Whether you are considering setting up a structured settlement or thinking about selling an existing one, you’re certain to have some questions.
We have compiled a list of the most frequently asked questions regarding structured settlements.
Please call New Leaf Structured Settlements if the question you have isn’t answered below.
Setting up Structured Settlements: Common Questions & Answers
What are structured settlements and why were they created?
Structured settlements enable a large sum of money (e.g. the settlement due from a successful personal injury or wrongful death claim) to be paid gradually over time. Structured settlements were first promoted as a solution to the difficulties victims were having in managing money while recovering from illness or injury. The Periodic Payment Settlement Act was enacted in 1982.
Are structured settlements likely to be recommended in certain cases?
Structured settlements are often recommended in cases involving temporary or permanent disability, wrongful death and serious injury. They are also commonly used in workers’ compensation cases and whenever the plaintiff is a minor or unable to make decisions for themselves.
Who determines the payment amounts and schedule?
This will be agreed between the attorneys of the plaintiff and defendant, often with the help of structured settlement brokers.
Am I better off going for a structured settlement or a lump sum payment?
Every case is unique and your attorney can help you make that decision. In general, structured settlements are better as they secure your future income and provide a guaranteed return.
Couldn’t I just invest my lump sum in stocks and shares for higher returns?
You could but stocks and shares are riskier than annuities and the proceeds will usually be taxed.
How flexible are structured settlements?
Before they are agreed, structured settlements are very flexible and can be designed around various different payment schedules. After they have been agreed, they are inflexible and the money can only be released early by selling to a factoring company like New Leaf.
I have been told my structured settlement will be invested into an annuity. What is an annuity?
An annuity is a financial tool for enabling periodic payments to be made over time. Life contingent annuities pay out until the annuitant’s death. Guaranteed payment annuities will continue to pay out until the agreed schedule ends.
Will I have to pay tax on my structured settlement payments?
In most cases, no. Section 104 (a) (2) of the U.S. Code says that taxable income excludes: “the amount of any damages (other than punitive damages) received (whether by suit or agreement and whether as lump sums or as periodic payments) on account of personal physical injuries or physical sickness.”
Ask your financial advisor or accountant for a definitive answer.
Can my structured settlement be passed on to my heirs?
This will depend on the type of structured settlement you agree to. A life contingent annuity will stop paying out when you die whereas a guaranteed payments annuity will pay any remaining amounts to your designated beneficiary. You can even choose to add a commutation rider which will convert any remaining payments into a lump sum for your heirs.
Can my heirs sell my structured settlement payments?
Yes, any remaining payments can still be sold.
Selling Structured Settlements: Common Questions & Answers
Isn’t selling a structured settlement the same as taking out a loan?
No. With a loan, the lender lends you a sum of money and you agree a schedule for paying back the money plus interest.
The money you get from selling a structured settlement is yours to keep. The interest (discount rate) is agreed and deducted during the sale.
Can I sell my structured settlement payments before I have started receiving payments?
Yes. It doesn’t matter if you have yet to receive a cent; you can still sell your structured settlement.
Can I sell my structured settlement payments after I have started receiving payments?
Yes. It doesn’t matter how many payments are still due, you can still sell your structured settlement.
How big does my structured settlement have to be for sellers to be interested?
Whatever the size of your structured settlement, there will be structured settlement buyers out there who will be interested in giving you a quote. At New Leaf Structured Settlements, we are happy to buy structured settlements of any size.
Can I sell a structured settlement that has been set up for a minor?
In some cases, yes. You would have to prove that the child is likely to experience significant financial hardship unless you liquidated their structured settlement.
I’ve received a good quote from another seller. Is there any point calling New Leaf?
Absolutely. We guarantee to beat a genuine quotation by at least $1,000. What have you got to lose?
If I call you, will you keep pressurizing me until I agree to sell?
No. While some of our more aggressive competitors will behave in that way, we respect that you need time, space and independent advice before making your decision.
How long does it take to receive funds from a structured settlement sale?
The actual time frame will vary but is usually between 45 and 90 days. Sellers can minimize the wait by ensuring documents are provided and forms filled in promptly and accurately. However, a lot depends on the availability of the approving judge.
To fill the gap, New Leaf offer a cash advance service which can pay funds into your account within 24 hours (and sometimes within just a few hours).
Why does a court need to approve the sale of my structured settlement?
The Federal Periodic Payment Settlement Act of 1982 introduced several consumer protection measures to prevent unethical structured settlement buyers from duping people into selling when it wasn’t in their interests. This included the need for oversight and approval from a judge.
Will the judge approve my structured settlement sale?
This will depend on several factors. The judge will want to be satisfied that the sale will not cause you financial hardship in the future, that you understand the transaction and that the seller is not taking advantage of you.
I’ve had a structured settlement sale refused by a judge in the past. Will the same happen again?
Not necessarily. If you can prove that you need the money, understand the process and will not experience financial hardship as a result of the sale, the judge is likely to allow the sale. A judge can sometimes refuse a deal if the discount rate is deemed too high.
How can I prove to a judge that I need the money from a structured settlement sale?
First, you will need to be honest with yourself and discern wants from needs. For example, you might need a specially adapted car to make traveling more comfortable. On the other hand, wanting a car because you’re bored of your existing one is a ‘want’ and will not convince a judge.
Will I have to pay tax on the proceeds of my structured settlement sale?
In most cases, no. In 2002, the federal government introduced legislation to make the proceeds of structured settlements tax exempt, providing they were being used to ease financial hardship. Speak to an independent financial advisor or tax specialist if you are unsure.
Why should I trust New Leaf to buy my Structured Settlement?
As experienced structured settlement buyers, we can offer a raft of guarantees to our customers. For example, we guarantee we can offer more money and deliver funds more quickly than our competitors. We are also an ethical structured settlement buyer and will never pressurize you into making your decision.
These are some of the most common structured settlements FAQs but we’re sure you have more specific questions of your own. Please don’t hesitate to call New Leaf Structured Settlements on 1-800 517 7671 to speak to one of our friendly team.