Getting cash for structured settlement payment rights:
Can You Decide On What Is In Your Best Interest?



Sound and clear: no, you can't decide getting "cash for structured settlement payment rights" is in your own best interest.

You will have to let others decide that for you. You can not waive your right to get court intervention to protect you from making decisions that you might think are in your favor but might not be according to the mind of the judge who is to decide on the matter.

By law, a judge will tell you what is good for you

Are you in your right mind?

Are you mature?

Can you make decisions for yourself?

Most importantly: do you know what is or isn't good for you?

If you are like most people with an average degree of self esteem, your answer to these questions is probably "yes," but from a government perspective at least, the answer may not be as clear when thinking about entering a transaction to get cash from structured settlement payment rights.

In order to raise cash from structured settlement payment proceeds that you plan to sell, you will need to be represented in court along with the transferee who wants to buy out the payments from you and pay you the cash. The judge will need to hear the case and get answers on why you want to sell the payments, why you need the cash now, and what you plan to do with the cash that you raise from the payments.

What parameters will the judge consider? One of them, a very central one, is whether the sale of your payments is in your own (and your dependents') "best interest."


cash for structured settlement payment rights - provision of required court approval for selling structured payments in the Illinois SSPAProvision of court approval requirement for structured settlement transfers to get cash for structured payment rights in the Illinois Structured Settlement Protection Act

'Big Daddy' is here to protect you... from yourself

Let's not get into specifics now on what constitutes "best interest"; we cover that elsewhere on the site.

What is important to our discussion here is that the judge, not you as the owner of your payment rights, is the one to decide on whether you know well what you are doing when agreeing to a transfer transaction to get cash for structured settlement payment rights.

The court thus will have the final say on whether the sale is in your best interest or not, and hence whether your payments could or could not be transferred.

You are not your own boss to get cash for structured settlement payment rights

What if your own view differs from that of the court and you still believe getting cash for structured settlement payment rights now is the right thing to do and in your own very best interest according to your own very best understanding and judgement?

Well, as we said before, when it comes to selling settlement payments for cash now, you are not really your own boss and you can't be your own judge to decide that you know well enough what you are doing or what is in your own interest.

It is "Big Daddy" who provides that a judge is the one to make decisions for you when getting cash for structured settlement payment rights is at stake. This requirement is, as critics put it, in order to "protect yourself of yourself."

You can not waive your right to get government protection from doing what think is good for you when the judge think it's not.

Why the government wants to protect you

The reason at the basis of this law that some denounce as too "paternalistic" has its roots in the tax-free benefit of a structured settlement that is reached for personal injury victims.

The government gives the future payments a tax-free status with the aim to encourage plaintiffs of major injuries to structure the money for the long term in order to ensure long-term protection and financial security and prevent the injury victims from falling back on the social safety net to cover for job loss and medical expenses as a result of the injury.

To reinforce this protection, laws have been enacted on federal and state levels to govern the sale of future settlement payments to get cash for structured settlement payment rights, and protect vulnerable payees who may be disabled, cognitively impaired, or otherwise limited in their ability to make sound decisions on the management of their finances and be taken advantage of by structured settlement factoring companies looking to buy out their future payments even when not in their best interest, i.e. when they are dependent on the periodic income for their own or family's support and welfare or to cover medical expense, or buying out their payments at a very high discounting rate, and then leaving them deprived of their money and defeating the purpose of the government support and special tax treatment of structured settlements.

Here's an excerpt of the Illinois SSPA (215 ILCS 153/25) prohibiting a transfer to get cash for structured settlement payment rights without court approval, that we have selected here at random, but similar requirements are made by the SSPA in other states as well.

    (a) No annuity issuer or structured settlement obligor may make payments on a structured settlement to anyone other than the payee or beneficiary of the payee without prior approval of the circuit court. No payee or beneficiary of a payee of a structured settlement may assign in any manner the structured settlement payment rights without the prior approval of the circuit court. 

It is your money - is it your choice to decide what to do with the money?

While "structured settlement payments" are being referred to by some as "disability payments," the truth is that many personal injury claimants are not disabled at all and in fact are fully able individuals, physically and mentally, and completely capable of their own judgement, financial management (just as anyone else at least) and personal decision making.

These individuals are not in need for the government or judges to make decisions for them more than for any other ordinary person.

These people are well capable of understanding and making decisions on matters of their own life and financial matters without any outside help at least as long as they haven't asked for it.

In entering a contract to get cash for structured settlement payment rights, they are also physically and mentally equipped to judge for themselves and act in what they believe is in their best interest, regardless of what whoever else thinks is good for them.

It is their life and their money. Shouldn't it be their own right and freedom of choice to decide how to live and how to manage their own money?

On the plus side: you have got tax-free money

Well, it isn't. The Structured Settlement Protection Acts are not discriminate on who owns the payment rights, whether a capable, mature individual in good health and mental status or a disabled, impaired person with compromised ability to make personal decisions and protect his or her interests.

Regardless of status, a holder of structured settlement payment rights is legally barred from selling future proceeds to get cash for structured settlement payment rights without a court order approving that the sale, in the judge's view, is in the best interest of the seller.

Just let's not forget: it is because of this indiscriminate approach that healthy and fully able individuals also benefit from the tax-free law on the initial structured settlement.

Whether a personal injury plaintiff is left with long lasting injuries, disability, medical expenses, loss of job, wages and income, or has completely recovered with no more need for the protection of long term financial security than any other ordinary person, the plaintiff still benefits from the tax exemption on the structured settlement payments

Package deal: wanted and unwanted benefits of protection

Bottom line: tax-free status of structured settlements and structured settlement transfers to raise cash from structured settlement payment rights are both governed by the law indiscriminate of health and ability of the annuitants.

As an ordinary payee you take the whole package, the benefits as well as what may be perceived by you as a disadvantage.




Are you still left with questions about selling your structured settlement payments?

Are you interested and ready to sell payments?

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More useful articles:

Rights and liabilities of selling and purchasing structured settlement payments rights

The difference: factoring and commuting in a structured settlement annuity cash payout

Cash for structured settlement payment rights vs early annuity withdrawal

On paying back structured settlement transfer cash-advance money


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