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If you were injured on the job and won a structured settlement through your personal injury insurance or workers compensation claim, companies might start contacting you about purchasing the settlement. Or you may have looked at the terms of your settlement and thought about selling it for a lump sum. Most states have passed laws that limit the sale of such settlements; in addition, tax-free structured settlements are also subject to federal regulations regarding third parties purchase of structured settlements. Also, there are some insurance companies out there that wont dispense or reassign such annuities to third parties at all; this is done to attempt to reduce the numbers of structured settlement sales. As a result, depending upon where you live and the terms of your annuity, you may not be able to sell your settlement at all. But if you can, here are some things to consider.
Remember that the companies which purchase structured settlements intend to profit from the purchase of your settlement. Their profit comes out of the payments you would otherwise receive. If your ability to work is permanently reduced because of your injury, you should think about what your future expenses may be before you decide whether or not to sell your settlement.
As was stated previously, laws in many states limit selling structured settlements, and additional federal rules may apply to those sales as well. Youll probably have to get a court to approve the sale, not to mention that a lot of states have laws on the books to regulate the actual transfer process. Keep in mind that the insurance company responsible for paying out the settlement might not agree to let you sell the settlement. They may base their refusal on the policys language or they may insist that settlement payments cannot be re-assigned.
Because typical structured settlements provide considerable tax benefits, there are often penalties incumbent upon selling part or all of your settlement. An often occurring result is that while your received payments are not taxed, but your lump sum buy-out will be taxed.
If a company approaches you about selling your settlement to them, or if you are actively seeking a buyer, dont just take the first offer you get. Talk to a few different brokers about your situation and youll more than likely get a better deal out of it. Make sure the prospective buyer is reputable too; you dont want to go through all the trouble of selling your settlement only to get stiffed on the buyers payment.
Lastly, you should at least talk to, if not retain an attorney before you sell your annuity. Lawyers can help to protect your rights and especially make sure that you cant be penalized for situations beyond your control. This would protect you if the purchaser of your structured settlement is later incapable of collecting payments from the settlements issuing company. Probably most important is that a lawyer can ensure the deal you are offered is fair and will be enough to cover the expenses the settlement was issued to cover. If you keep all of these things in mind, the purchase of your structured settlement will go smoothly.