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Structured Settlements in Your State

To learn more about the sale of your structured settlement payments, read the statute from your area.


State Statutes

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Alabama

Alabama Structured Settlement Protection Act

ALA. CODE § 6-11-51 et seq (2006)

Ala.Code 1975 § 6-11-50.

Short title.

This article shall be known and referred to as the “Structured Settlement Protection Act.”

 

Ala.Code 1975 § 6-11-51.

Definitions.

As used in this article the following words and terms shall have the following meanings:

 

(1) ANNUITY ISSUER. An insurer that has issued a contract to fund periodic payments under a structured settlement.

 

(2) DEPENDENTS. A payee’s spouse and minor children and all other persons for whom the payee is legally obligated to provide support, including alimony.

 

(3) DISCOUNTED PRESENT VALUE. The present value of future payments determined by discounting the payments to the present using the most recently published applicable federal rate for determining the present value of an annuity, as issued by the United States Internal Revenue Service.

 

(4) GROSS ADVANCE AMOUNT. The sum payable to the payee or for the payee’s account as consideration for a transfer of structured settlement payment rights before any reductions for transfer expenses or other deductions to be made from the consideration.

 

(5) INDEPENDENT PROFESSIONAL ADVICE. Advice of an attorney, certified public accountant, actuary, or other licensed professional adviser.

 

(6) INTERESTED PARTIES. With respect to any structured settlement, the payee, any beneficiary irrevocably designated under the annuity contract to receive payments following the payee’s death, the annuity issuer, the structured settlement obligor, and any other party that has continuing rights or obligations under such structured settlement.

 

(7) NET ADVANCE AMOUNT. The gross advance amount less the aggregate amount of the actual and estimated transfer expenses required to be disclosed under subdivision (5) of Section 6-11-52.

 

(8) PAYEE. An individual who is receiving tax free payments under a structured settlement and proposes to make a transfer of payment rights thereunder.

 

(9) PERIODIC PAYMENTS. Includes both recurring payments and scheduled future lump sum payments.

 

(10) QUALIFIED ASSIGNMENT AGREEMENT. An agreement providing for a qualified assignment within the meaning of Section 130 of the United States Internal Revenue Code, United States Code Title 26, as amended from time to time.

 

(11) RESPONSIBLE ADMINISTRATIVE AUTHORITY. With respect to a structured settlement, any government authority vested by law with exclusive jurisdiction over the settled claim resolved by such structured settlement.

 

(12) SETTLED CLAIM. The original tort claim resolved by a structured settlement.

 

(13) STRUCTURED SETTLEMENT. An arrangement for periodic payment of damages for personal injuries or sickness established by settlement or judgment in resolution of a tort claim.

 

 (14) STRUCTURED SETTLEMENT AGREEMENT. The agreement, judgment, stipulation, or release embodying the terms of a structured settlement.

 

(15) STRUCTURED SETTLEMENT OBLIGOR. With respect to any structured settlement, the party that has the continuing obligation to make periodic payments to the payee under a structured settlement agreement or a qualified assignment agreement.

 

(16) STRUCTURED SETTLEMENT PAYMENT RIGHTS. Rights to receive periodic payments under a structured settlement, whether from the structured settlement obligor or the annuity issuer, where:

 

a. The payee is domiciled in, or the domicile or principal place of business of the structured settlement obligor or the annuity issuer is located in, this state.

 

b. The structured settlement agreement was approved by a court or responsible administrative authority in this state.

 

c. The structured settlement agreement is expressly governed by the laws of this state.

 

(17) TERMS OF THE STRUCTURED SETTLEMENT. Include, with respect to any structured settlement, the terms of the structured settlement agreement, the annuity contract, any qualified assignment agreement, and any order or other approval of any court or responsible administrative authority or other government authority that authorized or approved the structured settlement.

 

(18) TRANSFER. Any sale, assignment, pledge, hypothecation, or other alienation or encumbrance of structured settlement payment rights made by a payee for consideration; provided that the term does not include the creation or perfection of a security interest in structured settlement payment rights under a security agreement entered into with a bank or other insured depository institution or a subsidiary or affiliate of a bank or other insured depository institution (secured party) until and unless the secured party redirects the structured settlement payments to such secured party, or an agent or successor in interest thereof, or otherwise enforces the security interest against the structured settlement payment rights.

 

(19) TRANSFER AGREEMENT. The agreement providing for a transfer of structured settlement payment rights.

 

(20) TRANSFEREE. A party acquiring or proposing to acquire structured settlement payment rights through a transfer; provided that the term does not include a secured party who has not received a transfer of the structured settlement payment rights as the term “transfer” is defined in subdivision (18).

 

(21) TRANSFER EXPENSES. All expenses of a transfer that are required under the transfer agreement to be paid by the payee or deducted from the gross advance amount, including, without limitation, court filing fees, attorneys’ fees, escrow fees, lien recordation fees, judgment and lien search fees, finders’ fees, commissions, and other payments to a broker or other intermediary. The term does not include preexisting obligations of the payee payable for the payee’s account from the proceeds of a transfer.

Ala.Code 1975  § 6-11-52.

Disclosure statement.

Not less than three days prior to the date on which a payee signs a transfer agreement, the transferee shall provide to the payee a separate disclosure statement, in bold type no smaller than 14 points, setting forth all of the following:

 

(1) The amounts and due dates of the structured settlement payments to be transferred.

 

(2) The aggregate amount of the payments.

 

(3) The discounted present value of the payments to be transferred, which shall be identified as the “calculation of current value of the transferred structured settlement payments under federal standards for valuing annuities,” and the amount of the applicable federal rate used in calculating the discounted present value.

 

(4) The gross advance amount.

