How to Combine a Structured Settlement

A court petition is required for the combining or selling of structured settlements.

Whether you have a structured settlement or an annuity, selling a portion of your settlement payments for a lump sum payment gives you redemption from taxes. State law guarantees exemption. Structured settlements originate from tort claims involving physical injuries or physical sickness and workers' compensation claims under which settlement proceeds take the form of periodic payments, including lump sum payments.



Congressional acts favor structured settlements; recipients are offered protection from economic crisis that leads to hardship. Disabled citizens who head their households avoid dependency on aid when they are allowed to combine structured settlements into one lump sum payment. Self-sufficiency is permitted.

Things You'll Need

• Proper documents
• Court petition

Instructions

1. Research financial institutions that sponsor the buying or combining of structured settlements. Especially look for government-sponsored groups that buy structured settlements. Law firms can offer assistance.

2. Request a quote after you gather a list of possible sponsors. Once you receive your quote, review your options. Decide which sponsor offers the most assistance.

3. Complete the required paperwork. Wait for the sponsor to analyze the settlement and make an offer. If you don't agree with the offer, use the list to choose a different sponsor.

4. Wait for the contract. Sign the contract and return it to the sponsor. Contact the sponsor to set up an appointment with the lawyer who will file the petition.

5. Meet with the lawyer. Begin final stages of the contract; send the signed and notarized contract to the lawyer.

6. File the petition; this is done by the lawyer. The court will set a date for approving the payment. After the date is set by the court, the lawyer will notify the recipient of the court date. The transaction goes through court hearing and receives court approval. If the contract is not approved by the court, the lawyer will advise the recipient of the next steps to take and will begin another motion.

7. Wait for the check. The check is mailed to the recipient for the agreed upon sum.

Tips & Warnings

• State legislature dictates the selling of structured settlements. Be sure you understand the state laws regarding your settlement. Ask questions when speaking to your lawyer. He/She will have a better understanding of the expectations of the court.

• Although the structured settlement payments are not initially taxed, you will be responsible for paying taxes on income earned from the lump sum payment. Speak to a tax preparer. Keep records in case there is an audit.

• Also, rights to strucutred payments may not be transferred. It is against the law to attempt to transfer rights to another individual. Be safe.

References

• "Structured Settlements and Periodic Payment Judgments"; Daniel Hindert; 2005
• IRS News Release: Structure Settlement Business Article

Resources

• "JG Wentworth Online Catalog of Services": Sell Structured Settlement