What's A "Structured Settlement"?

What's A "Structured Settlement"?

Your only exposure to the term “structured settlement” may be late night TV ads hawking immediate access to your money.  “It’s your money,” they’ll exhort.  “Cash in your structured settlement and use your money now!”  If you are (or were) a successful plaintiff in a lawsuit, your contact with structures may be more personal.  You may have received one, be evaluating one now, or have considered one but opted for cash. 
But what should you know?  Even if you already have one, you may not know how they operate and why they’re set up in the arcane fashion they are.  Like so much else in the world, structured settlements are mostly about taxes. 
Cash vs. Periodic Payments.  If you’re injured in a car accident and receive a $300,000 settlement from the other driver or insurer, it’s tax free.  See 10 Things To Know About Taxes On Damages.  When you invest the $300,000, your investment earnings are taxable.  If you receive a structured settlement instead of the $300,000 cash, you’ll get payments over a term of years or your lifetime (however you choose), and each payment is fully tax free.  Thus, a structure converts your after-tax earnings into a tax free return. 
Structured settlement brokers (a special type of insurance agent) consult as a case approaches settlement.  For more about brokers, see National Structured Settlements Trade Association.  Brokers are paid standardized commissions by the life insurance company that issues the annuity.  Brokers can run many financial projections based on a term of years, payments over your life, over your joint life with your spouse, etc.  You can even call for no payments for say 10 or 15 years, with payments starting thereafter as a way to fund your retirement. 
Thus, structured settlements are very flexible.  Provided that you consider these issues before signing a settlement agreement in your case, you can structure as much or as little as you want and take the rest in cash.  With all of this, though, they have to be set up properly. 
Mechanics.  You can’t own the annuity policy or the tax benefits won’t work.  Rather than paying the cash to you or your lawyer, the defendant will send the money for the structure to a life insurance company’s subsidiary called an “assignment company.”  The assignment company will buy the annuity from its parent life insurance company, and the assignment company will hold the policy and pay you each month as the contract requires. 

Special provisions in the tax code allow this arcane structure.  Apart from special benefits to insurance companies, the arrangement allows you to be a mere recipient of the periodic payments over time.  Even though you’re guaranteed to receive each payment, the tax code doesn’t treat you as owning anything except an expectation of each payment.
Structured settlements are tax efficient and can have asset protection and spendthrift advantages too.  Like other tax deferral ideas, their results are more impressive the longer their term and the slower they pay out.  They aren’t for everyone, and you shouldn’t structure every nickel you receive.  Once they are set up, they generally can’t be changed. 
Get Your Cash Now!  Who are the “cash it in and get your money!” crowd advertising on TV?  They are factoring companies.  They buy up structures at a discount from accident victims who are receiving structure payments but whose circumstances have changed so they need the cash now.  Most states now have a required court hearing before they can buy a structure. 
Taxable Structures?  Finally, there’s another type of structure that has become increasingly popular over the last five years.  The same concept is used in non-tax free settlements (like a contract dispute).  For more on taxable structures, see:

Before You Sell Your Structured Settlement Read This

 Before You Sell Your Structured Settlement Read This 

Austin, TXAfter twenty some years in the structured settlement business, Terry Taylor knows his industry—the good, the bad and the ugly. A former president of the National Structured Settlement Trade Association, Taylor warns there are vultures that prey on people who are poor, uninformed or desperate. The vultures Taylor is talking about are not part of this organization, but people often do not understand the difference. "Yes, I am a little mad at the predators," says Taylor. "I have always worked with plaintiffs to protect their money, and when I see them getting ripped off, I don't like it."

Taylor works with Strategic Capital, a highly reputable company that both buys and sells settlements and recommended by Consumer Attorneys of California (CAOC).

The bad apples are referred to as the "Factoring" companies—their sole purpose is to buy up settlements at excruciatingly high discounts. Unfortunately many people get hurt and don't realize that a 30 percent charge for the sale of an annuity is not the industry standard.

Americans receive as much as $4 billion a year in monthly disbursements usually as the result of a lawsuit. Taylor was once "adamant" that people never sell their structured settlements for cash, but these are tough times in the US and he has changed his position. "I have come to the conclusion it is sometimes better for people to save their home from foreclosure, for example, rather than continue to receive a monthly payment," he says.