 

(5) An itemized listing of all applicable transfer expenses, other than attorneys’ fees and related disbursements payable in connection with the transferee’s application for approval of the transfer, and the transferee’s best estimate of the amount of the fees and disbursements.

 

(6) The net advance amount.

 

(7) The amount of any penalties or liquidated damages payable by the payee in the event of any breach of the transfer agreement by the payee.

 

(8) A statement that the payee has the right to cancel the transfer agreement, without penalty or further obligation, not later than the third business day after the date the agreement is signed by the payee.

Ala.Code 1975  § 6-11-53.

Advance approval by court required; hearing.

No direct or indirect transfer of structured settlement payment rights shall be effective and no structured settlement obligor or annuity issuer shall be required to make any payment directly or indirectly to any transferee of structured settlement payment rights unless the transfer has been approved in advance in a final court order or order of a responsible administrative authority based on express findings by the court or responsible administrative authority, determined after a factual hearing, of all of the following:

 

(1) The transfer is in the best interest of the payee, taking into account the welfare and support of the payee’s dependents.

 

(2) The payee has been advised in writing by the transferee to seek independent professional advice regarding the transfer and has either received such advice or knowingly waived such advice in writing.

 

(3) The transfer does not contravene any applicable statute or the order of any court or other government authority.

Ala.Code 1975  § 6-11-54.

Effects of transfer of rights.

(a) Following a transfer of structured settlement payment rights under this article:

 

 (1) The structured settlement obligor and the annuity issuer shall, as to all parties except the transferee, be discharged and released from any and all liability for the transferred payments.

 

(2) The transferee shall be liable to the structured settlement obligor and the annuity issuer in the following cases:

 

a. If the transfer contravenes the terms of the structured settlement, for any federal or state income taxes, interest, fees, and penalties incurred by the parties, including the annuity issuer and structured settlement obligor, as a consequence of the transfer.

 

b. For any other liabilities or costs, including reasonable costs and attorneys’ fees, arising from compliance by the parties with the order of the court or responsible administrative authority or arising as a consequence of the transferee’s failure to comply with this article.

 

(b) Neither the annuity issuer nor the structured settlement obligor may be required to divide any periodic payment between the payee and any transferee or assignee or between two or more transferees or assignees.

 

(c) Any further transfer of structured settlement payment rights by the payee may be made only after compliance with all of the requirements of this article.

Ala.Code 1975  § 6-11-55.

 Application for approval of transfer; notice.

(a) An application under this article for approval of a transfer of structured settlement payment rights shall be made by the transferee and may be brought in the county in which the payee resides, in the county in which the structured settlement obligor or the annuity issuer maintains its principal place of business, or in any court or before any responsible administrative authority which approved the structured settlement agreement.

 

(b) Not less than 20 days prior to the scheduled hearing on any application for approval of a transfer of structured settlement payment rights under Section 6-11-53, the transferee shall file with the court or responsible administrative authority a notice of the proposed transfer and the application for its authorization. Such notice and application shall include all of the following:

 

(1) A copy of the transferee’s application.

 

(2) A copy of the transfer agreement.

 

(3) A copy of the disclosure statement required under Section 6-11-52.

 

(4) A listing of each of the payee’s dependents, together with each dependent’s age.

 

(5) Notification that any interested party is entitled to support, oppose, or otherwise respond to the transferee’s application, either in person or by counsel, by submitting a written response to the court or responsible administrative authority or by participating in the hearing.

 

(6) Notification of the time and place of the hearing and notification of the manner in which and the time by which written responses to the application must be filed, which shall be not less than 15 days after service of the transferee’s notice, in order to be considered by the court or responsible administrative authority.

 

(c) The notice and application required by subsection (b) shall be served on all interested parties in the manner provided by the Alabama Rules of Civil Procedure for the service of process.

Ala.Code 1975  § 6-11-56.

Waiver; choice of law; procedures for life-contingent rights; liability.

(a) The provisions of this article may not be waived by any payee.

 

(b) Any transfer agreement entered into on or after July 1, 2006, by a payee who resides in this state shall provide that disputes under the transfer agreement, including any claim that the payee has breached the agreement, shall be determined in and under the laws of this state. Such a transfer agreement shall not authorize the transferee or any other party to confess judgment or consent to entry of judgment against the payee.

 

(c) No transfer of structured settlement payment rights shall extend to any payments that are life-contingent unless, prior to the date on which the payee signs the transfer agreement, the transferee has established and has agreed to maintain procedures reasonably satisfactory to the annuity issuer and the structured settlement obligor for (1) periodically confirming the payee’s survival, and (2) giving the annuity issuer and the structured settlement obligor prompt written notice in the event of the payee’s death.

 

(d) No payee who proposes to make a transfer of structured settlement payment rights shall incur any penalty, forfeit any application fee or other payment, or otherwise incur any liability to the proposed transferee or any assignee based on any failure of the transfer to satisfy the conditions of this article.

(e) Nothing contained in this article shall be constructed to authorize any transfer of structured settlement payment rights in contravention of any law or to imply that any transfer under a transfer agreement entered into prior to July 1, 2006, is valid or invalid.

 

(f) Compliance with the requirements set forth in Section 6-11-52 and fulfillment of the conditions set forth in Section 6-11-53 shall be solely the responsibility of the transferee in any transfer of structured settlement payment rights, and neither the structured settlement obligor nor the annuity issuer shall bear any responsibility for, or any liability arising from, noncompliance with the requirements or failure to fulfill the conditions.

Ala.Code 1975  § 6-11-57.

Applicability.

This article shall apply to any transfer of structured settlement payment rights under a transfer agreement entered into on or after the 30th day after July 1, 2006; provided, however, that nothing contained herein shall imply that any transfer under a transfer agreement reached prior to such date is either effective or ineffective.

Ala.Code 1975  § 6-11-58.

Relation to workers’ compensation provisions.

