What is the function of a structured settlement honestly, and can (financial coach) I get rid of it?
No commentsBy Johnathan Grover
Have you seen the ads for your structured settlement? They all try to get you to sell your settlement. But what exactly is selling your structured settlement?
Structured settlements usually come from legal actions where money is awarded to one of the participants in the case. The settlement, if large enough, usually gets structured and is paid out over a pre-determined time. But what if you won a case and you needed the money now?
That is when you would consider selling your structured settlement. Now at first this could sound like a good idea but there are many considerations you need to take in to account before doing this. You will have to do some research.
In some states you will have to get the court’s permission to sell your settlement. There are also tax implications to be considered. In some cases you won’t be taxed if you wait for the money to pay out but when you sell the structured settlement you will have to pay tax.
The reason these lump sums are structured in this way is sometimes not so bad. It protects your money for you and other people that want to get their hands on it. If you need the money to live it is probably not a good idea to sell the settlement. If you don’t really need the money you could get it quicker and do something else with it like starting a business.
The important thing to remember when dealing with any financial decisions is to get good, sound advice from an advisor you trust. Don’t just take anybody’s word for it. The better you do your research, the better your chances are to not lose your money.
I know that the legal system can sometimes seem over protective but if you stepped back, and think with your head, you might see the reasoning behind it and realise that all laws are there to protect you.
I am a legal expert that deals with Financial Legal Issues on a daily baisis.I am a legal expert that deals with Financial Legal Issues on a daily basis. I write for various blogs that deal with these types of issues. Please read my article on structured settlement payouts.
Why Contracts are Important
By Monte Mccarty
Every business owner says it; “Do I really need a written contract?” The answer is “YES, YES and YES!” Using a written contract is like buying insurance for your business deals, but much better.
What Is A Contract?
Simply put, a contract is an enforceable agreement between two or more parties. The contract contains the promises made by the parties to one another, which is legally known as “consideration.” These promises define the relationship being undertaken as well as what happens if the business relationship doesn’t work out. If one party fails to act according to their promises, then they have “breached” the contract and can be found liable for damages. The damages typically equate to what the non-breaching party would have received if there had been no breach.
Oral Contract v. Written Contract
You go to a party with a friend and meet someone interested in your product or service. Eventually, you agree to provide him with 1,000 units of your product in exchange for a discounted price. You have created what is known as an “oral contract.” He has promised to order products and you have promised to provide them at a discounted price. Is the agreement worth anything? Unfortunately, the answer is probably no. Why? In most states, oral contracts are not enforceable if they carry an inherent value in excess of $500. Since it is so difficult to establish the terms of an oral contract in a dispute the legal system tries to discourage them. In fact, this legal restriction is generally known as the “Statute of Frauds.”
Turning back to our example, what if you thought you were going to give a 10 percent discount and he thought it was 20 percent? What if you can’t resolve it and he insists you provide the discounted products? You will end up in court with the dispute coming down to which party the judge or jury believes. Are you really willing to take that gamble?
With even a simple written contract, you can create a clause containing language that states you will give a 10 percent discount. If the dispute ends up in court, he is asked if his signature is on the bottom, the clause is read and you win. The contract should also contain a clause requiring the “prevailing party” to be reimbursed for their attorneys fees and costs. In short, he has to pay your legal bills as well.
An additional benefit to using a written contract is the due diligence element. I realize you will be shocked to learn that there are unethical businesses. In negotiating a contract, very specific requirements are put in writing. What if the other party starts squirming? It may be a sign they are unable to meet their obligations. Might that give you pause before you commit to tying up your inventory? You can save yourself a lot of headaches by discovering this information in advance.
In summary, even a simple written contract should be a mandatory bullet in your arsenal. Much like car insurance, you will be glad you have one if a business transaction falls apart.
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