"If they just want the money to buy a fast boat," says Taylor, "then that's still not a good idea."

"If you are going to sell your settlement for cash beware of the "discount rate" you're being offered." Taylor's company, Strategic Capital, offers a discount rate on average of 12%. If the structured payment has a future value of $100,000 in a year—you get $88,000. "Yes, we make money, but it's better than a credit card rate, and it is fair."

However, there are some rough players in the business that will take you for a 30 percent "discount rate"—and you'll end up with $70,000.

"People don't understand discount rates," says Taylor. "All they know is in a few years I get $50,000, but if I sell it I am going to get $22,000 today. That's a horrible deal, but they are just looking for cash now."

In 2002, as the then-president elect of the Structured Settlement Trade Industry, Taylor and others lobbied Congress for changes that would protect settlement holders from predatory practices. "Before then, we saw some horrendous deals," he says.

Since then, the law requires that the sale of every structured settlement must be approved by a judge, but Taylor still sees problems. "Most judges take care to guard the interests of people who are selling their structured settlement, but sometimes they don't," he says. "Sometimes the judge, who doesn't add very well, will approve a 30 percent discount. It doesn't happen very often, but it does happen."

And, before you sign, ask if the company that wants to buy your structured settlement has ever gone bankrupt. It's a good clue to stay away says Taylor. And it is very import to ask who is servicing the debt. Ideally, it should be the insurance company and not the people who are buying the settlement. If they go broke—so will you.

People are dealing with some very difficult circumstances in the US at moment. If you sell a portion of your
structured settlement to a company, they may harass you sell the remainder. If you discover you got a raw deal on the first sale, and decide to sell the rest to another company, the first company may refuse to work with another factoring company, making them the only one who can purchase any future sale at whatever price they set.

"Strategic Capital has always been fair with people," says Taylor.

"Yes, I sleep better now since 2002," says Taylor. "I feel much better than I did because so many people back then were being taken of advantage of."

But, warns Taylor, there are still some seriously bad apples out there and it is still a buyer beware situation.

Top 10 of the Best Rated Structured Settlement

Top 10 of the Best Rated Structured Settlement

tructured settlement payments are usually the result of a personal injury lawsuit in which the defendant's insurance company funds the award amount with an annuity policy that provides periodic payments and ongoing income to the plaintiff. However, many people find the need to have a lump sum to aid in paying off debt or medical bills. A long-term stream of payments is not always the most beneficial method of receiving their award. A secondary market has evolved around structured settlements that allows consumers to sell all or a portion of their payments to a structured payment buyer. These buyers, or factoring companies, then pay the consumer a lump sum in return. In addition, other types of annuities, such as lottery winnings, are usually paid over time and can also be converted into a lump sum payment.

Fairfield Funding purchases structured settlements and annuities. Backed by a 100% guarantee, Fairfield works to get you the best price, needed cash in as few as five days, no interest advances, and fast closings.
Peachtree Financial Solutions has helped tens of thousands of people reach their goals. As a leading purchaser of structured settlement payments, we can buy all or some of your future payments, so you can take the next big step.
J.G. Wentworth has been purchasing future payment streams for more than 20 years. With a best price guarantee and customized transactions to fit your needs, J.G. Wentworth can help you get the cash you need.
Olive Branch Funding is a purchaser of structured settlement payments. Our experience in this field allows us to provide money upfront in exchange for future structured settlement payments FAST.
Annuity Transfers puts its customers first, approaching every settlement sale with their interests in mind. The company offers personalized service that walks the customers through the process and the financial implications.
Seneca One offers a 5K Right Away program that gives owners of a structured settlement access to $5,000 in 24 hours. Each payment plan is customized for the recipients, giving them control of how much or how little they sell.
Woodbridge Structured Funding goes beyond the basics with its guaranteed highest price on a buyout. If the company does not offer the highest value on a settlement, it pays you $500 when you get funded from the competition.
Stone Street Capital offers quotes via the phone in minutes, making the process of getting cash a quick and painless process. The company personalizes every quote to meet specific needs.
Oasis Legal Funding is a structured settlement providers that offers pre-settlement funding. This let customers negotiate while waiting for their personal injury or accident claims.
Annuity.org is a website designed to help people understand annuities and structured settlements. The company is a partner of Pennsylvania-based CBC Settlement Funding.

