Cash For Structured Settlements

Have you been injured by a major corporation? How about have a major accident happen during a surgery? Cash for structured settlements are used to resolve these matters. In 1982 congress enacted a law called the Periodic Settlement Act. The law generally provides a means for a recipients to receive periodic payments as damages in court cases that involve personal physical injury, physical sickness or awards received under the workers compensation act. In this act these payments can be received as a lump sum or as periodic payments. Another benefit of this law is that the money is generally excluded from personal income. A benefit for your income tax. The tax benefit is only available to those who choose to have the periodic cash for structured settlement. Those who take the lump sum settlement are subject to the taxable income laws.

Their is also a question as to taxation when cash for structured settlement is sold to an intermediary company in lieu to a lump sum payment. This in itself is a very complicated transaction that could be denied. Sell structured settlement should be your last resort.  But if this path is being considered recipients should weigh the discount value of the lump sum to the present value of receiving periodic payments. Is it more advantageous to get less money in present time or receive the entire value of the settlement over a larger period.

Their are other benefits to a structured settlement. 

Guaranteed Long Term Income - Yes, structured settlements can mean a stream of income coming to your mailbox every month for the rest of your life.  This means in some cases that the recipient will not have to worry about money ever again.  In some cases this just means that they have a little nest egg coming in to help out with bills and living expenses.

Tax Free Income - As I spoke before in the introduction structured settlements are tax free and don't show up towards your personal income on your tax return.  That means it is free money that is given to a recipient every month.  This money can be used for anything that the recipients want to use it for.  But in most cases it is used for hospital bills, medical expenses and household bills.

Guardianship cases - This is when settlements are put together to support the guardianship of a minor.  It may be the case that the parents or a parent have had a wrongful death and the remaining parent or a guardian will receive payments to support the living minor as a result of the parents or parent dieing.

If you have a structured settlement you do have the option of selling it to receive a smaller amount as a lump sum.  Although, you may see plenty of commercials that advocate this practice it may not be a good idea.  The tax code only recognizes the tax free amount only if it is not a lump sum.  Most of the companies will not tell their clients this.  So in effect, once a recipient receives the lump sum they are tax a high percentage of the amount which is a loss.  The company that gave the lump sum over and abundantly benefits from this because the are getting the lion share of the income.

It is better just to recieve the settlement in periodic payments and receive the full amount tax free without any worries.