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Woodbridge Structured Funding LLC

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									                                    What is a Structured
Woodbridge                          Settlement?
Structured Funding LLC
                                    Straight talk about
                                    structured settlements
Learn more about structured settlements: Why settled personal
injury cases are often paid out in this manner and how they protect
you. Also learn when selling may be beneficial to you and your        2012
family.
What is a Structured
Settlement: A White Paper   [WOODBRIDGE STRUCTURED FUNDING LLC]




                             Structured Settlements:
                             Accommodate Larger Judgments
                             and Provide Protection
                             Prior to the 1970s, most compensation claims for injuries,
                             liability and malpractice were paid out in lump sums. But, as
                             the dollar amount of these awards began to rise dramatically,
                             the structured settlement became a sensible alternative that
                             protected the interests of the injured party and also provided
                             tax incentives to annuity providers.

                             A structured settlement is an alternative to a lump sum cash
                             award. It is an arrangement which ensures that monthly,
                             quarterly or annual payments are paid out to the claimant over
                             an extended period, from 10 to 50 years or longer.
                             Often, settlements are set up as structured payouts over time in
                             order to assure the plaintiff has the funds necessary to survive
                             over their lifetime. The payment structure also gives the
                             insurance company the ability to invest less in an annuity than
                             the actual aggregate amount awarded, helping to balance out
                             their risks over time. However, a structured settlement can give
                             the plaintiff a false sense of the actual amount of the
                             settlement due to the much lower present value of the award in
                             relation to the total amount of future payments.
                             The injured party benefits by receiving a secure, long-term
                             guaranteed income stream to help pay for medical care or
                             replace income lost due to an inability to work. The structured
                             settlement also protects the injured party from spending a lump
                             sum award in a short period of time—thus leaving him and his
                             family stranded without a critical flow of income. On the
                             downside, however, these periodic payments are fixed and
                             offer no liquidity—and payments cannot be accelerated,
                             increased or deferred.




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What is a Structured
Settlement: A White Paper   [WOODBRIDGE STRUCTURED FUNDING LLC]

                             How does an annuity work?
                             Insurance companies purchase special investment products
                             called annuities through their own annuity divisions or from
                             other life insurance companies. They are purchased for a
                             fraction of the cost of the judgment. These annuities are set up
                             to automatically fund periodic payments to the claimant who is
                             named as the annuitant or payee. Payments continue for a
                             period certain, which can range from 10 to 50 years and, in
                             many cases can extend throughout the annuitant’s lifetime. In
                             the end, the claimant and/or his beneficiaries will have received
                             the total amount of the award for damages.
With the purchase of an
annuity, the obligation
to guarantee the
recurring periodic
payments, as set forth in
the structured
settlement agreement, is
assigned to a third party.
                             Can a structured settlement be sold?
                             While receiving guaranteed periodic payments may be the
                             perfect solution for many individuals, for others it may not be
                             the ideal scenario. Having one's money locked up in an annuity
                             and well out of reach can be frustrating and inconvenient.
                             There are many circumstances in which having access to a lump
                             sum payment would be preferable. For instance, an annuitant
                             may be looking to buy a home and needs a down payment, or
                             would like to pay off large debt. Other reasons may be the
                             desire to send their child to college or maybe even go back to
                             college themselves to train for a new career. These are all good
                             reasons to cash out all or a portion of a structured settlement.



                             Fortunately, there are cash flow purchasers that can legally
                             purchase all or part of a structured settlement’s future
                             payments for a cash lump sum.




                                            3
What is a Structured
Settlement: A White Paper   [WOODBRIDGE STRUCTURED FUNDING LLC]



                             Some payment streams cannot be sold
                             There are specific types of annuities that typically cannot be
                             sold. They include:


                                    Worker’s compensation payments (in most states)
                                    Payments to a minor
                                    Pensions
                                    Social security payments
                                    VA disability or pension



                             Federal and state law helps protect
                             structured settlement owners
                             Federal and state statutes require court approval of a
                             structured settlement transfer. In 2002, the federal government
                             passed the Structured Settlement Protection Act ("Federal Act")
                             that requires court approval to determine whether or not it is in
                             "the best interest of the payee" to sell their annuity payment
                             rights. The Federal Act requires the approval of the state court,
                             if that state has a statute, to avoid any excise tax for the
                             acquirer of the structured settlement payment rights.

                             The court will look at the reasons for the sale, take into account
                             the financial situation of the individual or family and determine
                             whether the sale is well-advised. The law further protects the
                             structured settlement recipient by mandating that companies
                             advise those looking to sell their annuities to independently
                             seek the advice of a lawyer or financial advisor before making
                             any decision involving their structured settlement.




