Advantages and disadvantages of the sale of their future structured settlement payments

Advantages and disadvantages of the sale of their future structured settlement payments

Although structured settlements are designed to ensure long term stability is not necessary limited to periodic payments. You can, instead of getting a regular payment, sell all or part of your future payments. In return for future periodic annuity, you get a large sum of money directly to your property sells.

There are advantages and disadvantages in selling structured settlement. If buyers are structured settlement in the area of ​​making money, you should negotiate the best prices and maximize the money you can get your pension.

What is good to sell structured settlement?

As mentioned above, the structured settlement designed to protect your long-term income. In most cases, recipients of structured settlements are those that have lost some of their ability to work and can not produce the same amount of revenue because they are used. The idea of ​​structured settlement system back to balance losses in the income column of their balance sheets.

The structured system sounds perfect for those who are too lazy or unable to make good financial plans, but in reality is a huge loss of opportunity cost. Imagine if you have a large sum of money in lieu of periodic payments, invest wisely in mutual funds, blue chip stocks or real estate, perhaps to ensure a better income than the initial plan.

Suppose you have a good business idea, selling structured settlement gives money manners. They say the property market collapse and properties that you see on the sales price and a half, would not it be better for the money lump sum? If you have a high rate mortgage, it would be better to repay the loan and save interest?

Long story short, the sale of structured settlement provides a positive impact on your balance as long as the money in the right place.

What are the disadvantages then?

When it comes to putting more green in your pocket, Uncle Sam has his eyes (and hands) it. A structured settlement payment is not taxable and does not affect social security benefits for all. However, if you sell your future settlement payments, every dollar they earn money with this lump sum is taxable. Let's say you started your business after the sale of your annuity, the money the company is subject to tax. So the money you earn stock dividends, real estate investment, or investment funds.

Things to pack

In general, given the advantages and disadvantages mentioned above, the sale of a decision must be made on the basis of potential impact on its balance sheet. When you sell your structured settlement tend to generate more income for you to sell, otherwise if you sell your future structured settlement payment of an expensive (sports car) leading to increased costs (fuel and high maintenance costs ), then maybe you should think twice when using that money.