December 24th, 2011 by admin. No Comments »
For some people, the idea of receiving structured settlement money over the long term is not something that they are particularly interested in. These individuals have financial needs right now. They might need to pay off pressing bills or maybe they just understand the time value of their money. But what happens when the settlement comes in the form of an annuity. This means you won’t receive all of the money up front. Instead, you will receive a small amount each year until the settlement is paid off. In some instances, you might have delayed payments from the beginning. The best option in many instances is to cash out this settlement annuity.
How cashing out a structured settlement annuity works
For people who would rather have their money right now, the best option is getting a company to buy out the annuity rights. The idea is that you would sell the rights to collection to a company for a lump sum of money. There are companies that offer this service for people who want to get their hands on settlement money right now. If you are thinking about making this move, then you need to consider the different positives and negatives. This is a big decision that will impact your financial future for the long term.
Advantages of cashing out a structured settlement annuity
The most obvious advantage is that you will get your hands on settlement money immediately. If you are settling a personal injury matter, then there is a good chance that this money is necessary for your betterment. No matter what the settlement is for, having money now is always better than having money later. When you get money now, you can invest in things and you can reap the rewards of compound interest. Likewise, you can get yourself out of a financial hole with money that is rightfully yours.
Another plus is that you don’t have to worry about any possible breach of contract. When you settle a matter, the company makes a promise to pay. Though there may be court orders that require the annuity payments, this does not stop the other party from pulling out in some circumstances. What if they declare bankruptcy? The benefit of getting the cash out now is that you have the money and you no longer have to worry. Think about this when you consider whether or not a settlement annuity cashout is the right move.
The negative, of course, is that you lose out on a bit of your eventual annuity value. This is a small price to pay for the rights to your money right away, though. It is really worth it to many to make this type of deal.
June 5th, 2011 by Fairlane Raymundo. No Comments »
One of the most common reasons for people in selling their structured settlement is to make more aggressive investments in stocks or their own business. The tax loss carryforward is one strategy commonly used by many people making their investments as a safety net.
The Tax loss carryforward is a strategy used by many accountants to lessen the tax they need to pay. The tax loss carryforward allows anyone to file their losses to up to seven years from the time it occurred. Let us say that the investment I made from the money I sold to structured settlement lost in 2009. I can still file the loss in 2016. The disadvantage to the government is that if I file the loss on a year I made a lot of money, I will still be entitled to the deductions so I pay less taxes even when I should pay more. That, unfortunately, happens a lot.
It is also common for people to be “forced” in utilizing the tax loss carryforward. If I lose more than what the limit allows me to, I can file the rest of the loss on a later date which allows me to pay less taxes on that year. If tax amounts are low, part or all of losses may be deducted when I have the capacity to do so. That means I will wait until my business makes some money or I earn excess money somewhere else which is dispensible.
Take note that this is a legal strategy and may be used as long as you meet the requirements set by the law. It doesn’t stop other critics for viewing the provision as a method set up for big businesses who want to have legal ways of paying less taxes. More often, big businesses defer the filing on the year when they make large profits so they don’t have to pay more taxes.
It comes with risks too, of course. If you don’t file your loss right away, you are banking or hoping that there will be a year when you will earn more. You can always file on the seventh year but if you have greater losses on the seventh year, this will only mean you will have almost nothing left to you.
June 4th, 2011 by Fairlane Raymundo. No Comments »
A structured settlement is an agreement between an insurance firm and a beneficiary. The insurance company pays the beneficiary the agreed amount on agreed periods. As we have discussed before, the money you have in a structured settlement may earn interest for you. The insurance company that manages your money invests your money on stocks and other forms of investments.
There are different kinds of structured settlement investments and for you to decide how your money is going to be invested in, it is important for you to understand how the system works. A private equity firm is important in the whole process.
Before we go to how a private equity firm works, let us understand the different elements involved in this whole scenario. An equity is the total value of an asset after deducting any liability associated to the asset. A private equity is the equity in an asset that may not be traded on the public stock market. That makes the private equity firm is composed of different partners that have pooled their resources to invest in a particular opportunity. There is a controlling party in these firms. This is the party that actively seeks out opportunities for the partners to earn money.
Private equity funding can come from private individuals with significant networth looking to grow their money, pension funds, and financial institutions. Insurance companies invest in a private equity funding. The money that you have is invested by insurance companies. That is how they earn money and how you earn money. When a private equity funding pool a significant amount, it is able to expand its reach to better opportunities too.
There are different ways or forms of investment your insurance company can go into but most of the time, they focus on stocks and buying businesses that has the potential to be shaped up and eventually sold for a profit. Think of it as buying a house. You look into the value of the spot of the house, fix it, and then sell it. That’s the same principle in buying businesses.
It is beneficial that you are aware of such a system and how it works so that you are also aware on how your money may do depending on the kind of investment you will go for.
June 3rd, 2011 by Fairlane Raymundo. No Comments »
The periodic payments you get from your structured settlement are tax-free. That’s one the major reasons people prefer to go for structured settlement rather than a lump sum especially for court settlements.
