Based on several recent articles on the secondary structured settlement market, you already know that selling your structured settlements for cash is perfectly legal. But knowing that you can sell your future payments without a broker’s commission means that you shouldn’t. You’ll find out why in this next article.
If you’re considering selling your payments, you should know that the current value of your annuity isn’t worth much. A financial expert from a reputable firm can determine this value, but you only have a few years before your payout is due. Once you reach this point, your payout will begin to decline slowly, and you may actually owe more in taxes than what you would get. If you’ve been paying into your annuity for many years and are nearing the age that you will receive your full payout, it’s a good idea to consider cashing in on your annuity now, instead of waiting for an uncertain future. By purchasing your structured settlements today, you’ll be able to cash in on the tax-deferred interest during your retirement years and receive your fair share of the jackpot.
The IRS states that the current market value of your structured settlement payments is less than the fair market value of your annuity. If you were to sell, at this time, all of your future payments would be included in this calculation. It is not uncommon for people to sell their structured settlements, only to discover that they will actually owe far more money in taxes when they reach retirement age than the fair market value of what they had sold. By selling now, you could potentially save hundreds or thousands of dollars in taxes over your lifetime. This could provide substantial financial relief.
There are many factors that come into play when determining what the fair market value of your structured settlement future payment is. One of these factors is the discount rate. The discount factor is determined by your current financial circumstances and what you are willing to pay out today versus what you may be able to pay in the future. Your situation is assessed using several different factors. Some of these factors include:
Once you’ve determined the fair market value of your structured settlements, you will need to determine the discount that you will receive for each of your future payments. The discount that you will receive will be the difference between the present value of your settlement and the amount that you would have received if you had sold at the time of your settlement. In order to sell structured settlement payments for a discount, you must be aware of and be able to prove to the buyer that your present and/or future income as a whole does not meet the requirements required under the laws governing structured settlements. The buyer will require that you prove to them that your income as currently structured does meet the requirements. Your proof of this will be based upon several things including:
It is important to understand that in today’s market selling structured settlements for a lump sum amount is not always a good idea. The reason for this is because many of these buyers will require you to provide them with a large lump sum payment upfront in order to purchase your settlement. If you try to sell your settlement for a lump sum payment, the courts may require you to surrender most, if not all of your remaining payments. This could result in you having to pay taxes on the amount of money that you would have been required to pay out over the duration of your lawsuit. If you are attempting to sell your structured settlements for cash, make absolutely sure that you are fully aware of the steps that you must take in order to ensure that you are legally allowed to receive cash for your settlement.