structured Settlement Loans

structured Settlement Loans


structured Settlement Loans

If you have won a lottery, a personal injury lawsuit, a wrongful death suit, or workers' compensation case you’ll be awarded a large sum of money and your payment will surely be set up as a structured payout. But instead of having your payments stretching over twenty years you’d like to have a lump sum of money right away especially when you have problems like an unplanned emergency or job loss, need to pay college tuition or purchase a business or a new house or just have to pay off some debts.  But what if you don’t want to sell your structured settlement? Settlement loans (both post-settlement and pre-settlement) can be a lifesaver.
These loans are provided by structured settlement companies and you make future loan repayments with the interest applied to the loan principal according to terms.  You don’t have to risk your assets for the loan, you don’t have to concern yourself with background checks, employment and credit history or even how you’ll have to repay the loan because your settlement structure acts as the collateral. However, it must be taken into account that court approval must be obtained and when you apply for a pre-settlement lawsuit loan the lender company must review documents regarding your case and speak with your attorney so it may take about 90 days for the loan to be processed and funds distributed. Also lenders will provide the loan based on a percentage of the actual settlement and typically this will be somewhere between 70% and 90%.

  • Have a structured settlement and need a loan? We've put together a list of structured settlement loan companies. 
  • Think you may sell your structured settlement payments? Consider these points?
  • Trying to find structured settlement companies that seem legitimate? Check out the list we've researched.
  • Learn more about the secondary structured settlement market.

This type of loan can even be obtained during a pending lawsuit and is known as Pre Settlement Funding, pre-settlement loan or lawsuit loan. The plaintiff can obtain the loan before the case is finally resolved and if he doesn’t win the lawsuit, he doesn’t have to repay the monies advanced. If he does win the lawsuit, he repays the original settlement loan amount together with fees assessed due to the lawsuit’s inherent risk.
Like any other type of loans structured settlement loans have their cons and pros too.
The main benefit of this loan is that you get your money right away to solve some urgent issues. Moreover, you are protected against future inflation, or you may even have enough money to invest into a business or stocks with possible solid returns. You will also have to pay comparatively low interest payments. But on the other hand you’ll get your money at a discount (minus a percentage, as lender companies give out loans to make a profit). Also, if you don’t manage your money reasonably and start “enjoying” the lump sum of money you have got in your hands, you may end up being broke.
So, if you need your money right away and are OK with these disadvantages, a structured settlement loan is possibly your best option.


Structured Settlement Loan Companies

Structured Settlement Loan Companies


Structured Settlement Loan Companies

We've compiled both a list of companies that provide loans against structured settlement payments. Similar to our list of structured settlement companies, we have excluded brokers or companies whose web site, including their contact information, left us without a warm and fuzzy feeling.
Be aware that the prevailing opinion is that it is not possible to provide structured settlement loans. One company we messaged to ask if they provide loans replied as follows:
"Structured settlements have specific language that prohibits the use of the structured settlement as collateral for a loan. The language in it should be similar to the following, which keeps you from being able to take a loan against it.
'This is a structured settlement annuity and cannot be assigned or used as collateral on a loan. Payments cannot be accelerated, deferred, increased or decreased."'
Do you best to be patient. Read all documents carefully. Get the best advice you can.
/s/ Jovan Johnson

Structured Settlement Loan Companies

Absolute Legal Funding

(888) 696-6449 New York
(631) 339-1713 Long Island
2100 Middle Country Road
Centereach, NY 11720
BBB Rating: N/A

Accident Claims Loan Ltd.

