At age 72, you are now permanently disabled and probably will not be around for 20 more years to collect the money you were awarded. You were counting on a big lump sum to use to make your Golden Years as comfortable as possible. While you intend to give some money to your children and grandchildren, you also want to enjoy some of the finer things in life while you still can.

A solution to your cash flow company is when a company can buy structured settlement payments from you. A factored structured settlement is where a Factoring Company purchases the rights to collect the proceeds of your settlement over the length of the settlement terms in return for giving you a lump sum cash settlement. The Factoring Company will give you something close to the present value of the anticipated future revenue stream. A fee or surcharge will be deducted from the lump sum payment to cover the risk of the transaction and for other short and long-term expenses. The factoring company also needs to make a profit on the transaction.

The benefit to the person that uses a structured settlement factoring company is that they get immediate use of their money. They can have control over a large sum of money now and may invest it or spend it any way they want. Now, here is a word or two of caution when proceeding with a factoring transaction. If you have no will power and go crazy spending money on houses, fancy cars and very expensive items, you could conceivably run through the money you receive in a very short time. Second, if you receive a $1,000,000 as a one-time payment instead of spreading the windfall out over 20 years, the tax consequences could be substantial. Unless you are very financially astute, it might be wise to consult a certified financial planner or other financial counselor to help you manage that money.

Structured settlement factoring transactions are not limited to settlements from lawsuits. Anytime a person receives a large sum that is subject to payments over time, factoring becomes an option. Lottery winners may engage such a service. A large settlement for agreeing to an early retirement is another possibility. When you want your money now, a structured settlement factoring transaction may just be the thing to do.

The advantage of a structured settlement is the party to pay doesn’t have to come up with a huge sum of money at once. Structured settlements are usually paid in the form of annuities. For the party paying it acts like a payment plan, rationing out the payments over a set period of time. However, the drawback is that the company is bound by the settlement for a long time period, in which it has to continue to record in its accounting records that it is paying a settlement. Additionally, the amount of a structured settlement is often a lot larger than if the company reached a smaller amount in a lump sum.

Taxes are another factor when it comes to structured settlements. Annuities can often be paid before taxes are assessed. Therefore, the tax liability for the party paying becomes less once the annuity has been paid. This is another advantage for the party paying.

For the party receiving payment, one of the biggest advantages of getting a structured settlement is the fact that they will get money for sure. Left up to the court, they might come away with nothing, or come away with some large figure that will force the company into bankruptcy. In these cases, the plaintiff could end up walking away with a huge multi-million dollar settlement that they will never see a penny of. By going the structured settlement route, they stand a better chance of at least recovering some of the funds. There’s always the chance that the legal proceedings don’t go the plaintiff’s way and they end up finding their case dismissed. Accepting a structured settlement can avoid throwing a coin-flip case on the court and just seeing what happens. However, the obvious disadvantage for the plaintiff is that they won’t be seeing a large sum of money all at once. Instead, the money will trickle to them yearly. This is a lot better than not getting any, but it still might take years for their damages to truly be reimbursed.

Structured settlements are something that have to be analyzed exhaustively before being agreed to. If both sides are in agreement that it is the best way to proceed, it can save a lot of heartache, as well as money for both sides. It is best to consult a lawyer before even acknowledging a structured settlement.