The following post is a guest post. Enjoy!
Just like any other financial and legal instrument, there are numerous rumors and myths that float around about structured settlements. These myths only result in creating complete and utter confusion in the minds of those who are considering selling their structured settlements. If you are one of those people who are absolutely unsure of whether to go ahead with a structured settlement sale or not, here are a few myths about structured settlements markets we have busted for you.
Lawyers and attorneys should avoid recommending structured settlements to their clients as they are bound to cash out
It is a common misconception among lawyers, attorneys and even structured settlement payment recipients that lawyers should avoid recommending structured settlements to their clients as they are most likely to cash it out. On the contrary, it is a proven fact that an estimated 95% of structured settlement recipients avoid selling their structured settlement payments. It is only in a situation where the circumstances of the receiver drastically change from the time of the settlement that he or she may consider cashing out. So lawyers must urge clients to get structured settlements. By becoming a recipient of a structured settlement the client will also acquire guaranteed financial security.
If a recipient cashes out his structured settlement he is liable to pay tax on the lump sum amount
This is yet another misconception that people have in their minds. If your structured settlement payments are tax free, then he is not liable to pay tax on the lump sum amount when you cash out. The recipient is only liable to pay tax on the lump sum cash amount when his structured settlement is also taxable.
The court doesn’t carefully scrutinize the case before giving an approval
Some people believe that the court approves almost all cash outs without scrutinizing the case carefully. This is an absolutely ridiculous myth about structured settlements. Invariably, purchasers of structured settlements only take up deals that are more likely to get court approval. If the structured settlement purchase company has a strong reason to believe that the court will not give an approval to cash out, the company will not take up the case.
Companies that purchase structured settlements and the overall structured settlement industry are unregulated.
This is another major misconception that even lawyers and financial analysts have about structured settlements purchasing industry. Contrary to popular belief, companies that purchase structured settlements are subject to numerous taxation as well as other laws. Both the court as well as the income tax bodies thoroughly scrutinize the case before approval. Even if the structured settlement purchase company has complied with all the laws, if the court has reasons to believe that the transaction is not in the best interest of the annuitant, the court will not approve the application. Further the purchasing company will be liable to pay all the direct and indirect expenses such as filing fees, attorney costs, etc. Additionally if there is ever a situation wherein the purchase company does not comply with the law, they will be liable to pay heavy fines and penalties.
So if you had any doubts and hesitations about the structured settlement industry to countless myths that have floated around, you needn’t stress anymore. The structured settlement industry is a properly regulated industry that always aims at working in the best interest of the annuitant. So before you take any decision on cashing out your structured settlement please ask your attorney to clarify all the misconceptions and doubts you may have.