A 1099-MISC is a type of tax form. Since, you are not supposed to pay taxes for structured settlement, many people assume that they do not need to know what this is. On the other hand, knowing what a 1099-MISC will help you realize the advantages of not having to pay it when you earn money.
Let us start by defining what it is. A 1099-MISC is used to report miscellaneous income. If you have a regular employment, for example, and you do other jobs, that is considered a miscellaneous income. Commissions, rents, or royalties paid during the last tax year, payments for prizes, awards, legal services, and other non-employee activities are all considered miscellaneous.
Many people think that when they earn outside of their regular employment or regular work, they have “extra money” with them especially if the amount is not “significant”. However, the Internal Revenue Service or IRS thinks that every income is significant. Failing to report your extra income may result to legal consequences. Even when your earnings fall below the taxable bracket, you still need to report it.
One option is get your royalties or any lumpsum income via a structured settlement. You will still, of course, need to declare it and seek the advice of a lawyer on how to go about converting your income to a structured settlement. It will automatically assure you that your income will be stretched to as long as possible and will get you the opportunity to skip paying taxes that you will otherwise have to pay if you get it on lump sum.
Remember that if you earn $600 or more as a non-employee, you will have to pay taxes for that. You need to declare that. For royalty income, a 1000-MISC must be accomplished for $10 USD or more in royalties. What you can do is make arrangement from the distribution company to pile up your payments until it is big enough for a significant structured settlement.
June 2nd, 2011 by Fairlane Raymundo. No Comments »
We discussed several months ago that structured settlement may be used for child support instead of resorting to monthly cheques which holds not guarantee for the recipient of the child support. The parent paying child support may be mandated by law to pay it but there are many cases when the parent still misses the payments to the parent who has custody of the child(ren) or custodial parent. Click here and here for those.
As we all know, the court holds that raising a kid is a joint responsibility of the two parents regardless of the status of their marriage. The amount of the child support is determined by many factors including the cost of the child’s needs and the financial capacity of the non-custodial parent. Once all those are determined by the court, the non-custodial parent is expected to pay on a regular basis. Because children below seven years old are automatically awarded to the mother, the father is the one who ends up paying the child support. This may change if the father can prove beyond reasonable doubt that the mother is incapable of taking care of the children. Such is the case of the famous actress/singer Britney Spears and ex-husband, Kevin Federline. After the much publicised break down of Ms. Spears, the court awarded custody to Mr. Federline and because Ms. Spears had more means to pay for the children, she is the one who ends up paying child support.
In other cases, many parents still refuses to pay child support for various reasons. The most common ones used are:
* inability to pay because of “emergencies” that the parent needed to spend for
* lack of accountability for the money
* unwillingness to have the child in the first place
* to protest visitation agreements
* a personal conviction that the amount of the award is unfair
The third, fourth and fifth points may only be resolved by filing an appeal to the court. Refusing to pay child support will only put the non-custodial parent in a bad light. The rest of the points may be resolved with a structured settlement.
There will be no excuse for the parent to not pay because in the beginning of the process, the parent will have to settle everything with the insurance company. In effect, he will pay for the child’s needs until the child reaches 18 or beyond in advance. The money will be locked and secured.
The money will also be computed to provide for the most important needs like food, heath and education. The custodial parent will not be able to spend the money elsewhere because it will be released specifically for those needs.
June 1st, 2011 by Fairlane Raymundo. No Comments »
First, let us define what a liquid asset is. Liquid asset is cash. Some also consider any possession that is easily convertible to cash easily a liquid asset. If you have a home in a prime spot and in good condition, that may be considered liquid asset. A good gauge for many financial advisors is if an asset may be sold or converted to cash within 20 days, that may be considered liquid. A farm, for example, or a resort is not usually considered a liquid asset because the sheer price that it will take to sell it will most likely, require more than twenty days for it to be converted to cash.
Essentially, no one gets by without a liquid asset. This is what you use in your daily transaction like buying basic goods. It is also important to determine how liquid you are when you are finalizing your last will.
Now, many are asking if the periodic payments you get from structured settlement may be considered a liquid asset. The periodic payment you get is a liquid asset. The total value of your structured settlement is not. Remember that for it to be liquid, you need court approval and the process takes more than one month. Financial advisors consider an asset to be liquid if it can be converted into cash for 20 days.
If you are looking into liquidating your structured settlement for inheritance purposes, you might not even have to. Remember that you can include in your settlement a clause that will allow your beneficiaries to continue getting the payment even when you pass away.
If you want to use you structured settlement to pay off debts, then you may really have to seek court permission to do so. Just be aware that when you sell your structured settlement future payments, you will get less than the real total value to pay the lawyers and other fees. Also understand that this is a business venture to structured settlement buyers and they need to make money off what they buy. Click here and here to read more about the things you need to be careful of when selling your structured settlement.
May 31st, 2011 by Fairlane Raymundo. No Comments »
Your rights to the future payments of your structured settlement may be considered a personal asset. A personal asset is something of value which is legally and formally owned by one person. An example of a personal asset or personal property is a home, money, computers, clothes, and others. The monetary value of your personal asset is usually re-examined when you apply for loans, when you want to sell them or when you are transferring it to someone else.
