When you acquire a structured settlement annuity you’re left with a couple of options. You can keep it and collect the eventual annuity-style income, or you can sell it to a third-party and get cash for your settlement immediately. Many people like structured settlements because generally you can save between 25 and 35% in state and federal taxes on interest that would otherwise be taxable, but many annual annuity settlements charge maintenance fees up to 3% and some even have a penalty up to 7% in the first seven years.
Unfortunately, selling a structured settlement can have a dark side as well. Much has been covered in the news recently about people selling a structured settlement to companies that prey on desperate individuals at below-market prices. The good news is that has led to new legislation being drafted to prevent such practices. According to The Washington Post, Prince George’s County Circuit Court in Maryland has implemented significant reforms to handle these transactions and ensure deals are made in good faith.
The changes are meant to, “ensure accountability and transparency during these proceedings,” according to officials with the Maryland state Court of Appeals Standing Committee on Rules of Practice and Procedure.
Some of the changes include; all sellers must be present at the hearing in which a judge decides if the deal is fair, independent professional advisers must also appear at these hearings, and all petitions must be filed using sellers full name rather than initials.
County Administrative Judge Sheila R. Tillerson Adams is the latest to lead the charge for these reforms after reviewing numerous cases from one purchasing company in particular.
“When I looked at these cases, and I saw the same attorney and the same adviser and the initials and no reason for them to be filed with initials and no reason that I dictated that these cases should be redacted, that was a cause of concern,” Adams said.
In the end it will be left to the judges, advisers, buying companies, and ultimately people to decide if selling a structured settlement is right for each situation. More government oversight can lead to a more inefficient process, but it can also provide the protection many people need from themselves.