Buying Structured Settlements!

Introduced in the United States and Canada in the early 1970s, structured settlements are now part of most of the common law countries. Though the underlying principles are the same, each country defines structured settlements within its legal boundaries.

Originally expected to work as an alternative to lump sum payments, structured settlements have come a long way. The advantages of these agreements have made them popular choice over the course of three decades.

They provide tax free money at regular intervals, negates the worry of planning for long term investments, the overall risk involved for both the parties are also considerably low, to name a few of its benefits.
Despite its obvious luster, individuals sometimes come across near-term requirements, and to meet the immediate requirement of lump sum cash, they opt to fully or partially sell the structured settlements.

The eligibility to sell the settlement is not a universal feature of the agreement; rather it is governed by the local law. The eligibility to buy the structured settlement is also governed by the law of the land. Usually, the purchaser will be required to be licensed. An advance approval from the authorities is also required in most of the cases.

If you are looking to buying structured settlements, it is very important to understand the local law that defines the rules and regulations regarding structured settlement transactions. Usually, a court will evaluate the proposed sale to understand if it is beneficial to the seller. If you do not seek this prior approval, later on you might end up paying a heavy tax.

Usually the seller would seek quotes from different buyers. You have to provide a competitive quote based on the insurance company party to the settlement, and the payments. If the seller finds your quote in his favor, the buyer will have to provide disclosure document detailing the terms and conditions that would govern the potential transaction.

Once the agreement is signed by both the parties, there would be a waiting period during which the court would fulfill its duties. This can sometimes take up to a quarter year. After the court approval, money will be dispatched to the seller with minimal delay.

The buyer of the structured settlement is lured to it by the prospect of fixed tax free income in regular intervals. The major cost involved is the marketing cost. It is important to portray yourself in the right earnest to generate the necessary trust in the seller. Once your credentials are established, the next major expense if in obtaining the mandatory legal approvals.

As the structured settlements are guaranteed financial instruments, the buyer can avail low interest loans against these. The money is plunged back into the buyer’s existing line of business. To add to that, the lump sum money that a buyer pays is much less than the actual value of the structured settlement in the long run.

Dealing in structured settlements does not eat up much of your time, but it offers a win-win for the buyer and the seller. Seller benefits from the short term lump sum money and the buyer from the long term prospects.

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Buying Structured Settlements!