How to unload illiquidity

In selling illiquid assets, it is imperative to do your homework, financial experts say:

*Consult with local banks to find out about financial firms in your area that deal with illiquid assets.

*Comparison shop. Ask several companies for bids.

*Make certain the company buying the assets is reputable. Check with the Better Business Bureau, your state insurance commission, or state consumer agency. If you are considering a deal with an insurance company, check out their financial ratings from such firms as A.M. Best (www.ambest.com 800-424-2378), or Standard & Poor's ( www.standardandpoors.com/ratings 212-438-2000).

*Be sure that the firm buying your illiquid asset meets all local or state licensing requirements necessary for the type of asset you plan to sell. While financial firms are not required to have a licenses to buy structured legal settlements and lottery winnings, viatical settlements do require licensing. Also, some states require that you must go through a court to tap into a structured settlement

*Consult with an attorney, accountant, or financial planner before signing a contract turning over your rights to an illiquid asset.

*Weigh potential tax implications. If you receive a lump sum for an illiquid asset, you will be taxed for that amount. On the other hand, if you are over 65 and win the lottery - and then pass on - your heirs might face a major up-front tax bill for lottery winnings not yet received.

*Create a financial plan that earmarks what expenses your lump-sum will go toward and stick to it.

(c) Copyright 1999. The Christian Science Publishing Society