What to know about transfer of structured settlement payment rights

When it comes to the transfer of structured settlement payment rights, this is in reference to having the right to receive payments that are provided by a structured settlement.

If you have ever heard of or come across the term structured settlement factoring transactions, this is in reference to the transfer of structured settlement payment rights, either in whole or a portion of, for the consideration of selling the scheduled payments.

What you need to know
There are some exceptions to what is prohibited. For one, a structured settlement only allows the transfer of payment rights once. As different jurisdictions have laws set up differently, understand payment rights as created under structured settlement protection acts (SSPAs) will differ from state to state.

Created as compensation for personal injury, product liability, and even wrongful death, structured settlements are contracts funded by single-premium annuities that provide periodic payments and/or scheduled lump sums that act as future settlement payments that the payee is contractually obligated to provide for.

Most states require the factoring company to disclose the discounted present value and use an Applicable Federal Rate for valuing annuities to ensure a settlement buyout does not exploit the holder of the settlement in times of need.

Most structured settlement transfers require court approval. This is another safeguard for the recipient, to ensure it is in the best interest of the payee, and dependents if applicable.

It's also important to know there will be a factoring discount. What is also know as discounted present value, this means that you will not get full value of your structured settlement when selling your payments.

For more information, also see Transfer of Structured Settlement Payment Rights for further details.

Related:
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