Selling your Structured Settlement Payments
If you own a structured settlement annuity, you might receive a lot of benefits. The primary benefit that you could get from structured settlement payments is that your family and you are well covered financially for a longer period; another advantage is that these payments and also the interest earned on them are free from tax. Also there is no legal hurdle in using this money either for your emergency situations or for high yielding investments.
The federal law HR 2884 permits you to sell your structured settlement payments without paying any taxes. About 67% of the states in the United States of America also allow the sale of structured settlement payment in addition to the federal laws. However, you must keep in mind that the tax free status is possible only if the court approves such a transaction.
Selling Your Structured Settlement
It is fairly easy to be approved in court for the sell of all or part of your structured settlement payments, as long as you can prove that there is a need for the money. The judge will review your case to see if the transaction will benefit you and your dependents.
In order to get a positive judgment from the court for selling your structured settlement payments you must be an adult with sound mind and you should have genuine reasons to prove that you are doing this in the interest of your and your family’s welfare. 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 most cases, the purchasing company you are working with will still buy your structured settlement payments. To facilitate finalization of the sale they will handle necessary legal formalities. They refrain from charging any fees for this effort they have taken; however, you are liable to pay tax on the money received without 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 find a suitable purchasing company out of the various quotes received, you should send to the purchasing company copies of the structured settlement policy. You will receive from the purchasing company a disclosure document which you are expected to sign. This document contains the clauses and conditions of the transaction. You must sign and return after you go through the document thoroughly.
The next step in this is beginning of the process for court approval. Depending on your state of residence and your insurance company, the process can take up to 90 days. After receipt of court approval it takes 10 days to receive your money.
