you are planning to sell, and the financial health of the market when you sell it.
What can I do to get the greatest value when I sell my structured settlement?
It’s a good idea to get offers from several structured settlement purchasing companies before selling. Make sure those offers include any applicable fees that you’ll be subject to, so you’re getting an apples to apples comparison between the offers. You should also consult your attorney or financial planner for referrals of reputable companies and to make sure you’re making the best choice for your financial future. To see more, read this. For more information see this.