Many people are choosing to sell their structured settlement payments for a lump sum of cash. Why would anyone want to sell a structured settlement, forfeiting the security of guaranteed periodic payments which once seemed to be an acceptable method of compensation? The most obvious reason is to exercise more control over the money. Once a structured settlement is established, the terms and payment amounts are fixed, and you have very little control over your money. If you sell your future annuity payments for a lump sum, you will be able to exercise full control of your money, but you also take on the formidable task of managing it.
Selling a structured settlement is usually not a wise financial move; in fact, it can be disastrous if the lump sum is not properly invested. Structured settlements were designed to give damaged parties long term financial security and minimize the need for government assistance. In the worst case scenario, trading the long term protection the annuity provides for instant cash could leave a person broke and in need of government aid.
The sale of a structured settlement will mean that the recipient forfeits the long term value of the payments. The underlying annuity increases in value over the life of the settlement, but cash can be quickly depleted through financial mismanagement. If you choose to sell your structured settlement payments, at least a portion of the money should be invested conservatively, perhaps in carefully chosen real estate. Consulting a professional financial adviser is a wise move; not only will you be protected from losing the money through risky, speculative investments, but you may actually increase the long term value of your money if your investment appreciates faster than the structured settlement annuity had been.
If your financial need is not too great, you may choose to sell only a portion of your structured settlement. You have the option to sell either a certain number of future payments, or a percentage of the award. If you choose this option you will continue to receive periodic payments in a lesser amount.
The law now requires that the beneficiary obtain court approval before selling structured settlement payments. This federal legislation was meant to protect the damaged party in a lawsuit from mismanagement of the money, but as a result, it now takes longer to receive the lump sum of cash. In fact, it can take twelve weeks or more to receive your money. Most people who sell their settlement payments need the money more quickly than this; an attorney or reputable buyer of structured settlements will work to insure that the transaction goes smoothly and that you get your cash in the least possible amount of time.
If you are considering selling your structured settlement payments for a lump sum of cash, you should first explore other options. A cash out refinance of your mortgage could give you a substantial amount of cash without sacrificing the safety net a structured settlement provides. If you are able to obtain a better interest rate than you are currently paying, it may be be an even more favorable alternative. If you must sell your payments, choose a structured settlement purchaser that has been in business for at least several years, and has a history of satisfied customers and on time transactions. Using caution now could save you many years of regret.
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Gregg Pennington writes articles on a number of topics including structured settlements and selling structured settlement payments. For more information and resources related to structured settlements visit
http://www.onlinemoneysources.net/structured-settlements.html