(888) 715-8701
244 Fifth Avenue
New York, NY 10001
BBB Rating: N/A

Advance Case Loans

(312) 332-4100
368 W Huron St, Ste 3S
Chicago, IL 60654
BBB Rating: A+

Alliance Claim Funding, LLC

(212) 847-9565
(888) 374-2822
1180 Ave of the Americas, Eighth Floor
New York, NY 10036
BBB Rating: A+

American Legal Funding, LLC

(480) 515-3698
17700 N. Pacesetter Way #104
Scottsdale, AZ 85255
BBB Rating: A+

AMICUS Capital Services, LLC

( 661) 263-0030
25876 The Old Road Suite 340
Valencia, CA 91381
BBB Rating: N/A

Black Diamond Funding

(954) 520-9248
8201 Peters Road Suite 1000
Plantation, Florida 33324 
BBB Rating: N/A

Bradley Financial Lawsuit Funding LLC

(561) 526-3331
7050 West Palmetto Park Road Suite 15-103
Boca Raton, Florida 33433
BBB Rating: N/A

Capital Financing

(404) 348-4475
1140 Hammond Dr 110
Atlanta, GA 30328
BBB Rating: N/A

Cash In Your Case, LLC

( 800) 526-8098
1400 Old Country Road, Suite 414
Westbury, NY 11590
BBB Rating: N/A

Cash4Cases Inc.

(212) 684-1060
228 Park Ave South
New York, NY 10003
BBB Rating: N/A

Cochran Lawsuit Cash Advance

(888) 875-6049
545 8th Avenue
New York , NY 10018
BBB Rating: N/A

E Lawsuit Loans

( 800) 972-5560
111 Grafton Ave #612
Dayton, OH
BBB Rating: N/A

Fair Rate Funding

(732) 612-3691
1913 Atlantic Ave Suite 140 
Manasquan, NJ 08736
BBB Rating: A

Fairfund Financial Group, Inc.

(800) 235-0876
(251) 990-4994
19414 Liberty Road
Point Clear, AL 36532
BBB Rating: A+

Fund Capital America

(310) 424-5176
714 W. Olympic Blvd 710
Los Angeles, CA 90015
BBB Rating: N/A

Great Bay Capital Inc

( 843) 324-6848
26 Flagship Lane
Hilton Head Island, SC  29926
BBB Rating: N/A

Interstate Lawsuit Funding, LLC

(954) 946-0487
5100 N Ocean Blvd # 1618
Fort Lauderdale, FL 33308
BBB Rating: N/A

JES Funding Solutions

(561) 432-9237
7064 Thunder Bay Drive
Lake Worth, FL 33467
BBB Rating: N/A

Law Cash

(718) 875-0605
26 Court Street
Suite 1104
Brooklyn, New York 11242
BBB Rating: A

LawCapital Enterprises, LLC

(360) 694-0330
7642 NE Hazel Dell Avenue
Vancouver, WA 98665
BBB Rating: A+


(888) 566-8614
1200-C Agora Drive, Suite 241
Bel Air, Maryland 21014
BBB Rating: N/A


Shop around before selling your Structured Settlement

Shop around before selling your Structured Settlement


Shop around before selling your Structured Settlement

If you’ve already decided to sell your structured settlement you’ve probably also already begun to look at companies that buy structured settlements. There are dozens of firms that buy structured settlements, and many of them offer great prices for all or a portion of your settlement. But how do you know if you’re getting the right price? Do you need to shop around before picking a company to work with? Or do you have a better chance of getting a good deal if you go with the first offer? Here’s what you need to know about selling your structured settlement and how to pick the very best offer:

Look at Many Different Offers

Because it is a lump sum that you get all at once, rather than structured payments over a long time period, all lump sum offers are going to be less than the full worth of your structured settlement. How much less they are going to be will vary from company to company and should be one of the major factors you consider when you think about who to sell your structured settlement to. It shouldn’t be the only factor, but it should be one of the largest.
Most offers boil down to this: you either get a large amount of money right now, or a little bit more money over the course of your structured settlement. What percentage of your original settlement the lump sum provides will separate the companies you want to work with from the companies you should not consider. Some companies will offer you as little has half of what your original settlement offered, simply because you need the money right now. Others will require only a small percentage off of the top. If you go with the first offer you see, you are unlikely to be getting the very best offer you can find.

