Introduction
A structured settlement provides long-term financial security through periodic payments, often resulting from:
- Personal injury lawsuits
- Workers’ compensation cases
- Wrongful death claims
- Medical malpractice settlements
But what if you need a large amount of cash now instead of waiting years for payments?
A structured settlement cash out allows you to sell future payments in exchange for a lump sum today.
In this 2026 guide, we explain how it works, risks, fees, and how to avoid costly mistakes.
What Is a Structured Settlement?
A structured settlement is:
- A legal agreement
- Paid in scheduled installments
- Often funded through an annuity
- Designed to provide long-term income stability
Instead of receiving one large payout, you receive payments monthly, quarterly, or annually.
What Is Structured Settlement Cash Out?
Structured settlement cash out means:
- Selling part or all of your future payments
- Receiving a lump sum today
- Working with a purchasing company
You are not borrowing money — you are selling future payment rights.
How the Process Works
- Request quote from settlement buyer
- Company calculates lump sum offer
- Contract is signed
- Court approval is required
- Funds are released after approval
Court approval ensures the transaction is in your best interest.
How Much Money Will You Receive?
You will not receive full value of future payments.
Companies apply a discount rate, typically between:
- 8% to 18%
Example:
- Future payments total: $100,000
- You may receive: $60,000–$80,000 lump sum
The difference accounts for:
- Risk
- Time value of money
- Company profit
Always compare multiple offers.
Reasons People Cash Out Settlements
Common reasons include:
- Medical emergencies
- Debt repayment
- Home purchase
- Business investment
- Education expenses
Urgency often influences decision, but careful comparison is essential.
Pros of Structured Settlement Cash Out
- Immediate access to large cash
- No monthly waiting
- Can solve urgent financial issues
- Flexible use of funds
Cons and Risks
- You receive less than full value
- High discount rates reduce payout
- Loss of long-term financial security
- Possible emotional decision under pressure
Once sold, future payments are gone permanently.
Is Structured Settlement Cash Taxable?
Generally:
- Original structured settlement payments are tax-free
- Lump sum from selling may have tax implications depending on case
Always consult a tax professional before finalizing.
How to Choose the Right Settlement Buyer
Look for:
- Transparent discount rates
- No hidden fees
- Strong company reputation
- Clear written agreement
- Court-compliant process
Avoid companies that pressure you to sign quickly.
Can You Sell Only Part of Your Settlement?
Yes.
You can:
- Sell a portion of payments
- Sell payments for specific years
- Keep remaining structured payments
Partial sale is often safer than selling entire settlement.
Alternatives to Cashing Out
Before selling, consider:
- Personal loan
- Home equity loan
- Borrowing from family
- Negotiating payment plan with creditors
Sometimes alternatives may cost less long-term.
Frequently Asked Questions
How long does structured settlement cash out take?
Usually 30–60 days due to court approval process.
Can I cancel after signing?
Many states allow a short cancellation period before court approval.
Is selling settlement legal?
Yes, but must be approved by a judge.