If you own a structured settlement annuity, you might receive a lot of benefits. Structured settlement payments provide long term financial security for you and your dependents, and the payments and earned interest are tax free. Also there is no legal hurdle in using this money either for your emergency situations or for high yielding investments.

According to federal law HR 2884, you have the right to sell your structured settlement payments tax free. ) About two-thirds of the states in the United States also permit sale of structured settlement payments. In both cases, however, the transaction must be approved in court in order to stay tax free.

Selling Your Structured Settlement

Getting approval for the sale of your structured settlement payments from the court is relatively easy if you have solid reasons to prove that you require this money. The judge will review your case to see if the transaction will benefit you and your dependents.

Under normal circumstances, the judge might not reject your case if you can prove that you and your dependents stand to benefit from this transaction; this also requires that you should be an adult with sound mind. You ensure that you attend the hearing in the court on that day which may help your cause much. Court approval is not mandatory for selling your structured settlement payments; however the amount and interest will be taxed.

The purchasing company with whom you are having discussions might be interested in purchasing your structured settlement payments. They will simply do some extra legal work to get the sale finalized. You are not charged for this extra effort; however, without court approval, you may be liable to pay taxes on the money you receive.

Quotations have to be obtained from various purchasing companies for purchasing the settlement. You will always get benefitted if you have multiple quotations. In case you find a suitable purchasing company out of the various quotes received, you should send to the purchasing company copies of the structured settlement policy. In return, the purchasing company will send you a disclosure document for your signature. This document explains the conditions of the transaction. This should be signed and returned after your checking.

The next step is to get the court order. This process takes up to 90 days depending on your state of residence as well as your insurance company. After receipt of court approval it takes 10 days to receive your money.