SALE OF STRUCTURED SETTLEMENT FAQs

• What are structured settlements?
• Who is First Capital Funding Corporation and what does it do?
• Why would anyone want to sell his or her structured annuity payments?
• How can I sell my structured settlement payments?
• How long will it take to get my money?
• What if I want to sell only a portion of my payments?
• Will I have to pay taxes on the amount I receive from the sale?
• What states now have transfer statutes that require court orders?
• Tell me about the new federal law governing the sale of structured settlement payments.
• Which states do not currently have transfer statutes?

Question: What are structured settlements?
 

Answer: Structured settlements are legal agreements between two parties whereby one party agrees to make payments over time in exchange for their release of liability to the other. Structures are usually associated with personal injury claims in which the plaintiff agrees to accept annuity payments from an insurance company in exchange for their release of liability against the defendant who purchases the annuity on behalf of the plaintiff. While the payments are guaranteed to the plaintiff, for tax purposes the policy is usually assigned to an affiliate of the insurance company making the payments.

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Question: Who is First Capital Funding Corporation and what does it do?
 

Answer: First Capital Funding Corporation (FCFC) is the rising leader in the purchase of  structured settlement payments.  Established in 1995, FCFC has transacted in the purchase of Annuities and Settlements in all 50 States and continues to maintain its position in this industry.   FCFC has demonstrated its ability to efficiently provide this much needed service throughout the country.

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Question: Why would anyone want to sell his or her structured annuity payments?
 

Answer: While structured settlements serve an important role and often meet the payees' needs as originally planned, they are inflexible and incapable of resolving unplanned, immediate financial needs. Over thirty state governments have determined that individuals should have access to this important resource and now allow for court ordered transfers of the annuitant's rights to receive payments when it is determined to be in their best interest. Individuals in all fifty states now have access to their annuity payments when financial needs arise.

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Question: How can I sell my structured settlement payments?
 

Answer: By entering into a purchase and sale agreement with First Capital Funding Corporation, complying with its underwriting process and ultimately appearing before a judge who will decide if the transaction is in compliance with his or her state's transfer statute and is in the best interest of the seller. If so determined, the court enters an order requiring the insurance company to send the subject payments to First Capital Funding Corporation and the seller then receives their money.

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Question: How long will it take to get my money?
 

Answer: The process can take anywhere from four weeks to four months, depending on a variety of factors. The initial underwriting and contract processing can be completed very quickly. If a court order is required, then the courts' calendars will be factor. FCFC has a very experienced legal staff who, along with outside counsel, will work with you to make the process as efficient and uncomplicated as possible.

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Question: What if I want to sell only a portion of my payments?
 

Answer: You can do that. More often than not, First Capital Funding Corporation purchases only a portion of the seller's payments to meet their specific financial need. First Capital Funding Corporationcan structure a plan to buy a portion of each payment, or payments for a short period time or lump payments in the future leaving monthly payments with the seller.

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Question:  Will I have to pay taxes on the amount I receive from the sale?
 

Answer: No. On June 10, 1999, the IRS issued Private Letter Ruling 119273-97, which confirmed that an individual's sale of their structured settlement payments would not create a taxable transaction. In addition, the United States Congress passed HR 2884, a bill that confirms that the subsequent sale, assignment, transfer, or encumbrance of structured settlement payment rights by a payee to a company such as First Capital Funding Corporation does not create any adverse tax consequences for the parties to the original structured settlement, including the payee who makes the assignment of his/her structured settlement payment rights. The President signed the bill on January 23, 2002.

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Question:  What states now have transfer statutes that require court orders?
 

As of June 2002, the following states have enacted transfer statutes requiring either a court order and/or certain disclosures before a structured settlement recipient can sell their annuity payments. After July 2002, every transfer of payment rights will require a court order to avoid a penalty under HR 2884.

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Question:  Tell me about the new federal law governing the sale of structured settlement payments.

Generally, the bill imposes an excise tax on anyone who acquires structured settlement payments (such as First Capital Funding Corporation) unless said structured settlement payments are acquired pursuant to a "qualified order." A "qualified order" means a court order approving a transfer of structured settlement payments which finds that the transfer is in the best interest of the payee taking into account the welfare and support of the payee's dependents. First Capital Funding Corporation has extensive knowledge of all state and federal laws governing these transactions and can provide expert advice and support to those who need access to their structured settlement assets.

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Question:  State transfer statutes.

Most states have enacted a Model Act that requires certain disclosures and a court review to determine if the transfer is in the best interest of the seller taking into consideration the welfare and support of seller's dependents. Other states including Kentucky and Michigan have enacted statutes that essentially prohibit an individual from selling their annuity payments.

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Question:  Which States do not currently have transfr statutes?

While the following states do not currently have transfer statutes, individuals living in these states are still required by federal law to get court approval to sell their structured settlement payments. First Capital Funding Corporation can assist individuals in these states to get approval under the appropriate transfer act in another state. Please call for more details.

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