Should you take cash for structured settlement?

What is structured settlement?
A structured settlement is a settlement between two parties in which one party agrees to pay the second one the money which second party owes out of a lawsuit in parts. For example, a person has won a lawsuit in which he will get compensation from liable party for a personal injury, accident claim, worker's compensation claim or any other type of claim which usually involves a large sum of money, and then we can opt to receive the payment in parts instead of lump sum amount. These payments on periodic basis are called structured payments. Usually, the structured settlements are created through purchase of one or more annuities. And the payments can be scheduled to be dome on monthly, quarterly or annually basis.

Advantages of Structured settlement

You would think what can be the advantages of having a structured settlement if you can have all the cash in one go. But there are various benefits of doing a structured settlement. First and foremost, you will get tax benefits. If the settlement is properly set up, then you can save tons of money and may even get all the money tax free. Secondly, you will not have all the cash for structured settlement in your hand in one go. This is a benefit because the more money you have in your hand, quicker it is going to get spent. It is good to have it in partial payments so that you keep getting it when you need most. Structured settlement will ensure that you don’t spend all that money in one go.

Disadvantages of structured settlement

On other hand, it may not be a great idea to set up structured settlement. The benefit of taking cash for structured settlement is that you can invest the lump sum as per your needs and your calculations. You may get better returns in case you can invest it in some other avenues and then able to manage it well. This gives you more flexibility in terms of spending the lump sum amount you received from your claim. Another disadvantage of structure settlement payments is that you cannot modify the payment amount and duration once it is locked. Therefore it gives you little flexibility to modify the payment even if there is any urgent need to do so.

Should you take cash for structured settlement?

Whether or not you should sell your structured settlement for cash depends on your needs. The needs and situations for each individual are separate and unique. But still, you should take in consideration a few points before deciding to sell your structured settlement like your future plan, you current income, your family needs in current and future, whether you want to spend more money now in vacations or upgrading your lifestyle or you want to keep it coming in stages for a longer tenure. You should weigh in the advantages and disadvantages as mentioned above to then decide.

How does a structure settlement sale work?

If you have decided to sell your structured settlement, you will need to go through the process of this sale. There are a lot of companies which are more than willing to buy your structured settlement. They will give you cash for structure settlement as per the current value. You don’t have to do much except providing all the required information and documentation. All other things will be taken care by the company buying your settlement. Typically this process takes around three months to complete.

But you should not sell your structured settlement to any company. There are a lot of companies available online you are willing to buy the settlements. Get a list of them from internet and then get quotes from them as the first step. Since all companies will quote you different current value of your settlement, it is always better to get quotes from different companies, then talk to you legal counsel and financial advisor to help you choose the best one. It is possible that highest value quoted may not be the best one since it may involve higher fees. If you follow the steps above you should get good cash for structured settlement.