Selling your Structured Settlement Payments
Owning a structured settlement annuity gives you 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. This money can be used for your urgent needs or for any other investment where you expect a better ROI.
The federal law HR 2884 permits you to sell your structured settlement payments without paying any taxes. Two-thirds of states in the United States also permit the sale of structured settlement payments in addition to 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 not difficult to get approval of the court for selling part or full quantum of your structured settlement payments provided you are able to prove your genuine requirement for money. The approval or otherwise will be given by the judge after reviewing your case to decide whether you require this money for a transaction that 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. If you appear in the court on the hearing day your chances of getting court approval will be high. Sale of structured settlement payments is permissible without court approval but you will be taxed on the payments and also its interest.
It has been found in practice that in a large number of cases the purchasing company working with the seller purchases the structured settlement payments. However, they may have to do additional legal work in order to ensure that the sale is completed. They will not charge you for this extra effort they have taken for this; however, in the absence of court approval, you are liable to pay taxes on the money you receive.
Quotations have to be obtained from various purchasing companies for purchasing the settlement. It is always beneficial for you to get multiple quotes. You should send copies of the structured settlement policy to the purchasing company whom you select after running through various applications. A disclosure document will be sent by the purchasing company asking you to sign. In this document the conditions of transaction would have been clearly specified. This should be signed and returned after your checking.
In order to proceed further it is essential that the court approval is got and this is the next step in this process. Under normal circumstances this takes up to 90 days and this depends on your state of residence and your insurance company. In majority of the cases the sellers get their money within 10 days after court approval.
Filed under: Financial Advice