Look at Different Discount Rates

When you take out a mortgage, you know that you will actually be paying far more than you original borrowed, when you put interest into the equation. In many ways, selling your structured settlement is the process of getting and paying off a mortgage in reverse.
For example, if you take out a mortgage for $100,000, you will probably end up paying nearly $200,000 for that $100,000 once the mortgage’s term is up, because of the interest the lender adds on top of the principal. Your structured settlement is essentially that larger number (the principal plus interest). When you sell it, you are being offered just the principal, without interest. Of course, you aren’t actually paid interest on your structured settlement if you retain the original payment plan, the analogy simply demonstrates why you get less than your entire settlement when you sell to a company like JG Wentworth.
The percentage that the company takes off of the top is the discount rate. This dictates how much you will be paid when your settlement is sold. For example, if you have $120,000 left in your settlement and you sell at a discount rate of 5%, you will get a lump sum of $94,600—which is a great deal, especially if you need a large influx of cash right now. However, if you are selling at a 20% discount rate, you are looking at less than half of what you would original have made off of that settlement—so be very wary about what discount rates you deem acceptable.

Shop Around

It can be tempting to go with the first structured settlement buyer you find. This would be a mistake. Instead of selling you settlement to the very first bidder, you want to see lots of offers from ls of companies and determine which one is the best for you. Many companies will offer perks or will even help you with the court process that you must go through in order to sell your settlement. These features might sway you towards one company, even if they do not have the lowest discount rate.

When in Doubt, Contact an Expert

If you’re not sure whether or not you’re getting a good deal for your settlement, you should talk to an impartial third party. Of course, all companies will try to tell you how even their high discount rates are a great deal—but if you want to know for sure, ask a lawyer or settlement expert. Never just go with the very first offer you see—because there might be a better one out there

What is a Structured Settlement?

How do I sell my Structured Payments? 

You may need to buy or repair a home, start or invest in a business, fund a college education, pay off a debt, divorce or invest. These some valid reasons why you’d like to have lump sum in your hands rather than your periodical payments. The process of selling an annuity or structured settlement is not difficult, but it involves you taking the step to sell, deciding how much to sell and going before a judge to approve your request prior to accessing your cash.
All this process includes five steps:
  1. Make the decision to sell | you can start the sale of your settlement process if you have valid reasons for it and the sale of your payments will not have any effects on your future financial needs.
  2. Shop around to find the discount rate and service on your sale | it is important that you work with a funding company that is reputable and has your best interests in mind, uses its own money to fund (is not merely a broker), is experienced in completing the court ordered transfer process, and has A+ rating on the Better Business Bureau and very few complaints, if any. 
  3. Choose the company you like best and start the sales process | you must begin the paperwork process. After you submit the proper paperwork (your annuity policy, settlement agreement or benefit's letter so the transfer company can verify your payments, application, ID), all materials are reviewed to ensure they are complete and accurate.
  4. Have your sale approved by a judge | once the relevant documents are returned and they are fully signed, a local attorney files them with court and after that the court will schedule a hearing. This is the beginning of the waiting period. In the court you will be required to justify why the money is needed and you should be in a position to show that you are not putting your and your family’s financial future in jeopardy. Unless there are any problems with your request of transfer, the judges mostly approve the transfer at this stage.
  5. Get your money | Once approved, the judge will sign the order approving your transaction and the order is sent over to the insurance company to wire funds.

How long does it take to sell my Structured Payments?

After you've signed the contract, on average it takes about 45 days to receive your money. However, keep in mind that every structured settlement purchase transaction is different due to each state's laws regulating such purchase transactions. In addition, you may qualify for an immediate cash advance to help you through a particularly tough time.

What discount rate is normal when selling Structured Settlements?

If you are considering selling your annuity, you need to be sure that the offers you are getting are reasonable and fair as you’ll have to get the lump sum reduced by a factor of the projected interest earnings, known as the discount rate. The exact discount rate that you will need to give in order to sell your structured settlement will depend upon the total amount of your settlement payments, the number of payments you have remaining, the date those payments are due to arrive, the number of payments you wish to sell etc. The longer people have to wait to receive their payments, the greater the discount rate will need to be. Discount rates from factoring companies to consumers can range anywhere between 8% up to over 18% but usually average somewhere in the middle. An average discount rate of 12% should be reasonable but there are some companies that will want to take as much as 30% discount.

Will I be forced to pay tax if I Sell my Annuity or Structured settlement? 

