For many, structured settlements are often just the myths of late night television and confusingly operatic commercials. But for many Americans, structured settlements are extremely important. Did you know that 76% of Americans are currently living paycheck to paycheck? And to top it off, 62% of Americans aren’t able to take care of unexpected expenses, such as accidents, injuries, and the like. When something happens, getting cash for a settlement isn’t only what’s fair and what’s right, but it’s a means of survival.
So what is a structured settlement anyway? Why do you get cash for your settlement, and how does the process happen? Speaking in layman’s terms, a structured settlement is a legal settlement, earned through due process of law, that is paid out in an annuity, rather than in a lump sum over time. Annuities are fixed sums of money that are paid over time, typically each year for the duration of a person’s life. Structured settlements are typically preferred over lump sums because they provide a kind of fixed financial security and control, as well as included tax deductions and breaks.
But whether or not you’re taxed depends on the nature of your structured settlement. For example, if you get in an accident receive settlement cash, it will be tax-free in lump sum. Similarly, the annuity payments will also be tax-free. Regardless of the scenario, finding a tax broker is often ideal.
For the most part, structured settlements are extremely flexible and easy to accommodate to your individual needs, but you cannot own your annuity policy in order to access your tax-free benefits.
When money is tight or you need money fast, many want cash for annuity now. But gaining access to cash for your settlement prematurely may make for trouble down
the road. If your cash needs are great, start with a quote for your annuity and see where you go from there.