Structured-Settlement FAQ

A legal agreement that pays injury or wrongful-death damages as periodic, tax-free annuity payments.

Because U.S. tax code §104(a)(2) excludes personal-injury damages from gross income.

A life-insurance company via an annuity contract assigned at settlement.

Yes, if a judge approves the transfer under your state's Structured Settlement Protection Act.

About 30–45 days from petition filing to funds released, based on 2024 court dockets.

The annual percentage buyers apply to convert future payments into today's lump-sum value.

Most court-approved transfers fall between 6 % and 12 % APR, according to the NSSTA 2024 industry report.

Some states require independent advice for minors or large sums; otherwise, legal counsel is optional but recommended.

Yes. Partial sales let you keep future payments while unlocking some cash now.

No. A sale permanently transfers payment rights; loans accrue interest and are repaid.

They generally retain the tax-free character of the original payments, but check state rules.

Yes—denials occur for excessive discount rates, lack of financial need, or incomplete paperwork.

Settlement agreement, annuity contract, government ID, and any prior court orders.

Typical fees include filing costs ($50–$150) and administrative expenses (about 1 % of the lump sum).

All 50 states require registration or licensing to purchase structured-settlement payments.

A lump sum can count as an asset; consult a benefits specialist before selling.

A rate that includes all fees and timing—similar to APR—used for comparing offers.

Consumer advocates suggest at least three written quotes.

Yes. Shorter remaining payout periods often yield higher lump sums.

Most states allow cancellation only before the hearing or within a brief rescission window.

The annuity issuer redirects payments to the buyer, and you receive your lump sum.

Often yes, but some states require extra medical review.

A payment that stops if the recipient dies; buyers discount these more deeply.

Rarely—most factoring is done by specialty finance firms.

Courts seldom approve sales involving minors unless funds clearly benefit the child.

Yes. Federal excise tax rules make a court order mandatory nationwide.

The legal filing that asks the court to approve the sale.

The payee, dependents, assignee, and annuity issuer.

Yes, many payees do, but lenders may require the court order as proof of funds.

Licensed buyers that purchase structured-settlement payment rights.

They collect future payments worth more than the discounted lump sum they pay today.

No. A sale is not reported to credit bureaus.

They're usually sales, not loans, so interest doesn't apply—discount rate does.

Yes. Competing quotes help in negotiations.

An intermediary who shops your payment stream to multiple buyers for a fee.

Reputable brokers deduct fees from the lump sum; upfront fees are red flags.

The tax code section governing qualified assignments funding structured-settlement annuities.

Yes, but courts review repeat transfers more closely.

The arrangement that allows the defendant to shift payment obligation to an insurer tax-free.

If you sell those payment rights, yes—buyers receive the adjustments.

They request a benefits letter or annuity statement from the insurer.

The life-insurance company that guarantees your periodic payments.

Yes—e.g., the next 5 years of payments only.

Yes—e.g., first $50,000 of future payments.

Usually the buyer; verify in your purchase agreement.

A brief window (2–3 days in many states) to cancel after signing the purchase agreement.

No. The insurer stays the same; only the payee name changes.

VA disability payments are not saleable, but third-party tort settlements are.

Filing in another state to seek lenient judges—generally disallowed by statutes.

To confirm the sale serves your best interests and financial needs.

The monthly fee (often 3–4 %) charged on pre-settlement advances.

It's non-recourse—you repay only if you win, but costs are high.

All 50 states now have statutes; earlier gaps were closed by 2022.

Yes—once you invest the lump sum, normal tax rules apply.

Yes. Many factoring companies buy annuities from major insurers, including Prudential.

Only if trust documents permit assignment; most do not.

Effective APR includes compounding; nominal does not.

Yes—the buyer becomes payee and may garnish funds in the future.

Secondary transfers require another court order; original terms remain.

By discounting each future payment back to today using the discount rate.

Usually not, but confirm with a tax advisor.

Some courts waive fees for hardship; buyers seldom pursue waivers.

If the insurer fails, state guaranty funds only cover payments up to statutory caps.

Once received, they may be reachable by creditors unless placed in exempt accounts.

Factors include payee age, financial need, discount rate, and timing.

Rarely—structured-settlement hearings are generally public records.

The contract between you and the buyer outlining price and terms.

Buyers use government ID and, increasingly, KYC video calls.

Courts can compel buyers to improve terms; some accept concessions pre-hearing to avoid denial.

Loosely—when Fed rates fall, discount rates tend to edge lower too.

No—all payees must consent or petition individually for their share.

Buyers value future COLAs; selling them raises your lump sum relative to flat payments.

Divorce decrees can assign a portion to a spouse; check your order before selling.

Life-only streams get higher discounts due to mortality risk.

Most states require the payee's presence; some allow remote video testimony.

Only if the annuity contract allows assignment and court approves.

No statutory limit, but courts scrutinise repeat sellers.

A charge collected upfront before any lump sum—generally discouraged.

Yes, but they must meet licensing requirements and obtain court approval.

The difference between the total future payments and the lump sum you receive.

Yes, up to state limits, which vary from $100k to $500k per payee.

Verify state license, read BBB reports, and insist on a written quote.

Yes, but buyers will discount for FX risk.

Table showing discounting of each future payment to present value.

No, but any investment of the lump sum may have tax consequences.

Yes, if paid through an annuity; taxes may differ.

Possible, but buyers may offer lower lump sums due to statutory caps.

Language that lets you cancel within a short period after signing.

No, the sale simply fails and status quo resumes.

No, annuities are insured by state guaranty funds, not FDIC.

Some states require spouse's notarised consent, especially for married payees.

You can request scheduling, but docket availability determines the date.

They receive notice and must redirect payments once the court order is final.

It's not reported, but lenders will see lump-sum deposits.

Jurisdiction stays with the court where you filed the petition.

Courts may allow it if the settlement originated in the U.S. and all notices are properly served.

Yes, most courts require notarised signatures on the transfer agreement.

Via a certified court order plus insurer acknowledgment letter.

No statutory limit, but courts weigh age in "best-interest" decisions.

Yes, discrete future balloon payments can be assigned separately.

Gather multiple quotes, compare effective discount rates, read all fees, and consult a qualified advisor.