The periodic payments you get from your structured settlement have monetary value that is why it is considered a personal asset. This is sometimes confusing because many say that a structured settlement is not owned by the beneficiary.
Remember that when your personal asset is added up, even the things that you don’t usually think of in monetary terms are added up. Even your computers, pieces of jewels, clothes, and others may be assessed. Remember that gems increase its value as it gets older and other shoes, clothes and bags retain their value too even after a long time. Aside from this, your checking, savings, and retirement accounts are all personal assets, as are instruments like life insurance policies which have a cash value, even if that value is not accessible.
That is why many people are caught by surprise when their personal assets are computed. Remember that there are two ways to compute for the monetary value of your personal assets. You can look at the market value which is basically how much people would commonly pay to own something like what you own. The next one is the appraised value which is often higher because it is highly speculative. It is really the estimate of how people will be paying for your item in the future. You need to get both especially if you are using it as a basis for insurance policies and loans.
You also need to know how to manage your asset especially if the assets are put into bonds or other investments that allow it to grow interest. Like we have said, it is never wise to put all your assets on one investment. Spreading it would also spread the risk.
May 30th, 2011 by Fairlane Raymundo. No Comments »
We have mentioned that one of the biggest advantages of the setting up a structured settlement rather than getting your money lump sum is the tax exemption. It is not always easy, of course. Any money that you earn whether it be from a salary, inheritance, or profit for investment is taxable. This is different from the consumption tax which is integrated to the things you buy like goods and services.
However, paying taxes based on your income is not entirely a bad thing. It has advantages as much as disadvantages. Read below and you will see what paying an income tax brings.
• People who earn less will pay less. If you pay base taxes on the products you buy, everyone will pay the same amount of tax regardless of your capacity to do so.
• Your income tax records are legally and internationally accepted record. If you need to file a loan, the lender will have concrete basis on your capacity to pay.
• There is no need to pay for those who earn less to pay more. Since you are earning more, it is but natural for you to pay more. Income is the best way to get some tax breaks.
• Tax earnings take more work because you need to file it annually.
• If you belong to the lower class, you are still required to pay taxes. This means that you have to pay your taxes regardless.
• Some believe that an income tax violates a person’s privacy and the right of someone to use the money he rightfully earned.
• It encourages some corruption because some actually resort to bribery just to get away from income taxes.
There is nothing wrong, however, in getting tax breaks just as long as you do it legally. The most important thing is that you do not submit false claims or mislead the government in thinking that you earn less than you do. In the end, it will be your loss. Remember that your loans are always based on your income and if they think you earn less, then you will get less loan privileges too.
May 29th, 2011 by Rosanne Lim. No Comments »
It probably comes as no surprise for many: some mail carriers face a daily risk of dog bites depending on the area they service. The United Postal Service released the list of US cities where postal workers suffer the most dog bites. Houston ranked first with 62 attacks followed by San Antonio with 39 attacks. In total, 3,000 mail carriers were attacked by dogs in 2010 alone.
Most of the attacks occur when letter carriers deliver mail to a house with an outdoor dog. While they usually carry around a pepper spray to keep the dog at bay, it is not always enough to prevent injuries. Their mail satchel can also be used to defend against dogs although this won’t be sufficient to hinder very aggressive dogs.
Postal workers can refuse to deliver mail to a house where the dogs are not secured properly. The Postal Service urges pet owners to ensure that their dogs are secured when the letter carriers arrive. This is especially important if the dog is large and aggressive. If and when an attack occurs, the victim can file a lawsuit against the dog owner.
May 29th, 2011 by Fairlane Raymundo. No Comments »
A case settlement is the most common way how someone gets a structured settlement. They enjoy the benefits of tax exemptions provided to structured settlement among other things. However, a court settlement is not the only way for you to set up a structured settlement. If you, by any chance, get paid a considerable amount, you may opt to set up a structured settlement instead of getting the money lump sum.
Let us assume you have an idea for a book, a movie or invented some revolutionary gadget. You just may have the key that will secure your future. You need to legally establish ownership of your idea or product to allow you to make money. There are different ways on how you can secure ownership and it all depends on the nature of your work or product.
Any creation that falls under the arts is copyrighted. This includes literature, dramatic, musical, artistic, and intellectual. Even when the work is unpublished, you should still establish ownership as per the Copyright Act of 1976. This will give you the exclusive rights to publish your work and reproduce it and get royalties if someone else uses your idea. A copyright protects a form of expression, but not the subject matter of the work which means other people may write a review about it. Others may not use the same words he used but not prevent others from writing a review about the same work.
A trademark is used for seals, logos, a word, symbol, device, or name that is used for the purpose of trading goods. The trademark is a mark that indicates where the good came from and will prevent others from producing the same good and claiming that it is the same as yours. However, they may produce the same product using a different trademark.
A patent is for inventions of technology or other machines. It will not allow anyone from making, using or selling your invention. However, it lasts for a limited time afterwhich, others will be free to use it.