                                             4
What is a Structured
Settlement: A White Paper   [WOODBRIDGE STRUCTURED FUNDING LLC]




                             Is selling a structured settlement a good idea?
                             If one’s savings is substantial enough to cover unexpected
                             expenses such as medical bills, home repairs or tuition, then the
                             individual may benefit from keeping his structured settlement
                             intact. However, individuals who are smart investors, may want
                             to cash out of their structured settlements in order to be able
                             to reposition the lump sum into higher yielding investments
                             that offer more liquidity. Also, using the lump sum to pay off
                             high interest loans, college tuition or as a down payment on a
                             home can provide savings in interest charges that may make it
                             worthwhile to cash out.


You may gain greater
benefit by putting the
money to work for you
in a high-yield
investment.


                             Valid reasons for selling a structured settlement
                             Among the most common reasons individuals choose to sell
                             their structured settlements is to:


                                    Pay off high interest debt
                                    Achieve big dreams – buy a business, purchase a home,
                                     get a college education
                                    Fund potentially higher yielding investments
                                    Maintain liquidity for emergencies




                                            5
What is a Structured
Settlement: A White Paper   [WOODBRIDGE STRUCTURED FUNDING LLC]




                             Can a structured settlement be sold in part?
                             The recipients of structured settlements have the option to sell
                             all or just some of their future payments. The decision should
                             be based on the amount of cash need presently as well as what
                             that need might be in the near future. By keeping some future
                             payments intact, the structured settlement owner can maintain
                             a future income stream.

                             In other words, if only some structured settlement payments
                             are sold, the annuitant continues to receive funds from the
                             portion of the structured settlement he/she still owns as those
                             payments become due.

                             Also, should the need for cash arise again at a later date, it is
                             possible to sell additional future payments at that time.




                             Five steps to getting started
                             An individual considering selling structured settlement
                             payments should start with the following five steps:

                             1.      Evaluate your reasons for selling
                             2.      Consult a legal or financial advisor
                             3.      Decide the number of installments to sell
                             4.      Research structured settlement buyers
                             5.      Get comparative quotes from buyers



While companies are
legally bound to honor
their quoted price,
most offers include a
set expiration date.




                                             6
What is a Structured
Settlement: A White Paper   [WOODBRIDGE STRUCTURED FUNDING LLC]



                             Choosing a buyer
                             Before getting comparative offers, it is sensible to research and
                             compare structured settlement companies. You will want to
                             make sure that the company you choose has a long-standing
                             reputation for fairness and reliability.


                                    Search the internet to identify potential buyers
                                    Review customer comments and testimonials
                                    Consult the Better Business Bureau website
                                     (www.bbb.org) to get third-party insight into the
                                     company’s reputation and to make sure you are
                                     dealing with a legitimate company with no serious
                                     complaints on record

                             The ideal company takes the time to explain the specific details
                             of selling—and that company demonstrates a consistently solid
                             track record for successful court approvals.


                             Getting comparative quotes
                             Once a list of 3-5 potential buyers has been compiled, it is time
                             to get comparative quotes.


                                    Avoid any buyer who modifies his offer from the
                                     original bid or who promises to get you unusually quick
                                     access to your funds. Typically, the process takes 6-8
                                     weeks
                                    Don’t just look at the bottom line. Read all paperwork
                                     thoroughly, and closely examine the fine print for any
                                     unanticipated fees or special terms
                                    Ask about court fees, processing fees or other expenses
                                    Beware of offers that seem too good to be true
                                    Don’t be pressured into selling your payments

                                 Careful research and comparison of offers is crucial to
                                 getting the best possible offer. A potential seller may do




                                             7
What is a Structured
Settlement: A White Paper   [WOODBRIDGE STRUCTURED FUNDING LLC]

                                 well to obtain legal advice or the guidance of a financial
                                 advisor when reviewing and comparing offers.




Only sign a contract that
shows the exact amount
you will receive and
specifies any expenses
to be taken out.

                             The selling process
                             Once an agreed to price with a reputable buyer is reached and a
                             contract is signed, here’s what will happen next:


                                    The potential seller signs an affidavit stating the specific
                                     reason for the sale
                                    A petition is then filed with the local court
                                    A court date is set for a hearing before a judge who will
                                     determine if there is good cause for the sale—whether
                                     or not the transaction is “in the best interest” of the
                                     structured settlement holder—and whether the offer in
                                     the transaction is fair.