Nothing in this article shall be construed to apply to any settlement under the Alabama Workers’ Compensation Law.

Ala.Code 1975  § 6-11-59.

Confidentiality of settlement terms.

Nothing in this article is intended to, or shall, require or allow the disclosure, publication, or dissemination of the terms of a settlement which is confidential, whether the confidentiality is created by agreement of the parties or by order of the court, or by both.

 

Alaska

Alaska Structured Settlements Act

ALA. CODE § 6-11-51 et seq. (West 2003)

AS § 09.60.200.

Conditions to transfers of structured settlement payment rights and structured settlement agreements

(a) A transfer of structured settlement payment rights is not effective and a structured settlement obligor or annuity issuer is not required to make a payment directly or indirectly to a transferee of structured settlement payment rights unless the transfer has been approved by a superior court based on the court’s written express findings that

 

(1) the structured settlement arose from an action filed in Alaska or that could have been filed in Alaska, or the payee of the structured settlement is domiciled in Alaska;

 

(2) the transfer complies with the requirements of AS 09.60.200 - 09.60.230, other applicable state and federal law, and the orders of any court;

 

(3) not less than 10 days before the date on which the payee first incurred an obligation with respect to the transfer, the payee has received by certified mail, return receipt requested, or other means that provide a comparable record of delivery, a disclosure statement in bold type, no smaller than 14 points, specifying

 

(A) the amounts and due dates of the structured settlement payments to be transferred;

 

(B) the aggregate amount of the payments;

 

(C) the discounted present value of the payments, together with the discount rate used in determining the discounted present value;

 

(D) the gross amount payable to the payee in exchange for the payments;

 

(E) an itemized listing of all broker’s commissions, service charges, application fees, processing fees, closing costs, filing fees, referral fees, administrative fees, legal fees, notary fees, and other commissions, fees, costs, expenses, and charges payable by the payee or deductible from the gross amount otherwise payable to the payee;

 

(F) the net amount payable to the payee after deduction of all commissions, fees, costs, expenses, and charges described in (E) of this paragraph;

 

(G) the quotient, expressed as a percentage, obtained by dividing the net payment amount by the discounted present value of the payments; and

 

(H) the amount of any penalty and the aggregate amount of any liquidated damages, including penalties, payable by the payee in the event of a breach of the transfer agreement by the payee;

 

(4) the payee has established that the transfer is in the best interests of the payee and the payee’s dependents;

 

(5) the payee has received independent professional advice regarding the legal, tax, and financial implications of the transfer;

 

(6) the transferee has given written notice of the transferee’s name, address, and taxpayer identification number to the annuity issuer and the structured settlement obligor and has filed a copy of the notice with the court; and

 

(7) the transfer agreement provides that any disputes between the parties will be governed, interpreted, construed, and enforced in accordance with the laws of this state and that the domicile state of the payee is the proper venue to bring any cause of action arising out of a breach of the agreement; the transfer agreement must also provide that the parties agree to the jurisdiction of any court of competent jurisdiction located in this state.

 

(b) If the transfer would contravene the terms of the structured settlement, upon the filing of a written objection by any interested party and after considering the objection and any response to it, the court may grant, deny, or impose conditions upon the proposed transfer as the court considers just and proper under the facts and circumstances in accordance with established principles of law. Any order approving a transfer must require that the transferee indemnify the annuity issuer and the structured settlement obligor for any liability including reasonable costs and attorney fees arising from compliance by the issuer or obligor with the order of the court.

 

(c) A provision in a transfer agreement giving a transferee power to confess judgment against a payee is unenforceable to the extent the amount of the judgment would exceed the amount paid by the transferee to the payee, less any payments received from the structured settlement obligor or the payee.

AS § 09.60.210.

Jurisdiction; procedure for approval of transfers

 (a) The superior court where the action giving rise to the structured settlement was maintained or could have been maintained or where the payee is domiciled has jurisdiction over an application for approval under AS 09.60.200 of a transfer of structured settlement payment rights.

 

(b) Not less than 30 days before the scheduled hearing on an application for authorization of a transfer of structured settlement payment rights under AS 09.60.200, the transferee shall file with the court and serve on any other government authority that previously approved the structured settlement and all interested parties a notice of the proposed transfer and the application for its authorization. The notice must include

 

(1) a copy of the transferee’s application to the court;

 

(2) a copy of the transfer agreement;

 

(3) a copy of the disclosure statement required under AS 09.60.200;

 

(4) notification that an interested party is entitled to support, oppose, or otherwise respond to the transferee’s application, either in person or by counsel, by submitting written comments to the court or by participating in the hearing; and

 

(5) notification of the time and place of the hearing and notification of the manner in which and the time by which written responses to the application must be filed in order to be considered by the court.

 

(c) Written responses to the application must be filed within 15 days after service of the transferee’s notice.

AS § 09.60.220.

No waiver and no penalty

(a) The provisions of AS 09.60.200--09.60.230 may not be waived.

 

(b) A payee who proposes to make a transfer of structured settlement payment rights may not incur a penalty, forfeit an application fee or other payment, or otherwise incur any liability to the proposed transferee based on the failure of the transfer to satisfy the conditions of AS 09.60.200--09.60.230.

 

AS § 09.60.230.

