STRUCTURED SETTLEMENTS FREQUENTLY ASKED QUESTIONS
I've worked with one of the foremost leaders in this industry and have been in financial services (financial planning) for over 40 years. I would like to share my knowledge with you in hopes of helping you make a more confident decision.
STRUCTURED SETTLEMENTS RESOURCE PAGE
Should I sell my payments?
The answer to that one is difficult. The question you might ask yourself: Do I need the money now? For example: to buy a house, pay for an education, a business opportunity or to keep from filing bankruptcy. Any good reason would make sense. To go on vacation or buy an Acura Legend might not be in your best interest.
If you have other money sources to explore, I suggest using those options first. Selling your structured settlement should be a last resort.
What is it going to cost me?
If you add up all your settlement payments and figured your settlement is worth that amount today, you might be disappointed with the amount the broker will offer you.
Your structure came about because a certain amount of money was put into an annuity and then that principal, together with the interest is paid out over a period of time.
(for example: $1,000. invested at 7.2% will double in 10 years, meaning if your payments adds up to $2,000. over 10 years only $1000.or an amount less than the $2000. was paid to buy that benefit.) So when you speak to a broker, it may look like you are getting less than the sum of your payments.
Simpler answer: the present value (today's value) that's the $1000. will be discounted to cover costs to do the deal and the rest is sent to you. I know it's confusing, It took me awhile to understand, when it was first explained to me.
How long will it take to get my money?
You may have been told by others, 3 days,a week to 10 days. Not true - this is to get you to committed to them. Truth is - 3 weeks to 2 months or longer - it depends on a number of things:
a. The Insurance Company - (both issuer and owner of the annuity) - some companies are very difficult to deal with as you may have already experienced.
b. UPDATE: ALL STATES NOW NEED COURT ORDERS.
New law makes all structured settlement payment sales subject to a court order. If no court order, a tax equal to 40 percent will have to paid on the total amount of payments being sold. This is good, making selling your settlement safer. (For more information click here.)
c. Do you have monthly, quarterly, Semi or annual payment or are they lump sum payments? Different funders have different requirements and it is important for your broker to know those requirements. You will be able to obtain your money sooner with a lot less frustration if you have a knowledgeable broker.
d. Is your Insurance Company an impaired rated company? - most funders sell off these cashflows or settlements much like mortgages to large Wall St. type financial companies. They buy these settlements in large blocks of a million dollars or more. These companies tend only to be interested in A+ rated ins. company backed annuities. So the Funder may have to hold the settlements of lower rated ins. companies or sell them off at a lower profit margin, therefore a lower price to you
e. All the above applys to pricing plus having the necessary documention such as a copies of the following: The annuity, the settlement agreement and release, photo ID, recent check and application. see Structured Settlements
The above are a few of the considerations, there are more, but I think you get the idea.
How do I get the best deal?
If you are dealing with the wrong people can mean some tricky game playing for example: A practise known as (low balling). You are offered a quote much higher than others have offered you. Then the closing is drag out and they come back at a later date saying they can't do the deal as is and ask for for more money. All the while keeping you out of the market place.
Another: You are offer an amount. Then later you are charge the attorney and filing fees.
If you see ads saying " we are a direct funder and you will get more for your money, they have a retail price (for the general public)and a wholesale price. Only established brokers can get the wholesale price. And getting a good wholesale prices isn't always easy.
Check to see if there have been any lawsuits against the the company you are dealing with. Check the Dept. of Consumer Affairs in the State or City where the company is located.
My advise is:
If you know anyone who has sold their payments, ask them about the service they received.
Are there tax consequences when I sell my payments?
As of January 23,2002, under the new law governing the sale of Structured Settlements, there is no tax consequences. See New Law
How do I know if I'm dealing with a knowledgeable broker?
There are brokers who say that they will shop for the best price and I'm sure they try to do that. The only problem is, "best price" isn't the only consideration. All things being equal Experience seems to prevail along with creativity, ingenuity and plain hardwork. Most brokers I have dealt with are honest; however most have little or no experience in this area of expertise. Graduates from those one week courses that point out that they are "certified" need at least one to two years of experience first. Few brokers do that many structured settlements or have the opportunity to gain the much-needed practice to convert annuities to lump sum payments. It took me a number of years to understand the process and I have 32 years background in the financial community.
Questions to ask the broker:
How long have you been in the structured settlement environment?
What did you do before you came in the business? The broker should have some kind of a financial background, it's that difficult a business and getting more difficult every day.
Trust your instinct, talk with the broker of your choice, get a sense that they are aware of the complexities. If it sounds too good to be true, you are right, meaning if they are offering a lot more money than other brokers, or can get the job done a lot sooner they may not be aware of the complexities that your settlement conversion may entail. You need to choose someone who is a good problem solver, as well as ethical.
There are few things that come easily, most of the time it takes a lot of diligent hardwork. I hope I haven't confused you more than when you started reading this. The important thing to remember is that with competent advice you can and will get the money you need. That is why I get such satisfaction out of this business. Over the years, I have received letters from clients telling me how I helped them to achieve some of their life's goals such as buying a new home, starting a successful business venture or getting out of a difficult situation. I hope we can share a positive experience in a similar way.
There are good informed brokers out there. I suggest you take some time to explore all your options and select the right one for you. My goal is to help you get a fair price for your settlement, and to help you obtain your money in the shortest amount of time.
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We can be reached via email at contactus@money-now.net or by telephone at 1-800-338-5815 or 1-800-211-1680. Our postal mailing address is 3 South King St., Danbury, Ct., 06811 US
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