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Unlike many financial transactions today, a structured settlement transfer can’t be completed online. It takes planning and patience, and should involve the help of a qualified attorney.
Legal Regulation of Structured Settlement Sale
In most cases, transferring a structured settlement involves large sums of money, and that’s one reason the law is designed to regulate such transfers. To sell the annuity through which your structured settlement is funded, you must to appear before a judge. The transaction will go forward only if he or she approves it.
While it may seem like an undue headache, the laws are in place to protect you as a recipient of the structured settlement. The Structured Settlement Protection Act of 2002 was enacted to protect those who receive court-ordered settlements and ensure they get the full financial benefit intended in their agreements.The law also created safeguards and made the transfer process more transparent.
Under all of the laws, however, judges who decide to approve or deny structured settlement transfers must do so under what’s called the “best interest standard.” The judge must be certain that the sale will benefit not only you, the settlement owner, but also any affected family members or dependents.
When you appear in court, the judge is going to ask questions regarding the impending sale.
- Have you shopped around and vetted the company you’re selling to?
- Are you aware that you’re getting less money by selling now than you would be getting if you waited for the installment payments?
- Do you fully understand the transfer agreement?
- Has the agreement been reviewed by an attorney or other professional who is not working for the company you’re selling to?
The judge may also want to know if you’re having any current medical issues and how you’re paying for your care today and in the future, or if there is anyone who might oppose the sale.
You should be prepared for these questions and you should have an attorney with you to help make sure you’re ready and able to leave the judge satisfied that the transfer is indeed in your best interest.
As with any legal proceeding, selling a structured settlement is going to involve paperwork. While there won’t be an overwhelming number of documents required, the paperwork is a crucial part of the overall presentation and therefore needs to be complete and accurate.
It’s probably a good idea to start thinking about the paperwork almost as soon as you make up your mind to transfer your structured settlement. This will help you avoid any surprises or delays down the road. Your attorney can help you compile these and provide insight into any additional details regarding court-mandated documentation.
- You’ll need a least one form of state-issued ID with your picture on it. A driver’s license works for most people, but state-issued ID cards are also accepted for those who don’t have a driver’s license. You will also need a second form of ID, such as a birth certificate, Social Security card or passport.
- Settlement and Release Agreement
- This is the document that you should have received when you accepted your structured settlement. Usually between three and 10 pages long, it sets out the terms of your agreement and proves that the case that led to the structured settlement has indeed been settled.
- Sale Documents
- This shows that you have an agreement with a company to sell your structured settlement and defines the terms. The company you’ve contracted with to buy your settlement should provide it to you.
- Annuity Policy
- This is a two- to three-page contract between the insurance company that issued the annuity that funds the periodic payments you receive from your structured settlement and the defendant or, more commonly, a third-party qualified assignment company. The contract spells out the details of the annuity, lists your full payment schedule and includes the policy number. If you have misplaced your policy, you’ll need to send a written request for a benefits letter to the insurance company.
While not required, it’s also usually a good idea to bring a record of your most recent annuity payments.
Hiring an Attorney for a Structured Settlement Sale
Selling a structured settlement is a legal procedure, which means having a lawyer by your side is always a good idea. Some states mandate that you bring in your own attorney, while others insist you sign a waiver if you choose not to.
Most companies that buy settlements will provide you with an attorney who is experienced at navigating the structured settlement sale process. This is acceptable to judges in most states, but you also may want to consider hiring your own legal advocate.
If you go this route, you’ll want to work with an attorney who understands the complexities of the transfer process, has experience in your state or local area and is someone you trust so you know they have your best interest in mind.
Among the benefits of using your own local attorney is that he or she will likely know the judge handling your sale and be able to offer valuable insight into to what that judge wants to see or hear when you go to court.
Using a lawyer who knows what’s important to the person sitting on the bench can help you save time in preparation and be ready to answer the type of questions you’ll be asked during the court proceeding.
It’s also critical to have someone on board who thoroughly understands the state laws pertaining to structured settlement sales. Although they don’t vary widely from state to state, there are some nuances that only someone with experience will understand. For example, in Georgia sellers have 21 days to back out of their contracts, and in Louisiana, written disclosure of the agreement terms must be in a font that’s bigger than 14 points.
Having a lawyer in your corner can also ensure that your contract with any sales company is fair to you and doesn’t include any surprises in the fine print.
With the guidance of an attorney, and your own attention to the proper preparation, you should be able to get any judge to sign off on your sale, which is the ultimate goal.