Definitions

In AS 09.60.200--09.60.230,

 

(1) “annuity issuer” means an insurer that has issued an annuity contract to be used to fund periodic payments under a structured settlement;

 

(2) “dependents” means a payee’s spouse and minor children and all other family members and other persons for whom the payee is legally obligated to provide support, including spousal maintenance;

 

(3) “discounted present value” means, with respect to a proposed transfer of structured settlement payment rights, the fair present value of future payments, as determined by discounting the payments to the present using the most recently published applicable federal rate for determining the present value of an annuity, as issued by the United States Internal Revenue Service;

 

(4) “independent professional advice” means advice of an attorney, certified public accountant, actuary, or other professional adviser

 

(A) who is engaged by a payee to render advice concerning the legal, tax, and financial implications of a transfer of structured settlement payment rights;

 

(B) who is not in any manner affiliated with or compensated by the transferee of the transfer; and

 

(C) whose compensation for providing the advice is not affected by whether a transfer occurs or does not occur;

 

(5) “interested parties” means the payee, a beneficiary designated under the annuity contract to receive payments following the payee’s death or, if the designated beneficiary is a minor, the designated beneficiary’s parent or guardian, the annuity issuer, the structured settlement obligor, and any other party that has continuing rights or obligations under the structured settlement;

 

(6) “payee” means an individual who is receiving tax-free damage payments under a structured settlement and proposes to make a transfer of payment rights under the structured settlement;

 

(7) “qualified assignment agreement” means an agreement providing for a qualified assignment as provided by 26 U.S.C. 130 (United States Internal Revenue Code), as amended through December 31, 1998;

 

(8) “settled claim” means the original tort claim or workers’ compensation claim resolved by a structured settlement;

 

(9) “structured settlement” means an arrangement for periodic payment of damages for personal injuries established by settlement or judgment in resolution of a tort claim or for periodic payments in settlement of a workers’ compensation claim;

 

(10) “structured settlement agreement” means the agreement, judgment, stipulation, or release embodying the terms of a structured settlement, including the rights of the payee to receive periodic payments;

 

(11) “structured settlement obligor” means the party that has the continuing periodic payment obligation to the payee under a structured settlement agreement or a qualified assignment agreement;

 

(12) “structured settlement payment rights” means rights to receive periodic payments, including lump-sum payments, under a structured settlement, whether from the settlement obligor or the annuity issuer, where

 

(A) the payee or any other interested party is domiciled in the state;

 

(B) the structured settlement agreement was approved by a court in the state; or

 

(C) the settled claim was pending before the courts of this state when the parties entered into the structured settlement agreement;

 

(13) “terms of the structured settlement” means the terms of the structured settlement agreement, the annuity contract, a qualified assignment agreement, and an order or approval of a court, responsible administrative authority, or other government authority authorizing or approving the structured settlement;

 

(14) “transfer” means a sale, assignment, pledge, hypothecation, or other form of alienation or encumbrance made by a payee for consideration;

(15) “transfer agreement” means the agreement providing for transfer of structured settlement payment rights from a payee to a transferee;

 

(16) “transferee” means a person who is receiving or will receive structured settlement payment rights resulting from a transfer.

 

Arizona

Arizona Structured Settlements Act

ARIZ. REV. STAT. ANN. § 12-2901 et seq. (2002)

A.R.S. § 12-2901.

Definitions

In this chapter, unless the context otherwise requires:

 

1. “Annuity issuer” means an insurer that has issued a contract that is used to fund periodic payments under a structured settlement.

 

2. “Dependents” includes a payee’s spouse and minor children and all other family members and other persons for whom the payee is legally obligated to provide support, including alimony.

 

3. “Discounted present value” means the present value of future payments, as determined by discounting the payments to the present using the most recently published applicable federal rate for determining the present value of an annuity, as issued by the United States internal revenue service.

 

4. “Gross advance amount” means the sum payable to the payee or for the payee’s account as consideration for a transfer of structured settlement payment rights before any reductions for transfer expenses or other deductions to be made from the consideration.

 

5. “Independent professional advice” means the advice of an attorney, certified public accountant, actuary or other licensed professional adviser.

 

6. “Interested parties” means, with respect to any structured settlement, the payee, any beneficiary irrevocably designated under the annuity contract to receive payments following the payee’s death, the annuity issuer, the structured settlement obligor and any other party that has continuing rights or obligations under the structured settlement.

 

7. “Net advance amount” means the gross advance amount less the aggregate amount of the actual and estimated transfer expenses required to be disclosed under this chapter.

 

8. “Payee” means an individual who receives tax-free damage payments under a structured settlement and who proposes to make a transfer of payment rights under the structured settlement.

 

9. “Periodic payments” includes both recurring payments and scheduled future lump sum payments.

 

10. “Qualified assignment agreement” means an agreement that provides for a qualified assignment within the meaning of § 130 of the internal revenue code as defined by § 42-1001.

11. “Responsible administrative authority” means, with respect to a structured settlement, any government authority that is vested by law with exclusive jurisdiction over the settled claim that is resolved by the structured settlement.

 

12. “Settled claim” means the original tort claim or workers’ compensation claim that is resolved by a structured settlement.

 

13. “Structured settlement” means an arrangement for periodic payment of damages for personal injuries or sickness that is established by settlement or judgment in resolution of a tort claim or for periodic payments in settlement of a workers’ compensation claim.

 

14. “Structured settlement agreement” means the agreement, judgment, stipulation or release that embodies the terms of a structured settlement.

 

15. “Structured settlement obligor” means, with respect to any structured settlement, the party that has the continuing periodic payment obligation to the payee under a structured settlement agreement or a qualified assignment agreement.

 

16. “Structured settlement payment rights” means the right to receive periodic payments under a structured settlement, whether from the settlement obligor or the annuity issuer, if any of the following apply:

 

(a) The payee, the structured settlement obligor, the annuity issuer or any other interested party is domiciled in this state.

 

(b) The structured settlement agreement was approved by a court or responsible administrative authority in this state.

 

(c) The laws of this state expressly govern the structured settlement agreement.

 

17. “Terms of the structured settlement” include, with respect to any structured settlement, the terms of the structured settlement agreement, the annuity contract, any qualified assignment agreement and any order or other approval of any court or responsible administrative authority or other government authority that authorized or approved the structured settlement.

