Two payment streams with the same annual total can be worth very different amounts, and the difference is structure rather than size. Whether the payments are guaranteed or life-contingent, how far out they run, and whether there are lump sums along the way all move the number a buyer will put on them, and all of them are already fixed in your settlement agreement.
Guaranteed against life-contingent
Guaranteed payments continue for their term whatever happens to you, and pass to a beneficiary if you die. Life-contingent payments stop when you do. A buyer pricing a life-contingent stream is taking mortality risk and prices accordingly, sometimes requiring a medical questionnaire or a life insurance policy on the payee as a condition. If your schedule mixes the two, they will be quoted differently, and a quote that does not distinguish them is not a quote you can compare.
Term, timing and the shape of the schedule
Money far in the future is worth much less today than money soon, so a stream running twenty years is discounted far more heavily at the back end than at the front. This is the arithmetic that makes partial transfers attractive: selling the next four years of payments rather than the whole schedule puts the discount on the cheapest part of the stream and leaves the long tail intact. It is rarely what a buyer offers first.
The federal rule that makes it universal
Congress made the court step effectively compulsory without legislating for state courts at all. 26 U.S.C. 5891 imposes a tax equal to 40 percent of the factoring discount on a person who acquires structured settlement payment rights in a factoring transaction, and subsection (b) disapplies it only where the transfer is approved in advance in a qualified order: a final order, judgment or decree finding that the transfer does not contravene any federal or state statute and is in the best interest of the payee, taking into account the welfare and support of the payee's dependents.
Questions people ask about structured settlement payments
Does a court really have to approve this?
Yes, in every state. The federal exception in 26 U.S.C. 5891(b) applies only where the transfer was approved in advance in a qualified order, and the order must find the transfer is in the best interest of the payee, taking into account the welfare and support of the payee's dependents.
What is the single biggest variable in the price?
The discount rate, and after that how far in the future the payments you are selling fall due. The reported range across the market is between 9% and 18%.
Do you take a share of what I get?
No. Buyers pay a flat fee for the enquiry itself, never a share of the discount and never anything contingent on a transfer completing.