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How a Structured Settlement Transfer Works

How a Structured Settlement Transfer Works

A structured settlement transfer is a relatively simple transaction wherein a company purchases the structured settlement annuity payments from the original beneficiary and in return pays them out a lump sum of cash.  There are a wide variety of reasons why someone might choose a structured settlement transfer.  In most cases it is because they require a large sum of cash for a particular need and can’t wait for the payments to come in slowly.  While a structured settlement transfer is simple in theory, it can become a bit more complex when the courts are involved, as they often are.

A settlement is most often a sum of money that is paid out to the victim of an accident, injury or other loss as the result of the negligence of another person or company.  In court, the victim agrees to accept a structured settlement wherein they receive the money in payments over time.  In many cases this is beneficial to the recipient as it helps to boost income and the money is more likely to last when it is taken in payments.  However, when that beneficiary no longer feels that the payments are enough money, a structured settlement transfer is the best way to arrange to get a larger lump sum of money rather than waiting for it to all come in over a period of time.

Since the settlement was agreed upon in court, however, in most cases a structured settlement transfer must be approved by the courts before it can go through.  If the courst determine that it is not in the best interest of the beneficiary as well as all other parties involved to receive the lump sum, they may rule against it.  It is up to the judge who hears the case to decide whether they will approve the petition and allow the structured settlement transfer to go through.

There are a number of companies out there specializing in structured settlement transfer transactions.  Basically, they will purchase the payments of the annuity from the original payer and give you a lump sum of money.  The payments on it will then be transfered to the company and you will no longer receive any money or be involved in the annuity.  At that point, you will have received the full amount of the settlement.

It’s important to weigh all of the pros and cons of a structured settlement transfer before you make the decision to go through with it.  Be certain that you can be financially responsible with a large sum of money and use it wisely rather than spending it on a whim.  You will never be able to get that money back!  While some people are able to take a large sum of money and invest it or use it for their best benefit, others may not have the restraint to resist the temptation to splurge.  Be sure you are going through with the structured settlement transfer for the right reasons and are prepared to accept the loss of the payments in the future.

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