The Process of Selling Structured Settlements and Annuities
Several companies buy annuities and structured settlements from individuals, but the process for the transaction is pretty much the same for all of them. The difference, of course, is the speed, efficiency, reliability and service of your buyer and your level of trust in that company.
For most sellers, the process goes like this:
- Make the decision to sell
- Shop the annuity or structured settlement among various companies for the best price and service
- Pick a company and start the process
- Get a judge to sign off on the transaction
- Get a check
Deciding to Sell Your Structured Settlement
Before deciding to sell your structured settlement, you should do some serious thinking to determine whether or not this is the best decision you can make for you and your family. You must ask yourself some hard questions:
- Do you absolutely need immediate cash for a valid reason?
- Are you certain that this is the best possible way to raise the necessary money?
- Will selling the rights to future payments of your structured settlement or annuity jeopardize your financial security?
Unless you can come up with the right answers, you should not proceed, because questions like these will be asked of you again and again during the transaction process.
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Shopping Your Annuity
Once you do decide to sell any future payment rights to your structured settlement or annuity, you must negotiate a transfer agreement with a company that buys them. Perhaps you have already been contacted by such a firm, interested in discussing a possible sale.
If so, don't be swayed by vague claims made over the phone or flashy TV commercials that promise a large, instant payment with little participation on your part. The transfer of your payment rights is a serious financial process between you (the payee), and the buying company that ultimately will have to be sanctioned by a judge.
Shop around and do your homework. Seek counsel from any friends or colleagues who have made similar choices to sell their own structured payments. And never make a decision based on price alone.
Explore companies with solid credentials and broad experience in the field. Your best choice will almost certainly be a firm that has the capital to buy your structured settlement without having to negotiate with another vendor or third party.
Also, you should be wary of any company that wishes to buy your annuity without first determining if the transfer makes sense for both parties.
For example, if you have a very small contract, the company will generally not wish to purchase it because it would not be in its best economic interests to do so. But more importantly, a reputable firm will refuse to purchase your contract, either in whole or part, if it concludes that it is not in your best interests, either.
Why? In addition to maintaining its fiduciary integrity, a company will strive to arrive at the best possible deal for you because, eventually, the sale of your structured settlement payments must be approved in court.
By law, a judge must consider your best interests and those of your dependents, if any. The judge also will verify that the sale won't cause you any financial hardship.
If the company believes that the court will not approve the transfer, it is unlikely that it will offer to purchase your payment rights in the first place.
If you are interested in selling your annuity or structured settlement payment streams get a free estimate from Annuity.org. Our representatives will ask you a few simple questions and get you a quick quote today!
Pick a Company and Start the Process
Once you pick the best company to work with, you can take comfort in knowing that various federal and state laws will regulate the transfer procedure and protect your rights throughout. For example, once the buying company tenders an offer, it is required by law to disclose to you in writing all the pertinent details. These include:
- How much of your settlement rights you are selling
- The amount you will receive
- The difference between the value of your settlement payments if the annuity contract were to be maintained vs. their value if sold
During the negotiating process, you will have to supply the company with documentation, including the settlement contract between you and the insurance company that issued your annuity.
You will also have to convince the buying company that you are making the right decision and that you understand that you will be selling your payment rights at a discount – the difference being the buying company's costs and profit, as well as the variance in value between your future payments and their present worth in ready cash.
Depending on the state in which you live, which will have its own Structured Settlement Protection Act (SSPA), you will either have the right, or the obligation (unless it is waived), to seek outside professional advice before entering into a transfer agreement.
Upon your acceptance of the company's cash offer, the necessary transfer documents will be sent to you to sign and have notarized. The quicker they can be received and returned, the sooner the legal process can begin, so getting them by email, for example, instead of regular mail, can be helpful, especially if you need your money quickly.
You should expect the entire process to take up to two months. Often the buying company will advance you a small sum while you are waiting for the transfer's final outcome.
Getting a Judge to Agree to Your Sale
Once you return the signed documents, a local attorney – one hired by the settlement company – will file them with the court, after which a hearing will be scheduled. You likely will be required to appear in court. The judge will expect you to reveal all of your personal financial information, justify your need for the money, and convince him or her that you are not putting yourself or your family in jeopardy.
In addition, you must identify any interested parties to the court and submit proof that they were notified and given the opportunity to oppose, support or respond to your proposed transfer. Unless the court has a problem with your request, judges typically approve the transfer at this hearing.
Get Your Money
Once the court accepts the transfer, the insurance company will receive the transfer order for acknowledgement – and you will receive your lump-sum payment from the buying company.
In some cases, when the company has purchased only a part of your income stream, it will begin receiving your contracted payouts directly from the insurance company. The settlement company will deduct its share of the amount and forward the rest of your payment directly to you.
Remember: You always retain the right to sell any or all of your remaining settlement rights at any time in the future, but in order to do so you must initiate the process over again from the beginning.