Structured settlements are a way of compensating victims of injury.  A structured settlement is an agreement made between two parties, under which the victim is paid for damages in the form of extended cash payments that are purchased for the plaintiff on behalf of the defendant.  The whole process is completely voluntary and is a mutual agreement between the defendant and the victim.

The way payments work is that the victim does not recieve the compensation in one lump sum, but rather receives the payments periodically over an extended amount of time.  These payments are tax-free and are meant to cover future medical expenses and basic things that are needed for normal life.  The structured settlement is usually set up privately during a pre-trial settlement, however, it may be required by a court order.  More often than not an attorney draws up the paperwork and the victim sets a price while the defendant sets up the terms of the contract.

Once this whole process is completed many injury victims look for a way to get one lump sum payment rather than wait through the periodic payments.  This is where a structured settlement company comes in.  These companies usually have a structured settlement broker that will buy the payments so that you can sell structured settlement packages at a discount price.  This is a great way to get cash for structured settlement, you get the money up front and the structured settlement company makes money by waiting out the time and receiving all of the payments.

There are also some major tax advantages that come from using structured settlement companies.  They have fixed annuity payments that are tax-free to the claimant and the liability can be removed from the defendant’s books.

So to give a real life example of the process let’s say that you receive a judgement from a lawsuit for a large amount of money to be paid over a certain amount of time.  You decide after a little while that you would like more money by selling the payments and receiving a lump sum.  You sell structured settlement to a company at a discount.  You get all your money up front for capital and the company makes money from waiting out the payments.

This can turn out to be a positivie experience for all involved and if you are looking to sell your structured settlement don’t jump at the first offer.  It is a competitive business and many different offers will come your way.  Remember that structured settlements are funded by annuities that are payed over time.  Make sure that before you approach this method that you actually own the note that is to be sold.  Sometimes the insurance companies own the note and this makes it impossible for you to sell it to someone else.  If this is the case then consult your financial advisor and your attorney on how to approach the situation.