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Required Documents and Other Assorted MinutiaThere’s a great deal that goes into a successful structured settlement sale beyond just making the decision to sell in the first place. You have to ensure that you choose the right buyer, make sure that you’re selling for the right reason and more. Some of the other things that you’ll need to know about include the following:
- Required Documents
- How Courts and Judges Work
- Personal Representation
- Laws and Regulations
- More about Secondary Marketplace Buyers
- Paying Off Debt
Required Documentation for Selling a Structured SettlementAs soon as you decide that it’s time to sell your structured settlement, you’ll need to begin getting your paperwork together. While there’s not a ton of paperwork involved in the process, there are some very specific things that you’ll need, both for the buyer and for the judge who will be approving the sale ultimately. Here’s a list of what you need:
- Your Valid ID – You have to have valid state-issued identification, and you’ll need two forms of it. You can use your valid driver’s license (one form must be picture ID). You can also use your passport if you like, your birth certificate and your Social Security card.
- Your Application for Sale – Make sure you completely fill out this two-page form. It’s available from your factoring company, and should be sent to you automatically.
- Your Settlement and Release Agreement – You’ll need a copy of your Settlement and Release Agreement. This document is usually between three and 10 pages in length, and is what you signed on acceptance of your structured settlement. You should have been provided with a copy at that point.
- Your Annuity Policy – You should have a two to three-page document with the dates of all your annuity payments extending through to the end of the agreement. It should list both the dates and the amounts of each payment. If you don’t have this document, contact the insurance company that issued the annuity and request it.
- Annuity Payment Check Stub- You may also need a check stub from a recent annuity payment. This is not always required, but can be used to stand in for some other documents. It’s wise to have it even if you have all the other documents listed above.
A Look at Courts and JudgesIt’s difficult to imagine anything with more impact on your final sale than the court and judge responsible for approving the transfer. There are 48 states in the country that require a judge to approve your sale, so chances are excellent that you’ll be going to court here. In addition to the hassle of going through the court, the process of determining whether the sale is in your best interest isn’t all that straightforward – it’s subjective. Different judges use different criteria to determine if you are actually making the right decision for yourself and your family. To that end, it pays to be prepared for any eventuality, including the various questions that a judge might decide to ask you. Here’s a sampling of what you may encounter when you arrive in court.
Why do you need to sell your structured settlement? What do you intend to do with the lump sum payment? - This is the most important question you’ll be asked. It might seem like an invasion of privacy; after all, what business is it of the judge’s what you intend to do with that money? It’s yours. However, unless you can prove that you have a true need for a lump sum, you can bet that your sale won’t be approved.
Are you sure that you’ve chosen the right buyer? Have you shopped around and researched your options? – Not all buyers are worth your time and effort. Some pay very low amounts. Others have spotty reputations. The judge wants to make sure that you’ve done your due diligence here and have chosen a quality buyer.
Do you understand that you are selling your payments at a discount and that you will not receive the face value of your settlement? - The judge needs to make sure that you are aware that you’re selling your settlement or payment rights for less than what you would receive if you waited on the payments to arrive over time.
Have you received independent third party counseling, and do you understand the transfer agreement?- The judge wants to ensure that you’ve gotten good, impartial advice. Many states make this a requirement of the sale process. The judge also wants to make sure that you’re not unclear or confused by any language in the sale agreement.
Do you have any ongoing medical needs that might be impacted by selling this settlement?- The judge wants to makes absolutely sure that if you have ongoing medical care or physical needs, that you’ll have the financial resources available to take care of those needs.
Have you contacted other interested parties and given them an opportunity to voice their opinions? – “Interested parties” is a somewhat confusing term, but it applies to anyone who might have a vested interest in your settlement amount, including your heirs and others. They have a say in whether you’re able to sell your settlement, at least to some extent.
What If Your Transfer is Denied?While it’s not that common, sometimes the transfer of a settlement agreement is denied. There can be many different reasons for this. In most cases (95% of cases, actually), the judge agrees to the transfer. However, if you are not able to answer the questions to the judge’s satisfaction, if there’s an issue with the buyer, or there is another problem, you may be denied. Here are some examples of that:
A court in Minnesota denied a transfer in 2011 because it was not in the seller’s best interests. The seller also had not received independent counsel, and had been previously denied for this same transfer.
