Once you’ve
researched, planned and made the financial decision to sell all or part of a
structured settlement payment stream, you may have a few questions about the
next steps in the process. While it’s not as easy as simply receiving a check
in the mail after you sign your documents, Genex and its experienced legal team
does all the heavy lifting to make the process as pain free as possible. In
today’s blog, we’ll prepare you for what to expect once you’ve made the
decision to sell.
How Long Does It Take?
Numerous structured settlement transfer companies go to great lengths to advertise their process as being a fast way to get cash in hand. At Genex we are upfront about the fact that selling your structured settlement is not an immediate, walk in and walk out process. We move as quickly as the law permits, but most of the transaction time is unfortunately out of our hands – and yours.
As you may be aware, after you sign a sale agreement, your case needs to go in front of a judge so he/she can determine that selling your future payments is in your best interest. (Read our blog all about the hearing process here). Depending on the state you live in and the current caseload of nearby courts, this waiting period may take as little as a couple of weeks, up to 7 or 8 weeks in busy locations.
Will There Be Any Tax Implications?
Many structured settlement sellers are not aware that the sale of their payments is typically exempt from taxation.
The IRS is barred from taxing structured settlement income — whether it’s paid all at once or in installments — under the federal Periodic Payment Settlement Act. The law is designed to ensure structured settlements continue to provide financial security to those who received them. There are certain exceptions, however, and it’s a good idea to talk with a tax advisor before the final sale of your settlement.
What Can I Do With The Proceeds?
Technically speaking, you can do whatever you wish, as long as the court has decided that your reasons for selling have been planned out sufficiently and are in your best interest – namely, that you will be able to benefit financially from receiving the transaction. There are a number of important financial goals you can accomplish with the proceeds from your settlement sale, including but not limited to: purchasing a home or vehicle, using the funds as a down payment for a home, paying down existing bills and debts, paying for education, covering medical expenses, or even investments – like purchasing a business, rental properties, though the latter may expose you to significant risk if you haven’t taken the time to speak to a qualified advisor.