A structured settlement is one of the most important terms in the finance sector. A structured settlement is a number of payments to the person who settles or won a lawsuit. The settlement is funded by the defendant. The money paid maybe be different from the lump sum amount just because how the money is paid over a certain time. If the amount is money is small, then the party which is wrong pays the amount whereas if the amount is large a structured settlement annuity is arranged. The party who is at fault deposits money towards the annuity, it is a financial term which guarantees regular payment through an insurance company.
How does it work?
Since it is a legal settlement, structured settlement pays out money through periodic payment in the form of an annuity. But in many cases, legal settlements offer a lump sum amount of money, which is onetime payment. The main difference between them is long-term security and other taxes. We can say that the money which you receive is always tax-free but once when the money is yours, you fully liable to pay taxes.
What identifies the value of your structured settlement?
The value of this is dependent on many factors:
- The number of payments remaining
- The total money worth of payment
- Selling you payments also affects.
- When your payment increases over time
- Incoming lump sum payments
Think before you sell structured settlement
When you sell your structured settlement, you are basically selling your future payments. Just in the greed so that you can get paid today. In the greed of getting money today, you sell structured settlement at a discounted price, the discount depends on the type of market and the buyer which you choose. Apart from that, in order to get money as soon as possible, you have to go through many things:
- The first thing is the person buying will check whether the payment is legit and it is not sold off already.
- The buyer should also have an attorney that should be prepared to go in front of the judge to get the payment approved.
- After all that, the papers should be filled and then only you should get the payment.
Therefore, in order to sell structured settlement, you have to go through all this. Just to get the money now, you are selling a payment at a discounted price plus you are going through a big process, which can be tiring and long. Therefore, think before you sell structured settlement.