Sell Structured Settlement
Deciding to Sell a Structured Settlement
Okay, but things happen and now you need the money. One of the first
things that you may ask when deciding to sell a structured settlement is:
"What will be the tax consequence?" Firstly, you should know that the
Federal Tax code [IRC§ 104(a)2)] was amended in 1996 (Small Business Job
Protection Act), whereby congress preserved the right of family members to
make derivative claims based on the physical injury or illness of another
person, even though the claimant personally may not have suffered the
injury or illness. Basically this means that all sums received (except for
punitive damages) are excluded from a claimant's gross income. Simply put,
as of January 23, 2002 a new law that governs such sales, does not impose
any tax liability for selling a structured settlement.
Additionally when deciding to sell a structured settlement, you may
want to consider selling only a portion - a portion that will meet your
current needs, and leave the rest in an annuity so that you will still
receive some sort of monthly income. Initially for most people at the time
of their settlement, the payment plan appeared to make sense, but life
never works out the way we plan it to. A financial emergency or other
unforeseen expense may arise that requires you to access and sell a
structured settlement. Just keep in mind why it was set up that way in the
first place, and make sure that you do not leave yourself open to future
disaster by spending all the money at one time.
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