How to Assess Lump Sum Options and Make a Good Decision

In a structured settlement, a person receives a cash award (funds won for a lawsuit, lottery winnings, or insurance payouts) that is paid out in increments over time. It’s a straightforward arrangement that results in a steady stream of guaranteed income for the recipient.

The real decision-making process comes when you find that a lump sum payout would be the ideal solution for your current financial needs. Obtaining a lump sum can be complicated, so it is important to first figure out whether it is the best thing for you.

Your first step is to put in writing the financial needs that the money from a sale of your structured settlement will address. Do you need to pay down credit card debt, a mortgage loan, or college tuition? Do you want to start a business and need the cash to get it going?

Once your financial needs are written down, it becomes easier to assess their importance. Cash lump sums should not be used to satisfy fleeting personal wants – such as a lavish vacation or an expensive sports car. Your reason for requesting settlement cash should be to provide a lasting benefit for you and your loved ones.

Assessing your lump sum options also means deciding on the amount required to meet your needs. Consider whether a smaller amount will help you meet your current financial needs and future ones.

You also have the option to sell all or just a part of the structured settlement. In fact, the settlement can be sold again in the future. There are no restrictions against making multiple transactions, as long as all of the applicable laws are followed in the process.

Finally, it makes sense to seek advice from a neutral third-party who can assist you with evaluating your needs and options. In fact, some states require that a seller obtain independent professional advice prior to completing a transaction involving the sale of a structured settlement.

Once a judge approves the sale, the cash for your structured settlement is released. Now it’s up to you to budget the money accordingly. Knowing how the lump sum affects your monthly expenses will help make the money last and keep your financial needs met.