If you watch any TV at all you have probably seen ads for structured settlements. This article” Free Retirement Plan – Financial Planning – What Are Cash Structured Settlements” looks at what cash structured settlements are and if they are right for your situation. Below there are additional links to structured settlement resources.
The world of financial instruments is wide and varied. One of those instruments, cash structured settlements, has gain popularity in recent years. The question is what is a cash structured settlement. First let’s talk about a structured settlement. A structured settlement is simply an insurance or even a financial arrangement. This involves periodic payments from a financial institution or insurance company. This arrangement is usually created as a payment method for a settlement in a lawsuit or for lottery winnings. A cash structured settlement is when a company offers to buy you out if that settlement. The thing to consider is who will benefit the most you or one of the companies or institutions involved? Selling your rights to the periodic payments associated with a structured settlement is legal in many states the question is should you do it?
Free Retirement Plan – Financial Planning – 3 Things To Consider Regarding Cash Structured Settlements – #1 Thing To Think About – Structured Settlements Are Generally Tax-Free
When you sell the payment rights from a structured settlement the lump sum you receive could have state and federal taxes due. This has to be taken into account when determining an acceptable amount. Make sure and account for any taxes due after the sale.
Free Retirement Plan – Financial Planning – 3 Things To Consider Regarding Cash Structured Settlements – #2 Thing To Think About – Will Your Net Amount Solve Your Current Short Term Problem But Put You In A Worse Position Long Term?
Doing a little math will be helpful. First determine your net after taxes. Then subtract the amount to solve the problem that you are facing i.e. debt. Next determine if the remainder will provide enough income along with other income sources for you to live. If the answer is no, then you are simply making a poor short term decision for a long term problem.
Free Retirement Plan – Financial Planning – 3 Things To Consider Regarding Cash Structured Settlements – #3 Thing To Think About – Is Debt Counseling A Better Solution?
Even though this is the last item listed it probably should be your first step. One option is to contact the National Foundation For Credit Counseling. This is a non profit organization that can offer assistance. Their counselors will take a look at your situation, help negotiate with creditors and help assess if a cash structured settlement is your best option.
This does not mean that a cash structured settlement is not a good choice. If interest rates are low and you or your advisers feel that interest rates will increase in the near future your gamble might pay off. Remember however the people offering to buy your structured settlement are probably aware of this possibility and are adjusting their price accordingly. However sometimes the need for immediate cash is such that a cash structured settlement is your only option.