 

18. “Transfer” means any sale, assignment, pledge, hypothecation or other form of alienation or encumbrance of structured settlement payment rights. Transfer does not include the creation or perfection of a security interest in structured settlement payment rights under a blanket security agreement entered into with an insured depository institution, in the absence of any action to redirect the structured settlement payments to such insured depository institution, or an agent or successor in interest thereof, or otherwise to enforce the blanket security interest against the structured settlement payment rights.

 

19. “Transfer agreement” means the agreement that provides for transfer of structured settlement payment rights from a payee to a transferee.

 

20. “Transfer expenses” means all expenses of a transfer required under the transfer agreement to be paid by the payee or deducted from the gross advance amount, including court filing fees, attorney fees, escrow fees, lien recordation fees, judgment and lien search fees, finders’ fees, commissions and other payments to a broker or other intermediary. Transfer expenses does not include preexisting obligations of the payee payable for the payee’s account from the proceeds of a transfer.

 

21. “Transferee” means a party acquiring or proposing to acquire structured settlement payment rights through a transfer.

A.R.S. § 12-2902.

Payment rights; transfer conditions

A. Direct or indirect transfer of structured settlement payment rights shall not be effective and a structured settlement obligor or annuity issuer shall not be required to make any payment directly or indirectly to any transferee of structured settlement payment rights unless the transfer has been authorized in advance in a final order of a court of competent jurisdiction or responsible administrative authority.

 

B. Before issuing a final order pursuant to subsection A, the court or responsible administrative authority shall expressly find that:

 

1. The transfer complies with the requirements of this chapter and will not contravene any other applicable law.

 

2. Not less than three days before the date on which the payee signed the transfer agreement, the transferee provided to the payee a disclosure statement in bold type, no smaller than fourteen points, setting forth:

 

(a) The amounts and due dates of the structured settlement payments to be transferred.

 

(b) The aggregate amount of the payments.

 

(c) The discounted present value of the payments to be transferred, which shall be identified as the calculation of current value of the transferred structured settlement payments under federal standards for valuing annuities, and the amount of the applicable federal rate used in calculating the discounted present value.

 

(d) The gross advance amount that is payable to the payee in exchange for the payments.

 

 (e) An itemized listing of all applicable transfer expenses, other than attorney fees and related disbursements payable in connection with the transferee’s application for approval of the transfer, and the transferee’s best estimate of the amount of attorney fees and related disbursements.

 

(f) The net advance amount that is payable to the payee after deduction of all commissions, fees, costs, expenses and charges listed in subdivision (e) of this paragraph.

 

(g) A statement that the payee has the right to cancel the transfer agreement, without penalty or further obligation, not later than the third business day after the date the agreement is signed by the payee. 

(h) The amount of any penalty and the aggregate amount of any liquidated damages inclusive of penalties that are payable by the payee in the event of any breach of the transfer agreement by the payee. 

3. The transfer is in the best interest of the payee, taking into account the welfare and support of the payee’s dependents.

 

4. The payee has been advised in writing by the transferee to seek independent professional advice regarding the transfer and has either received the advice or knowingly waived the advice in writing.

 

5. If the transfer would contravene any applicable statute or the order of any court or other government authority.

 

C. Following a transfer of structured settlement payment rights under this chapter:

 

1. The structured settlement obligor and the annuity issuer shall, as to all parties except the transferee, be discharged and released from any and all liability for the transferred payments.

 

2. The transferee shall be liable to the structured settlement obligor and the annuity issuer:

 

(a) If the transfer contravenes the terms of the structured settlement, for any taxes incurred by such parties as a consequence of the transfer.

 

(b) For any other liabilities or costs, including reasonable costs and attorney fees, arising from compliance by such parties with the order of the court or responsible administrative authority or arising as a consequence of the transferee’s failure to comply with this act.

A.R.S. § 12-2903.

Jurisdiction: transfer approval

A. The superior court has jurisdiction over any application for authorization to transfer structured settlement payment rights pursuant to § 12-2902.

 

B. Not less than twenty days before the scheduled hearing on any application for authorization to transfer structured settlement payment rights, the transferee shall file with the court a notice of the proposed transfer and the application for its authorization and shall serve a copy of the notice on any other government authority that previously approved the structured settlement, on all interested parties. The notice shall include:

 

1. A copy of the transferee’s application.

 

2. A copy of the transfer agreement.

 

3. A copy of the disclosure statement required under § 12-2902.

 

4. A listing of each of the payee’s dependents, together with each dependent’s age.

 

5. A statement that any interested party is entitled to support, oppose or otherwise respond to the transferee’s application, either in person or by counsel, by submitting written comments to the court or other responsible administrative authority or by participating in the hearing.

 

6. The time and place of the hearing and the manner in which and the time by which written responses to the application must be filed in order to be considered by the court or responsible administrative authority. An interested party shall have at least fifteen days after service of the transferee’s notice in which to respond.

A.R.S. § 12-2904.

Waiver; penalties

A. The provisions of this chapter shall not be waived.

 

B. A payee who proposes to make a transfer of structured settlement payment rights shall not inure any penalty, forfeit any application fee or other payment or otherwise incur any liability to the proposed transferee based on any failure of the transfer to satisfy the conditions specified in § 12-2902.

 

C. Any transfer agreement entered into on or after the effective date of this section by a payee who resides in this state shall provide that disputes under the transfer agreement, including any claim that the payee has breached the agreement, shall be determined in and under the laws of this state. A transfer agreement shall not authorize the transferee or any other party to confess judgment or consent to entry of judgment against the payee.

