STRUCTURED SETTLEMENTS – NOT OVER TILL THEY’RE OVER
As we’ve found over the years of working with Indiana clients, structured settlements can be very good things – under the right circumstances.
Many personal injury lawsuits are settled, with the injured party agreeing to receive regular payments over a period of time (or sometimes for the rest of his or her life) in place of receiving a large amount of money in one lump sum. That can be a positive, freeing the individual from having to manage large investments, and providing a reliable monthly or quarterly income to help cover expenses. In addition, accepting a settlement is a way of avoiding the considerable costs of filing and prosecuting a lawsuit in court. The way it works is that the defendant’s insurance company, rather than paying out a large sum of money today, agrees to set up an annuity which will make guaranteed, periodic payments to the injured party.
Obviously there are complex mathematical calculations to be made, and one of the aspects of our work at Ramey & Hailey involves negotiating the most advantageous terms for settlements on behalf of our injured clients.
But with structured settlements, as is true in many other aspects of life, “It ain’t over till it’s over.”
In other words, after all the negotiations are over, and perhaps years after the client has begun to receive those regular monthly payments, there may be an “offer on the table” that causes the recipient of those structured settlement payments to think about changing the arrangement – causing that person to be in need of expert guidance and legal advice once again.
We’ve all heard the TV and radio commercials offering “Cash now”. Just as the original structured settlement turned a lump sum into a series of guaranteed payments, with a buyout of a structured settlement, it works in reverse. You’re offered one lump sum of money today, in exchange for giving up your monthly payments going forward. And of course, “cash now”, as creditcards.com emphasizes, means settling for fewer dollars today than the total represented by the stream of payments.
State laws governing the sale of structured settlement payouts are part of the Structured Settlement Protection Act. While the laws differ slightly from state to state, the main provisions include:
- When a “factoring” company offers to buy structured settlement payments, it must disclose to the seller the difference between the value of payments if the annuity contract remains in place as compared to the value if the contract is sold.
- The sale must be court-approved, meaning that the judge must find that the transfer would be in the best interest of the seller and his/her dependents.
- The seller must have the right to change his/her mind and cancel the sale, called a “cooling off” period. (In Indiana, the “cooling off” period is ten days.)
- All interested parties must be notified.
“If you are looking to sell your structured settlement, annuity or lottery prize, simply enter your details in the form above or give us a call,” is the offer made on one website. “Selling your belongings doesn’t usually require legal assistance, but the situation becomes a bit different when you’re talking about selling annuities,” structured settlement quotes so correctly cautions.
While Indiana is not one of the states that require sellers of structured settlement payments to consult a financial planner or attorney, for such a potentially life-altering decision, it’s always a good idea to seek counsel from an experienced legal professional. At Ramey & Hailey, we work as hard to negotiate the sale of structured settlements as we do to negotiate the settlements themselves. We have to. We know how important it is to protect the interests of injured clients, and we also know – it’s never over “till it’s over.”