                             The judge will look at the individual’s financial situation along
                             with the reasons for selling the payments. If the court denies
                             the petition, the structured settlement company is liable for all
                             costs incurred and the annuitant will continue to receive
                             payments from his structured settlement as before.

                             If the judge approves the application and signs the court order,
                             upon receipt of an acknowledgement from the insurance
                             company, the buyer will wire the funds to the seller’s account
                             or issue a check; this may take up to several days.




                                             8
What is a Structured
Settlement: A White Paper   [WOODBRIDGE STRUCTURED FUNDING LLC]




A judge has the power to
approve a sale―if it is in
your best interest
―even if there is
language within your
settlement agreement or
structured settlement
annuity that states you
are not able to sell or
assign your payments.



                             What happens to my payments if I die?
                             Depending on how the structured settlement agreement is
                             written, there are several possible scenarios:


                                    Payments continue to be paid out to the beneficiary if
                                     still within the “period certain” timeframe
                                    Payments cease upon the death of the policy holder if
                                     only life contingent payments remain
                                    The annuity is held in joint with right of survivor

                             It is advisable to review the structured settlement agreement
                             with an attorney or financial advisor to find out which of these
                             scenarios apply.




                                             9
What is a Structured
Settlement: A White Paper   [WOODBRIDGE STRUCTURED FUNDING LLC]




                             Why is a lump sum payment always
                             less than the value of remaining payments?
                             When selling to a financial institution or “factoring company”
                             that specializes in purchasing structured settlements for a lump
                             sum, the seller can always expect to receive less than the
                             aggregate value of the remaining future payments. These
                             companies use a standard formula for determining the present
                             day value of the annuity. The formula they use discounts for
                             inflation and determines the present value of a future payment
                             that will often not be paid out for another 10, 20, or even 50
                             years.

                             Think of it as the reverse of a mortgage. If you take out a 30-
                             year loan for $200,000, in the end you would have paid
                             between $500,000 - $600,000 to the bank. When a financial
                             institution buys your structured settlement, they start with the
                             aggregate end amount and back into the present day value.



                             What percentage of future value is typical?
                              When selling future payments for a lump sum payment,
                             individuals can expect to receive varying percentages of the
                             aggregate value of their payments, depending on how far into
                             the future the payments are sold. Bear in mind that this also
                             takes into account the standard filing and court fees, lien
                             searches and transfer fees which must be factored in. The
                             deduction for these fees should be taken out by the structured
                             settlement company before any lump sum amount is quoted.




                                            10
What is a Structured
Settlement: A White Paper   [WOODBRIDGE STRUCTURED FUNDING LLC]




Even though the lump
sum payment may be
less than the total value
of all remaining
payments, it may still be
more advantageous to
use that lump sum to
pay off high interest
loans, credit cards or a
mortgage.


                             Conclusion
                             The decision to sell a structured settlement is a highly personal
                             one and depends heavily upon the individual’s financial
                             circumstances. The current need for access to cash should be
                             balanced against the need for maintaining an ongoing income
                             stream. It is always advisable for the potential seller to
                             carefully weigh all options and to consult with a lawyer or
                             financial advisor.

                             If you have any further questions about structured settlements,
                             contact Woodbridge Structured Funding, LLC for assistance. To
                             speak with a Woodbridge representative, call 866-865-7044.




                                            11
What is a Structured
Settlement: A White Paper   [WOODBRIDGE STRUCTURED FUNDING LLC]




                             About Woodbridge Structured Funding, LLC

                             Woodbridge Structured Funding, LLC provides an expert team
                             dedicated to serving our customers’ needs. It is our mission to
                             educate our customers on their financial options and help them
                             decide for themselves whether to sell their future payments
                             from structured settlements, annuities, or lottery winnings, for
                             a cash lump-sum.

                             At Woodbridge Structured Funding, LLC, we open up new
                             opportunities for financial freedom for our customers, enabling
                             them to make dreams such as home-ownership, higher
                             education, debt relief, and lifestyle upgrades a reality for
                             themselves and their loved ones.

                             A leader in our field, Woodbridge Structured Funding relies on
                             proven, trusted techniques and years of experience in order to
                             craft innovative solutions that work for our customers’
                             individual financial needs. We put our expertise to work for our
                             customers, allowing them to best utilize their financial
                             resources in order to meet both their current and long term
                             goals.

                             Woodbridge Structured Funding, LLC together with its
                             predecessor companies and founders have been pioneers in the
                             financial services industry for nearly twenty years. They were
                             the first to innovate the purchase of future periodic payments
                             in return for a lump sum and since 1993 have purchased nearly
                             one billion dollars in lottery jackpot, structured settlement and
                             annuity payments.




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