A New York court rejected a transfer for of a settlement amounting to $70,000 in exchange for an incredibly low $6,000 lump sum. This was most certainly not in the best interests of the person selling the settlement, as it would have resulted in a massive loss of future income. New York also denied another transfer when the court determined that the discount rate was too steep. The transfer in this case was $31,000 in exchange for a settlement amount of $76,600 over time.
Plan, and Plan SmartPlanning is important in selling a structured settlement. You need to ensure that you have a smart plan going into the process. One of the aspects involved with proper planning is ensuring that you’re not inadvertently contravening another state law of federal statute. For instance, some benefits are prohibited from being reassigned (those under the Longshore and Harbor Workers’ Compensation Act for instance), and you’ll be denied.
Plan ahead. Plan well. Make sure that the plan is reasonable and fair to both parties. If the structured settlement transfer is one-sided, you can bet that the judge will deem it unfair. That means you need to ensure that you work with a reputable company willing and able to take the time necessary to create the fairest possible transfer.
Finally, judges are not cold, calculating machines. They are human beings with emotions. Often, those emotions are colored by past experiences and encounters. Some judges may be sympathetic toward your case, while others will be almost brusque in their treatment of you or your situation. Make sure that you are courteous, responsive and listen to the court’s recommendations.
Personal Representation – Needed or Not?Part of selling your structured settlement is going back to court. Federal and state laws mandate that only a judge is able to approve a transfer of your structured settlement. That means a day in court, and you might wonder if you need a personal lawyer at your side. Generally, the answer is yes. You should have an attorney when you go before the judge.
This is an important part of protecting your rights and ensuring that the sale is actually in your best interests. However, that doesn’t mean that you have to rush out and hire an attorney on your own. You’ll usually have one provided by the company buying your structured settlement. Of course, most states allow you the right to bring your own attorney in if you prefer, and some states actually make it mandatory that you hire your own lawyer. Still other states require that you sign a waiver if you opt not to bring in your own legal expert.
But Why Do You Need an Attorney?Some of you might be wondering why you need an attorney at all during this process. There are several reasons that you want to have an experienced attorney standing beside you during this process, but the most important reason is that transferring your structured settlement is not a simple process. It’s quite complex, and you will need some help navigating these legal waters. Each transfer agreement needs to be handled by an attorney with experience – no, you shouldn’t bring in your family lawyer. You need someone who’s been through this process before and knows the ropes. You need an expert.
Yet another reason you need to have a legal expert on your side is that those judges most familiar with structured settlement sales usually handle all of them for a specific area. That means your lawyer may well be familiar with the judge and have information that may be able to help ensure that you get a beneficial verdict here, and that’s important.
Experts who’ve watched the structured settlement sales process for many years say that most judges will take one of two positions when faced with such a sale. They will either A) take on a guardian or parent-like role, or they will B) take on the process of a process caretaker. Generally, it’s hoped that you end up with type B, as they are usually more amenable to you doing what you want with what’s yours. Type A is usually more hawkish in ensuring that you are truly doing what they feel is best for your future.
Working with Your AttorneyThus far, we’ve talked a good bit about the judge’s role in determining whether you’re making the right decision for your needs. However, the judge is not the only person who needs to do this. You do, certainly, but so does your attorney. In fact, your attorney is your first line of defense against a possible bad situation. He or she will have the experience and expertise necessary to ensure that you’re not only getting a decent deal, but one that’s fair and equitable, while watching for hidden threats buried in the language of the transfer agreement.
If you opt to work with the attorney appointed for you buy the factoring company, you’ll generally meet with each other a few days before the court date. This gives you both a chance to get to know one another, and for the lawyer to go over the transfer agreement with you while explaining all the pertinent details. You’ll also go through a preparation period to ensure that you can answer the questions the judge will ask. This is necessary, because the judge will ask probing questions about the settlement, your understanding of the agreement and, most importantly, your need and purpose for selling your settlement in the first place.