Former plaintiffs who are considering selling their structured settlement or annuity are often under pressure, in a hurry, and desperate to make a decision. These are all elements in what could create the perfect storm. If you have a client considering selling, help them by letting them know what not to do. Here are the top mistakes they should avoid:
- 1. Not shopping around – This is no time to accept someone’s word at face value. When your asset is on the line, it’s time to do your homework, get multiple bids, and ask for references. Consider calling the lawyer or original structured settlement broker who helped you obtain the structure or annuity for advice or a reference on a reputable purchasing company. Then, get at least three bids before you make your decision.
- 2. Being pressured into a contract – Some companies use high-pressure tactics to get a sale, but this should send up red flags rather than encourage you to sell. If you don’t feel comfortable with the company representative, or if there is undue stress to make a quick decision, then walk away. Our guess is this company doesn’t want you to get a second bid.
- 3. Selling more than you need – Structured settlements provide long-term stability via stead monthly income. If you own more than you need, you can opt for a partial payout, which will give you the cash you need now while also allowing you to keep some of your structure intact.
- 4. Not getting their offer in writing – A company may offer you the highest value for your structured settlement, then change the terms or add other fees to the contract once the process is underway. Be aware of this, get all offers in writing before agreeing to anything, and look for the fine print.
- 5. Wasting the money – If you have a solid, well-vetted plan, stick to it. Once the check arrives, resist temptation to go shopping or buy anything other than what the money is intended for. Wasting the money will only put you further into debt, and with fewer assets than ever before.
The bottom line is, the decision to sell a structured settlement or annuity should not be made lightly. It should also be the last resort, and considered only after every other conceivable option is pondered. By owning a structure, you own an asset. And, your plans for the money will be important in determining whether you really need it, and whether you are willing to trade the benefit of long-term stability for the power to use the money now for a defined purpose.
Hank Didier is co-founder of Vantage Capital Consultants, a purchaser of structured settlements and annuities.