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Structured Settlements

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Are you receiving monthly payments as the result of a structured settlement agreement? The right to receive those payments can be sold for a lump sum of cash. Plus you have the choice to sell only some of your monthly payments. If you receive annual or other lump sum payments periodically, those future payments may also be sold for cash now. You may have been told otherwise, but as you read on I will clarify this misconception.

If you are ready to proceed, request a quote, and I believe you will be pleased with the results. Reading the remainder of this page will help you better understand this process and how we can work together to best meet your needs.

Please keep in mind that the process under discussion here is regulated by state laws and federal law in the form of Internal Revenue Code 5891. Some of what you will read here is based on these laws, so there is some legal terminology used herein. At the same time common language that might not precisely match the law, is more easily understood and often used in this industry.

Another important point is the time frame to sell structured payment rights is largely effected by the laws involved. The law requires that the sale of structured payment rights be approved by court order. This necessitates a court hearing and related legal notices. The total time will vary by state, but as a rule of thumb figure on 90 days, start to finish. You may find that others in this industry promise a speedy transaction. And in rare cases, the entire process could happen in less than three weeks. But world record speed rarely applies, and you shouldn't plan on it.

To provide necessary clarity, here are some key terms:

  • Structured Settlement - An arrangement established by lawsuit or agreement for the periodic payment of damages.
  • Structured Settlement Payment Rights - Rights to receive payments under a structured settlement.
  • Structured Settlement Factoring Transaction - A transfer of structured settlement payment rights (including portions of structured settlement payments) made for consideration (a payment or compensation) by means of sale or assignment.
  • Annuity Issuer - An inurance company that has issued an insurance contract (annuity policy) used to fund periodic payments under a structured settlement.
  • Payee - An individual who is receiving payments under a structured settlement and proposes to make a transfer of payment rights thereunder. Since this person is receiving payments from an annuity, he or she is also called an annuitant. In this process of selling structured settlement payment rights, this person is commonly called the seller.
  • Transferee - A party acquiring or proposing to acquire structured settlement payment rights through a transfer or restructuring.
  • Transfer Agreement - The agreement providing the transfer of structured settlement payment rights from a payee to a transferee.

To put these terms in context, the payee under a structured settlement began this process as a plaintiff in a lawsuit, and won a monetary payment for damages. An agreement was made to pay for these damages by way of monthly payments through a structured settlement, and the terms were spelled out in a settlement agreement.

Under the settlement agreement, the plaintiffs are granted only the right to receive certain future payments in return for their release of the defendant's liability. To accommodate the payment of their obligations, the defendants (or their insurer) buy an annuity policy and either retain ownership or assign ownership to another company.

The annuitant, therefore, does not own and cannot sell the policy. The annuitant does, however, own the right to receive the payments, which is considered personal property and can be assigned. So in other words, you can sell your structured settlement payment rights in keeping with the appropriate laws and corresponding terminolgy.

What Laws Apply To You?

The United States has enacted structured settlement laws and regulations at both the federal and state level. With the addition of the District of Columbia in 2018, and New Hampshire in 2021, all 50 states plus Washington D.C.have created structured settlement protection acts.

As far as the pertinent details of these laws, much of that is procedural and is covered in my comments above, and the steps listed below. The biggest remaining concern is that the sale of your structured settlement payment rights must be approved by a court order. While this is indicated in step 7. below, you need to plan ahead, and this ties in directly with the sale of your payments meeting your needs.

What Are Your Current Needs?

By agreeing to a structured settlement originally, you helped to resolve your personal injury tort claim. You received a financial award, and hopefully the payments have adequately met your needs. But time and circumstance changes everthing. You or a family member may face unexpected medical care or mounting debts. Or perhaps you have the opportunity to go to college, buy a home or start a business. Either way you now have a need for cash that exceeds current income including your structured settlement payments.

The downside to structured settlements is that they are inflexible. The payments are fixed, and can not be accelerated, deferred, increased or decreased by the recipient. Selling your structured settlement payment rights gets past this inflexibility, and can help you meet your current needs.

As you think about this, you must also consider your future needs. The connection to the laws mentioned above is that the judge who will consider the request to sell your payments, is required to determine that the transaction is in the best interest of the seller, taking into account the welfare and support of any dependents. "Best interest" is not defined, which gives the judge flexibility to make a determination on a case-by-case basis. This gives the judge more latitude to approve your sincere need for funds.

While you may be able to sell all your payments, that usually doesn't happen. Think about how much money you really need. You will have the option to sell some payments now and more payments later. You may also have the option to sell a percentage of each of a specified number of payments, and keep the remainder as ongoing income.

Steps To Sell Your Payment Rights

  1. When you have reached the point where you are willing to consider selling your payments, in order to receive a lump sum of cash, please complete the structured settlement worksheet and submit it back to me.
  2. I will contact you to discuss your situation and answer any questions you have. This process will allow us to customize a plan that works best to meet your needs.
  3. I will look for the best way to purchase your structured settlement payments, and contact you to present my proposal. Buyers of structured settlement payments do so to make a profit. The circumstances of the buyer at that time, will determine how much someone will pay to purchase your payments. So it pays to shop around. I will do this for you by working with selected payment buyers to get the best price for you.
  4. After we agree on the price and terms to purchase your payment rights, each state's transfer statute requires that you be provided with a Disclosure Statement. The Disclosure Statement confirms the payments being sold, the net amount received from the sale, and any fees or expenses to be charged to the seller to complete the transaction.
  5. The Transfer Agreement is the contract between the seller, and the purchaser of your structured settlement payment rights. Depending on the applicable state law, this agreement will be sent to you anywhere from three to ten business days after the Disclosure Statement.

    Before signing the Transfer Agreement, you are encouraged to obtain Independent Professional Advice (IPA). Independent Professional Advice means advice of an attorney, CPA, actuary or other licensed professional advice.

    Certain states require that the payee (the person that is receiving payments), obtain Independent Professional Advcie. Other states do not make this a requirement. But they do advise that the payee seek IPA regarding the transfer. When the payee chooses not to obtain Independent Professional Advice, he or she must formally waive the advice in writing. You will be advised what applies in your state.

    Once you are satisfied with this process, you need to sign and send the Transfer Agreement back to me, along with a copy of your Settlement Agreement and Annuity Policy.

  6. The documents you provided above will be forwarded to the attorney representing the purchaser, who will file the required paperwork with the court This process petitions the court for a hearing. Each state's legal requirements mandate the steps that must be followed to obtain court approval. This stage of the entire process takes the most time.
  7. You will receive advance written notice advising you of the time and place of the hearing. The attorney representing the purchaser of your payment rights will also contact you to arrange a time and place to meet on the date of the hearing. Most court hearings are relatively simple and take between ten and twenty minutes to complete. The judge must determine that the transfer is in the best interest of the seller, taking into account the welfare and support of any dependents. The majority of these hearings result in court approval. Your chances of approval go up significantly if you appear in court.
  8. Once the judge signs the court order approving the sale, you should expect to receive your funds within three business days.

Let's Get Started

  • Selling your structured settlement payment rights can be an excellent way to meet your financial needs.
  • Problems with your credit history will have no negative impact on the process.
  • Internal Revenue Code 5891 states that neither the issuers, owners nor annuitants will suffer tax consequences as a result of these transfers.
  • If the transaction is denied in court by the judge, you will not be responsible for any costs, unless you hire your own professional advisor.
  • What's important is that we work together to meet your needs.
  • To get started, please submit a structured settlement worksheet, and I will start working to produce a deal for you.


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