Receiving Structured Settlements or an Annuity? Know Your Options.
If you are a recipient of a structured settlement or an annuity, you should know your options. This of course includes receiving cash for future payments. Recognized by congress since 1982, structured settlements provide long-term financial security to personal injury victims and their families through a stream of tax-free payments that are usually tailored to their needs. As a result, structured settlements generally have become an inherent part of physical injury settlements.
As we said, a large part of knowing your options includes getting cash for future payments that are due you. If it seems like your structured settlement payments are trickling in over a very long period of time, you can cash-in and get a lump sum today without tax consequences. There are a number of brokers who can help you by getting cash for all future payments or only a part of them.
Is it legal to get Cash for Future Payments?
Yes it certainly is. Although your settlement agreement may include an anti-assignment or anti-acceleration language, it has now been supported by numerous court cases that an annuitant does have the right to assign the payments. During the past five years, there have been numerous State statutes that have been passed that regulate the transfer of any payments and a court order is required. In accordance with the recently enacted law, any transfer is subject to court approval. If court approval is not obtained, then the purchaser must pay an excise tax on the total discount. This tax is onerous enough to prohibit a purchaser from making a purchase without following the legal steps.
Additionally, you should know that it is legal to sell only a portion of the settlement. In fact, most brokers will encourage you to not sell any more than is necessary of your structured settlement. There are programs that will buy specific lump sum payment amounts or only a portion of the remaining future payment. Some programs allow for only a portion of the monthly structured payment to be purchased. Thereby allow you to continue to receive regular income from the remaining annuity amount.
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