The money you receive from selling your structured settlement payments will have the same tax treatment as the payments you receive from your structured settlement annuity.
The Periodic Payment Settlement Act of 1982 (Public Law 97-473) formally recognized and encouraged the use of structured settlements in physical injury cases by designating payments from a structured settlement as tax-free.
Section 104(a)(2) of the Internal Revenue Code clarifies that the full amount of the structured settlement payments, including the acceleration when, for example, RSL Funding purchases your annuity, is tax-free to the victim.
The Internal Revenue Service has ruled that where a claimant assigns periodic payments due to be received under a settlement agreement in exchange for a lump sum, the lump sum remains tax-free.
As part of the Tax Relief Act of 2001 (H.R. 2884) signed by President George W. Bush on January 22, 2002, individuals who must sell their structured settlement payments to meet unplanned financial needs are protected. This legislation made it mandatory for individuals to seek court approval when they sell their structured settlement payments, and works in conjunction with state laws directing how these types of transactions will be completed. In addition to benefiting and protecting the individuals, it also makes clear that annuity providers will suffer no tax consequences as a result of these transactions. The legislation states that annuity owners and providers do not now owe, nor have they ever owed, taxes as a result of these transactions.
Though, most likely you will have to pay taxes on any money that you have won, such as lottery winnings or casino earnings. These things are taxed as any other income. If you paid your taxes on the entire lump sum up front then you will not pay taxes again when you sell your payments. However, if taxes are deducted regularly, when payments are made, then you may be responsible for paying a lump sum of taxes if you sell these periodic payments. 

Do you offer tips for selecting a Structure Settlement company to work with?

The best structured settlement companies are those that treat you the best, do not pressure you, and offer you the best deal with the lowest discount rate. Shop around before accepting an offer. Although you wouldn't research settlement brokers if you didn't need the money, a discount rate of 20% + is a lot of money to give up. Perhaps it's worth it for you but you should give this a lot of consideration.

Should I sell my Settlement Payments to pay off debt?

This is a complicated question. If your debt is serious enough that you may end up in bankruptcy proceedings, you should speak with a bankruptcy attorney and determine whether your settlement would be protected. If it would be protected, do not sell to pay off your debt.

What is an anti-assignment provision?

The goal of an “anti-assignment” provision is to ensure that the two contracting parties will not be able to transfer their obligations under the agreement to someone else without first getting permission from the other party. One of the boilerplate clauses found in  most commercial contracts looks something like “Neither this Agreement nor any of the rights, interests or obligations under the Agreement shall be assigned, in whole or in part, by operation of law or otherwise by either party without the prior written consent of the other party.” 
There are three variations of anti-assignment clauses that can be used in a contract: a standard anti-assignment clause barring any assignment or delegation, the second one is used when the parties want to prohibit assignments except if they transfer the agreement to new owners or affiliate companies (and don’t want to ask for permission), and the third type is similar to the second one except it requires permission for such an assignment. But it should be noted that only prevent “voluntary” assignments van be prevented; you cannot prevent assignments that are ordered by a court or that are mandatory under law—for example in a bankruptcy proceeding.

What is a deferred annuity?

Usually an annuity contract is created when an insured party pays an annuity company a single premium that will later be distributed back to him over time. However, sometimes an investor may choose to defer annuity payments income, installments or a lump sum until he/she elects to receive them (e.g until he/she retires). This type of annuity is called a deferred annuity and has two main phases: a savings phase, when money is invested into the account and an income phase, when the plan is converted into an annuity and payments are received.
A deferred annuity is not taxed until the income phase begins and it also provides a death benefit to the survivor(s) of the annuitant. As this type of annuities is designed primarily as retirement savings accounts, the annuitant may owe a 10% penalty tax in addition to ordinary income taxes if principal, earnings or both are withdrawn prior to age 59½.
Depending on the way the investment is made the deferred annuity earnings can be either fixed (your money earns interest at a fixed rate that will never drop below a minimum rate guaranteed by the issuing company and is tax-deferred until withdrawals are made) or variable (you choose investments from a pre-selected list of funds called sub-accounts inside of a variable annuity and the returns will vary depending on the underlying performance of the chosen investments).
  • Have a structured settlement and need a loan? We've put together a list of structured settlement loan companies. 
  • Trying to find structured settlement companies that seem legitimate? Check out the list we've researched.
  • Learn more about the secondary structured settlement market.