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 Because it is considered a form of property it is possible to sell structured settlement payment agreements to another person or company. These are purchased as an investment with relatively low risk. There may be some issues with inflation if the future dollars become worth a lot less than today’s dollars. People do sell structured settlement payment agreements in order to obtain a large lump sum instead of waiting for smaller amounts to arrive over a long period of time.

Structured settlements are set up frequently in the situation of a lawsuit settlement for a couple of reasons. One is to provide an injured party with long term guaranteed income. Another situation is that the defendant may be able to make smaller payments over a long term more easily than coming up with a large lump sum at once. Many settlements end up being in default if the payer is unable to pay. In that situation the whole matter ends up with more litigation. If the defendant can make payments of smaller amounts over a long time that may be the only way the defendant will be able to collect.

The decision to sell structured settlement payment agreements to another entity is one that should be considered carefully. There may be tax issues to deal with and in some cases the court must get involved to approve the sale in order to protect the interests of the person who is receiving the annuity payments.

There are many companies who will purchase structured settlements. As with anything financial the seller will want to do some research to be sure they are getting the best deal possible. Buyers of structured settlements will offer a largely discounted amount to purchase the future payments. They do this because they are taking on risk of inflation, non-payment and the costs of doing a business where they put out large amounts of cash that then take a long time recovering.

A good reason to sell structured settlement payment agreements would be if income is not an issue and you want a lump sum for a good reason like college tuition or a home down payment. Older persons may want to pay off bills or take a vacation. It all depends on the individual situation but selling these payment agreements is a possible solution that is on the level and easy to find.

This Financial Services article was written by George Mandala on 11/4/2009

George is a Financial Consultant