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Important Cash for Structured Settlement Facts
What if any conditions should you set with the transfer of cash for structured settlements payment rights?
When you sell structured settlements, this is nothing new. Financial arrangements such as these are commonplace, and they are meant to resolve wrongful death or personal injury claims, with the responsible person agreeing to make payments over time instead of in one lump payment. This is very useful when it comes to settling lawsuits, since undertaking extended legal proceedings will be a drain on both your personal and financial health. Structured settlements can be very useful, because you will get on with your life once you have them set in place, and your attorney can handle the specifics.
What structured settlements mean to most people is that you will get the best possible settlement for everything you might experience -- whether it be a slip and fall case to a lifelong injury that's going to have serious and long lasting consequences. However, structured settlements aren't just limited to catastrophic injury. In other words, structured settlements don't just involve lifelong disabilities.
If you're in a lawsuit, some services "offer" you the ability to "sell" your structured settlements to them. In exchange, they provide you with a lump sum of cash in the event you need this type of financial resource.
Laws do protect consumers from brokerage companies that are unscrupulous. Most often, the settlement agreement also specifies a nonassignability clause. Basically, this is unenforceable, though.
Some of the purchase agreements require the consumer to stipulate to a host of provisions which severely restricts consumers rights and raises questions as to their basic fairness. To forestall suit, however, the contracts often require the consumer to defend and hold harmless the purchasing party in any lawsuit.
One of the largest brokers of structured settlement has said that more than 50% of structured settlements agreements have premiums that are less than $50,000. Less than 13% have settlements that are valued at greater than $250,000. Whatever the original concept of structured settlement was, and whatever the purpose of the tax rules that facilitate them, these figures clearly show that structured settlement today are not used principally for catastrophic injury resolution.
With structured settlements that qualifies for preferential tax treatment, the claimant does not have the right to delay, accelerate, decrease or increase the future payments he or she receives from the structured settlement company. If the claimant's circumstances change, such that they need additional funds from the settlement, the only means by which the claimant can have access to these funds is to sell either a portion or all of the settlement.
According to industry watchdogs, the shady side of the structured settlement factoring business is rapidly growing. One company announced that it has undertaken more than 7,700 structured settlement purchase transactions with a total value of $370 million. During the first nine months of 1997, the same company undertook more than 3,700 structured settlement purchases paying $74 million for $163 million of structured settlement payments.
What that means is that the long-term fiscal security and careful planning so painstakingly set up to take care of the needs of the injured victim and his or her family are being tossed aside. This is all because factoring companies offer quick cash at deep discounts for future structured settlement payments -- but at what cost? Once these victims have given away their only source of assured future financial income, they may indeed have to go on public assistance to cover future basic living expenses and medical expenses -- even though this is what the structured settlement plan was set up to avoid.
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