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Cash Settlements - are they a good idea?
Should you consider a
Lump Sum Cash Settlement?
A cash settlement in legal terms is an amount of money delivered to close out a legal issue or it is an action required as a number of terms needing
to be exercised to close out a legal issue. This can include court judgments, estate transfers, lottery winnings, annuity cash outs, insurance plan
cash outs, and more. In all of these types, the common factor is the end result: a new pot of money placed in the hands of the intended recipient.
Sometimes such funds have restrictions on their use, but most of the time the recipient can do as he or she pleases once the funds are received.
When most people first hear the term "cash settlement" we either think lawyers or
those commercials asking us to sell a settlement for cash up front. Mantras of "I
want my cash now" ring in our heads from basic yet effective marketing. However,
cash settlements are more than just a rare win in a lawsuit. The term includes a
variety of financial situations. What they all have in common is a sudden influx of
cash. However, the rules that apply to those funds can vary significantly depending
on the circumstances of how the money was produced in the first place.
Let’s start out with a definition of what a cash settlement is:
Technically speaking, a cash settlement is a term used for both investments and
taking possession of amount of money in currency form or similar. The investment
perspective is primarily associated with closing a financial position in an
investment, whether it be the actual sale of share or the closing out of an option to
buy or sell investments as would occur exercising an option.