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How to Sell Structured Settlements Annuity Payments [Complete Guide]

Sell Structured Settlements Annuity

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When you face serious financial crisis accessing your annuity can help you put your life back together. Few of the reasons that compel people to sell their annuity are as follows.

  • Inflation
  • Retirement funds
  • Clearing off debts
  • Unforeseen life events
  • Buying home
  • Starting a business
  • Divorce
  • Investments
  • Unemployment
  • Travelling
  • Getting serious injuries
  • Funeral expense
  • Liquidating inheritance via annuity

These are only few examples as there are more than a few.

Options for selling Structured settlements or annuity:-

Depending on your need to sell annuity, you need to access the specific sum of money at specific time period. There are several types of buy outs for structured settlements. The three most common types are as follows.

  • Partial:-

Partial buyouts mean selling portion of your annuity as it will still guarantees some periodic income payments in future without losing tax advantage. In case you need cash immediately, you can obtain a lump sum amount for exchange of your settlements for a specific period. For example if you need a car you can sell 4 years of your annuity payments for one lump sum amount. After these four years payments will resume back to prior conditions.

In case you need money second or third time the same process will repeat itself.

  • Entirety:-

This option allows you to sell off your whole structured settlement or annuity plan for full time by liquidating the entire investment. This will also terminate any chance of future periodic payments but you will receive a lump sum amount as payoff.

  • Lump Sum:-

Selling lump sum over time can also gin you huge amount of income immediately. This option still gives you guarantee to obtain periodic payments from the remainder of your structured settlement while retaining tax benefits. For example in case you need an amount of 25000 dollars for down payment of something, you can sell this amount specifically, contrary to certain number of payments.

This s similar of partial sale and you can sell portion of your annuity payments in exchange for a lump sum amount. Choosing this option allows you to receive specific amount of money and this amount will be deducted from your future annuity payments.

Amount received for selling annuity payments:-

Annuity sale is like a business transaction. Companies buying these structured settlements are referred to as Factoring Companies and they do intend profit from these purchases. This means that they will offer lesser amount when compared with the net worth of the annuity at time of payout. This amount deduction is the price you must pay for tapping into your money immediately.

The difference of amount that you receive between the actual worth of your annuity and the amount you receive is called the Discount Rate. Seller and buyer can both negotiate this discount rate while the average discount rate is around 12 percent. Following are some of the factors that allow you to influence the percentage of this discount rate.

  • Value of payment you are selling
  • Number f payments you are selling
  • Present economic conditions
  • Interest rates enforced by Federal Reserve
  • Fees
  • Extra charges

In some rare cases you can only receive half the amount as compared to the actual value of your structured settlement. Most offers come at near 60 or 80 percent of the original value. It is best advised to hold on to these future payments as much as they can. In case you really need to sell them then look around for getting different quotes from various buyers.

Process of selling Structured Settlements or annuity:-

This process of selling structured settlements is straight forward and simple. Buying companies complete around thousands of transactions each month. The process is as follows.

  • Making the decision:-

The first step of selling annuity is to make the decision yourself. If selling these annuities does not affect your future financial stability then it is okay to sell them. It is advised to talk t a lawyer or an accountant before making this decision.

  • Getting the right quote:-

After making decision, find the best quotes from reputable factoring companies. It is again advised to shop out more to get better discount rates from different buyers.

  • Setting up a court date:-

After taking care of paperwork, a court date will be scheduled to for addressing this sale. Before receiving the buyout you need to tell the judge the reason for selling the structured settlement.

  • Receiving cash advance:-

Before the court date, some factoring companies offer cash advance even before the sale goes through legal process.

  • Receiving final Cash in hand:-

Once court accepts this transfer, you may be able to receive the full amount in three to four days. This access to money also is dependent upon the factoring company’s polices as well as the policies of banks.

Legal process for selling structured settlements:-

Selling the rights for the future annuity payments is a legal process and the seller and buyers for these structured settlements must comply with state and federal laws. This legal process is also known as SSPAs or Structured Settlement Protection Acts which protects your rights to sell the structured settlement to third party while following provided rules and laws.

Judges are meant to ensure the reason for you selling the structured settlement is legitimate and is in your bets interest. Judges can also deny the sale if they get inclination that you are receiving either bad advice to sell or receiving a faulty bargain from the bung company.

Annuities that cannot be sold:-

Mostly all annuities including lottery winnings and structured settlements are allowed by law for sale; there are some annuities that are not permissible by law for sale. These annuities include the following.

  • Veteran benefit
  • Social security benefit
  • 401 K
  • Worker compensation payments
  • Divorce settlement payments
  • Child support payment

Time span to receive funds:-

The legal process to sell your structured settlements is a bit lengthy and it can range in between 45 to 60 days for completion. This timeline also varies based on the individual laws of each state regarding the sale.

 

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