What is a Structured Settlement?
According to JG Went Worth,
A structured settlement is a financial package that allows court-awarded compensation to be paid in regular installments rather than in one lump sum. These installments may be paid over a fixed period or over the recipient’s lifetime. Because each is tailor-made for the individual case, the structure may also include some immediate payment. Structured settlements are commonly used in settling personal injury or malpractice suits. However, structured settlements can vary widely; for instance, some are set up as retirement plans, while others provide payments on specific birthdays.
After talking to a buddy of mine who is a plaintiff trial attorney he broke it down for me. When you tell an insurance-defendant that they don’t have to pay everything upfront, they become more willing to negotiate. But nothing can guarantee that years down the line you will still want that stream of income versus a lump sum payout.
Since I have never been involved in obtaining a structured settlement nevertheless selling one, I asked Jason from JGWentworth to provide some insight into the topic.
6 Savvy Ideas When Selling Your Structured Settlement
Like stocks or property, a structured settlement is an asset – just a lot more flexible and yielding to your financial needs. Yet decisions both big and small concerning your inheritance must have your best interests in mind. How will a lump-sum payment work best for your plans and budget? What impact will it have on your financial life? Structured settlement owners have a bevy of ideas to consider when selling this significant asset. Here are five important ones:
Enter a relationship with a reputable secondary buyer
Selling your structured settlement should be a smooth and easy process. The traits of a strong company assure a variety of selling choices such as using your settlement for a loan. A reputable company explains the fine print, answers all questions in entirely and empowers the decision-making process.
Sell what you can afford to live without
Structured settlements are used as a source of income for many. This doesn’t have to change. Understand you have the flexibility to sell a portion of your settlement –and only when you feel comfortable selling it. This can better help you decide how to get a precise lump-sum amount for a down payment on a home and still use your structured settlement to pay the monthly bills.
Zero in on the exact amount needed
Perhaps you want to use your lump-sum settlement money to start a business or get an advanced educational degree. Researching education or start-up costs give you a much clearer idea of how much of your structured settlement you will need to sell to make these new dreams come to fruition.
Consider the length of the process
A reputable structured settlement company will walk you through the process, explaining exactly when your settlement will be liquidated into cash. That means you there is a light at the end of the tunnel if you are looking to use your payout to pay off those medical bills or other debts that might have accrued due an accident.
Prepare for the unexpected
Tuition increases. So does inflation. Housing bubbles pop and the market takes a nose dive. Smart structured settlement selling takes any unforeseen economic crisis into consideration and budgets appropriately for life’s little road bumps.
Review other sources of funding
A structured settlement might not be your only form of income. Perhaps you also have a regular paycheck or rental property to depend on. This equates to more freedom when imaging what you can do with a lump-sum structured settlement payout.
Have you ever received a structured settlement? Ever subsequently sell one? How was the process