 

D. A transfer of structured settlement payment rights shall not extend to any payments that are life contingent unless, before the date on which the payee signs the transfer agreement, the transferee has established and has agreed to maintain procedures reasonably satisfactory to the annuity issuer and the structured settlement obligor for both of the following:

 

1. Periodically confirming the payee’s survival.

 

2. Giving the annuity issuer and the structured settlement obligor prompt written notice if the payee dies.

 

E. Compliance with the requirements and fulfillment of the conditions set forth in this chapter is the sole responsibility of the transferee in any transfer of structured settlement payment rights, and the structured settlement obligor or the annuity issuer is not responsible for, or any liability arising from, noncompliance with the requirements or failure to fulfill the requirements of this chapter.

Arkansas

Arkansas Structured Settlement Protection Act

ARK. CODE ANN. § 23-81-701 et seq. (West 2005)   

A.C.A. § 23-81-701.

Title

This subchapter shall be known and may be cited as the “Structured Settlement Protection Act”.

A.C.A § 23-81-702.

Definitions

As used in this subchapter:

 

(1) “Annuity issuer” means an insurer that has issued a contract to fund periodic payments under a structured settlement;

 

(2) “Dependents” includes a payee’s spouse and minor children and all other persons for whom the payee is legally obligated to provide support, including alimony;

 

(3) “Discounted present value” means the present value of future payments determined by discounting such payments to the present using the most recently published applicable federal rate for determining the present value of an annuity, as issued by the Internal Revenue Service;

 

(4) “Gross advance amount” means the sum payable to the payee or for the payee’s account as consideration for a transfer of structured settlement payment rights before any reductions for transfer expenses or other deductions are made from the consideration;

 

(5) “Independent professional advice” means advice of an attorney, certified public accountant, actuary, or other licensed professional adviser;

 

(6) “Interested parties” means, with respect to any structured settlement:

 

(A) The payee;

 

(B) Any beneficiary irrevocably designated under the annuity contract to receive payments following the payee’s death;

 

(C) The annuity issuer;

 

(D) The structured settlement obligor; and

 

(E) Any other party that has continuing rights or obligations under the structured settlement;

 

(7) “Net advance amount” means the gross advance amount less the aggregate amount of the actual and estimated transfer expenses required to be disclosed under § 23-81-703(5);

 

(8) “Payee” means an individual who is receiving tax-free payments under a structured settlement and proposes to make a transfer of payment rights under the structured settlement;

 

(9) “Periodic payments” includes both recurring payments and scheduled future lump-sum payments;

 

(10) “Qualified assignment agreement” means an agreement providing for a qualified assignment within the meaning of section 130 of the Internal Revenue Code of 1986, as in existence on January 1, 2005;

 

(11) “Responsible administrative authority” means, with respect to a structured settlement, any government authority vested by law with exclusive jurisdiction over the settled claim resolved by the structured settlement;

 

(12) “Settled claim” means the original tort claim or workers’ compensation claim resolved by a structured settlement;

 

(13) “Structured settlement” means an arrangement for periodic payment of damages for personal injuries or sickness established by settlement or judgment in resolution of a tort claim or for periodic payments in settlement of a workers’ compensation claim;

 

(14) “Structured settlement agreement” means the agreement, judgment, stipulation, or release embodying the terms of a structured settlement;

 

(15) “Structured settlement obligor” means, with respect to any structured settlement, the party that has the continuing obligation to make periodic payments to the payee under a structured settlement agreement or a qualified assignment agreement;

 

(16) “Structured settlement payment rights” means rights to receive periodic payments under a structured settlement, whether from the structured settlement obligor or the annuity issuer, when:

 

(A) The payee is domiciled in or the domicile or principal place of business of the structured settlement obligor or the annuity issuer is located in this state;

 

(B) The structured settlement agreement was approved by a court or responsible administrative authority in this state; or

 

(C) The structured settlement agreement is expressly governed by the laws of this state;

 

(17) “Terms of the structured settlement” includes, with respect to any structured settlement:

 

(A) The terms of the structured settlement agreement;

 

(B) The annuity contract;

 

(C) Any qualified assignment agreement; and

 

(D) Any order or other approval of any court or responsible administrative authority or other government authority that authorized or approved the structured settlement;

 

(18)(A) “Transfer” means any sale, assignment, pledge, hypothecation, or other alienation or encumbrance of structured settlement payment rights made by a payee for consideration.

 

(B) However, “transfer” does not include the creation or perfection of a security interest in structured settlement payment rights under a blanket security agreement entered into with an insured depository institution, in the absence of any action to redirect the structured settlement payments to the insured depository institution or an agent or successor in interest, or otherwise to enforce the blanket security interest against the structured settlement payment rights;

 

(19) “Transfer agreement” means the agreement providing for a transfer of structured settlement payment rights;

 

(20)(A) “Transfer expenses” means all expenses of a transfer that are required under the transfer agreement to be paid by the payee or deducted from the gross advance amount, including, without limitation:

 

(i) Court filing fees;

 

(ii) Attorney’s fees;

 

(iii) Escrow fees;

 

(iv) Lien recordation fees;

 

(v) Judgment and lien search fees;

 

(vi) Finders’ fees;

 

(vii) Commissions; and

 

(viii) Other payments to a broker or other intermediary.

 

(B) “Transfer expenses” does not include preexisting obligations of the payee payable for the payee’s account from the proceeds of a transfer; and

 

(21) “Transferee” means a party acquiring or proposing to acquire structured settlement payment rights through a transfer.

 

A.C.A. § 23-81-703.

