Plaintiffs who win personal injury lawsuits are likely to be awarded structured settlements instead of a lump sum. Structured settlements provide a secure financial future for the plaintiffs and their families, hence the periodic payments over a fixed number of years.
Circumstances do change where the plaintiff may require a lump-sum to cater to immediate expenses such as medical bills, renovating a home, purchasing a new home or car, repaying debts, or even paying college tuition.
When faced with such predicaments, most plaintiffs prefer to sell all or part of their structured settlements in exchange for a lump-sum.
Buying a structured settlement is one of the best investment options, besides buying stocks or treasuries. As a buyer, you will be required to offer the owner of the settlement immediate cash and from the sale, you will gain some substantial profit.
If you’re planning to purchase a structured settlement, all you have to do is find a plaintiff who is willing to sell a part or all of his structured settlement.
How to Buy Structured Settlements?
Although the process of purchasing structured settlement is usually easy, it’s advisable to consider a few important things to avoid finding yourself in a nasty situation. You will be dealing with a huge sum and so you should proceed with caution.
Furthermore, the buying and selling of structured settlements must fully comply with the state and federal laws and must as well be approved by the court of law.
Here is the procedure you should follow when buying a structured settlement.
1. Find a Genuine Broker
When it comes to structured settlement transactions, it’s important to enlist the help of a broker. An experienced and qualified broker will help you navigate the entire process of finding a seller and buying the settlement.
A simple web research will bring up a good number of genuine brokers so all you have to do is choose the best one.
2. Find a Seller
The next step is finding a willing structured settlement seller. There are many plaintiffs out there in need of immediate cash and so your chances of finding one are high.
With the help of your broker, start your search for a seller, reach out to them and make your offer.
3. Calculate the Offer
When you decide to purchase a structured settlement, your main aim is to get some profit from it. This is why it’s important that you calculate the discount rate to be applied to the particular sale.
4. Discuss the Quote with the Seller
As the buyer, you’re obligated to provide a quote to the seller. This is the total amount of money that will be given to the structured settlement owner in exchange for their future payments.
The quote must be clear and concise.
5. Issue the Contract
Once the client accepts the quote and agrees with the terms and conditions of the transaction, it’s now time to offer the contract.
This contract should contain the necessary terms and conditions of the structured settlement purchasing deal.
6. Await Court Approval
Most states restrict the buying and selling of structured settlement(s) and in most cases, a court approval is often required to proceed with the deal.
Both you and the seller will be required to appear before a judge who upon approving the transaction will sign of the sale.
7. Send Money to the Seller
With a signed contract and court approval, all that is left to do is sending the money to the settlement owner in the account he/she chooses.
Is Buying Structured Settlement Risky?
Like most other investments, buying structured settlements is a risky business. One of the main reasons is that most states have put strict laws that restrict the sale of structured settlements.
This is because according to these laws, the settlement is offered to benefit the plaintiff and it cannot be altered in the future, meaning that it should not be sold at any given time. However, this doesn’t mean that the settlement cannot be sold- it’s just that the legal aspect of the sale can be complicated due to these laws.
You will therefore require the help of an experienced attorney who will ensure that these laws will not affect the legal status of your investment.
Also, these restrictions are put in place due to the fact that most structured settlements are not subject to tax, making it hard to transfer to third-parties.
Therefore, purchasing structured settlement can be risky, but this doesn’t mean that you should back out of the deal. With the help of a lawyer and a broker, the process should be a little less complicated.