Required disclosures to payee

Not less than three (3) days prior to the date on which a payee signs a transfer agreement, the transferee shall provide to the payee a separate disclosure statement in bold type no smaller than fourteen (14) points, setting forth:

 

(1) The amounts and due dates of the structured settlement payments to be transferred;

 

(2) The aggregate amount of the payments;

 

(3) The discounted present value of the payments to be transferred, which shall be identified as the “calculation of current value of the transferred structured settlement payments under federal standards for valuing annuities”, and the amount of the applicable federal rate used in calculating the discounted present value;

 

(4) The gross advance amount;

 

(5) An itemized listing of all applicable transfer expenses, other than attorney’s fees and related disbursements payable in connection with the transferee’s application for approval of the transfer, and the transferee’s best estimate of the amount of any such fees and disbursements;

 

(6) The net advance amount;

 

(7) The amount of any penalties or liquidated damages payable by the payee in the event of any breach of the transfer agreement by the payee; and

 

(8) A statement that the payee has the right to cancel the transfer agreement, without penalty or further obligation, not later than the third business day after the date the agreement is signed by the payee.

 

 A.C.A. § 23-81-704.

Approval of transfers of structured settlement payment rights

No direct or indirect transfer of structured settlement payment rights shall be effective and no structured settlement obligor or annuity issuer shall be required to make any payment directly or indirectly to any transferee of structured settlement payment rights unless the transfer has been approved in advance in a final court order or order of a responsible administrative authority based on express findings by the court or responsible administrative authority that:

 

(1) The transfer is in the best interest of the payee, taking into account the welfare and support of the payee’s dependents;

 

(2) The payee has been advised in writing by the transferee to seek independent professional advice regarding the transfer and has either received the advice or knowingly waived the advice in writing; and

(3) The transfer does not contravene any applicable statute or the order of any court or other government authority.

 

A.C.A. § 23-81-705.

Effects of transfer of structured settlement payment rights

Following a transfer of structured settlement payment rights under this subchapter:

 

(1) The structured settlement obligor and the annuity issuer shall be discharged and released from all liability for the transferred payments as to all parties except the transferee;

 

(2) The transferee shall be liable to the structured settlement obligor and the annuity issuer:

 

(A) If the transfer contravenes the terms of the structured settlement, for any taxes incurred by such parties as a consequence of the transfer; and

 

(B) For any other liabilities or costs, including reasonable costs and attorney’s fees, arising from compliance by the parties with the order of the court or responsible administrative authority or arising as a consequence of the transferee’s failure to comply with this subchapter;

 

(3) Neither the annuity issuer nor the structured settlement obligor may be required to divide any periodic payment between the payee and any transferee or assignee or between two (2) or more transferees or assignees; and

 

(4) Any further transfer of structured settlement payment rights by the payee may be made only after compliance with all of the requirements of this subchapter.

A.C.A. § 23-81-706.

Procedure for approval of transfers

 (a) An application under this subchapter for approval of a transfer of structured settlement payment rights shall be made by the transferee and may be brought:

 

(1) In the county in which:

 

(A) The payee resides; or

 

(B) The structured settlement obligor or the annuity issuer maintains its principal place of business; or

 

(2) In any court or before any responsible administrative authority which approved the structured settlement agreement.

 

(b) Not less than twenty (20) days prior to the scheduled hearing on any application for approval of a transfer of structured settlement payment rights under § 23-81-704, the transferee shall file with the court or responsible administrative authority and serve on all interested parties a notice of the proposed transfer and the application for its authorization, including with the notice:

 

(1) A copy of the transferee’s application;

 

(2) A copy of the transfer agreement;

 

(3) A copy of the disclosure statement required under § 23-81-703;

 

(4) A listing of each of the payee’s dependents and each dependent’s age;

 

(5) Notification that any interested party is entitled to support, oppose, or otherwise respond to the transferee’s application, either in person or by counsel, by submitting written comments to the court or responsible administrative authority or by participating in the hearing; and

(6)(A) Notification of:

 

(i) The time and place of the hearing; and

 

(ii) The manner in which and the time by which written responses to the application must be filed in order to be considered by the court or responsible administrative authority.

 

(B) The time by which written responses to the application must be filed shall be not less than twenty (20) days after service of the transferee’s notice.

A.C.A. § 23-81-707.

General provisions--Construction

(a) The provisions of this subchapter may not be waived by any payee.

 

(b)(1) Any transfer agreement entered into on or after August 12, 2005, by a payee who resides in this state shall provide that disputes under the transfer agreement, including any claim that the payee has breached the agreement, shall be determined in and under the laws of the State of Arkansas.

 

(2) No transfer agreement shall authorize the transferee or any other party to confess judgment or consent to entry of judgment against the payee.

 

(c) No transfer of structured settlement payment rights shall extend to any payments that are life-contingent unless prior to the date on which the payee signs the transfer agreement, the transferee has established and has agreed to maintain procedures reasonably satisfactory to the annuity issuer and the structured settlement obligor for:

 (1) Periodically confirming the payee’s survival; and

 

(2) Giving the annuity issuer and the structured settlement obligor prompt written notice in the event of the payee’s death.

 

(d) No payee who proposes to make a transfer of structured settlement payment rights shall incur any penalty, forfeit any application fee or other payment, or otherwise incur any liability to the proposed transferee or any assignee based on any failure of the transfer to satisfy the conditions of this subchapter.

 

(e) Nothing contained in this subchapter shall be construed to authorize any transfer of structured settlement payment rights in contravention of any law or to imply that any transfer under a transfer agreement entered into prior to August 12, 2005, is valid or invalid.

 

(f) Compliance with the requirements set forth in § 23-81-703 and fulfillment of the conditions set forth in § 23-81-704 shall be solely the responsibility of the transferee in any transfer of structured settlement payment rights, and neither the structured settlement obligor nor the annuity issuer shall bear any responsibility for or any liability arising from noncompliance with the requirements or failure to fulfill the conditions.

California

California Transfer of Structured Settlement Payment Rights Act

CA. INS. CODE ANN. § 10134 et seq. (West 1999)

Amended in 2000, 2001, 2004, 2009, and 2010

West’s Ann.Cal.Ins.Code § 10134.

Definitions

For the purposes of this article, the following terms have the following meanings:

 

(a) “Buyer’s first right of refusal” means any provision in the transfer agreement or related documents that obligate the payee to give to the buyer the first choice or option to purchase any remaining structured settlement rights belonging to the payee.

 

(b) “Dependents” include the payee’s spouse and minor children and all other family members and other persons for whom the payee is legally obligated to provide support, including alimony.

 

(c) “Discounted present value” means the fair present value of future payments, as determined by discounting those payments to the present using the most recently published applicable federal rate for determining the present value of an annuity, as issued by the United States Internal Revenue Service.

 

(d) “Effective equivalent interest rate,” with respect to a transfer of structured settlement payment rights, means the annualized rate of interest on the net advance amount, calculated by treating the transferred structured settlement payments as if they were installment payments on a loan, with each payment applied first to accrued unpaid interest and then to principal.

 

(e) “Expenses” means all broker’s commissions, service charges, application or processing fees, closing costs, filing or administrative charges, legal fees, notary fees and other commissions, fees, costs, and charges that a payee would have to pay to transfer the structured settlement payment rights of a structured settlement agreement or that would be deducted from the gross consideration that would be paid to the payee in connection with the transfer of the structured settlement payment rights of a structured settlement agreement.

 

(f) “Independent professional advice” means advice of an attorney, certified public accountant, actuary, or other licensed professional adviser meeting all of the following requirements:

 

(1) The adviser is engaged by a claimant or payee to render advice concerning the legal, tax, or financial implications of a structured settlement or a transfer of structured settlement payment rights.

 

(2) The adviser’s compensation for rendering independent professional advice is not affected by occurrence or lack of occurrence of a settlement or transfer.

(3) A particular adviser is not referred to the payee by the transferee or its agent, except that the transferee may refer the payee to a lawyer referral service or agency operated by a state or local bar association.

 

(g) “Interested parties” means, with respect to a structured settlement agreement, the payee, the payee’s attorney, any beneficiary irrevocably designated under the annuity contract to receive payments following the payee’s death, the annuity issuer, the structured settlement obligor, and any other party who has continuing rights or obligations under the structured settlement agreement. If the designated beneficiary is a minor, the beneficiary’s parent or guardian shall be an interested party.

 

(h) “Payee” means an individual who received tax-free payments pursuant to a structured settlement agreement.

 

(i) “Qualified assignment agreement” means an agreement providing for a qualified assignment within the meaning of Section 130 of Title 26 of the United States Code, as amended from time to time.

 

(j) “Structured settlement agreement” means an arrangement for periodic payment of damages established by settlement or judgment in resolution of a tort claim in which the payment of the judgment or award is paid in whole, or in part, in periodic tax-free payments rather than a lump-sum payment. A structured settlement agreement entered into pursuant to Section 667.7 of the Code of Civil Procedure or Section 970.6 or 984 of the Government Code is not subject to the provisions of this article other than the requirements of Section 10138.

 

(k) “Structured settlement obligor” means the party that has the continuing periodic payment obligation to the payee under a structured settlement agreement or a qualified assignment agreement.

 

(l) “Structured settlement payment rights” means rights to receive periodic payments, including lump-sum payments, pursuant to a structured settlement agreement, whether from the settlement obligor or an annuity issuer.

 

(m) “Terms of the structured settlement” include, with respect to a structured settlement agreement, the terms of the structured settlement agreement, annuity contract, qualified assignment agreement, and any order or approval of a court or responsible administrative authority or other governmental authority authorizing or approving the structured settlement.

 

(n) “Transfer” means any sale, assignment, pledge, hypothecation, or other form of alienation or encumbrance made for consideration.

 

(o) “Transfer agreement” means the agreement providing for the transfer, and any other document used to effectuate the transfer, from the payee to the transferee of structured settlement payment rights of a structured settlement agreement.

 

(p) “Transferee” means any person receiving structured settlement payment rights resulting from a transfer.

West’s Ann.Cal.Ins.Code § 10135.

Application of article

 (a) This article is only applicable to transfers entered into on or after January 1, 2000.

 

(b) Notwithstanding subdivision (a), the changes to this article made by the act1 amending this section in the 2001-02 Regular Session shall only be applicable to transfers entered into on or after January 1, 2002.

(c) This article is only applicable to transfers of structured settlement payment rights if one of the following requirements is met:

 

(1) The payee is domiciled in California at the time the transfer agreement is signed by the payee.

 

(2) The payee is not domiciled in California at the time the transfer agreement is signed and the state where the payee is domiciled does not have a structured settlement transfer statute, but either the structured settlement obligor or annuity issuer is domiciled in California.

 

West’s Ann.Cal.Ins.Code § 10136.

Required disclosures for transfers of structured settlement payment rights; notice of proposed transfers; transfer agreement requirements; cancellation

 (a) No direct or indirect transfer of structured settlement payment rights by a payee to which this article applies shall be effective, and no structured settlement obligor or annuity issuer shall be required to make any payment directly or indirectly to a transferee, unless all of the provisions of this section are satisfied.

 

(b) Ten or more days before the payee executes a transfer agreement, the transferee shall provide the payee with a separate written disclosure statement, accurately completed with the information that applies to the transfer agreement, in substantially the following form, in at least 12-point type unless otherwise indicated (bracketed instructions shall not appear in the form):

“Disclosure Notice Required By Law [14-point boldface type]

 

You are selling (technically called ‘transferring’) your right to receive your payments under a structured settlement. You should get this disclosure notice at least 10 days before you sign any contract.

 

IMPORTANT TERMS: [14-point boldface type ]

 

You have agreed to sell to the transferee future payments totaling ___ dollars ($___) in exchange for a purchase price of ___ dollars ($___).

 

Those future payments have a discounted present value equal to ___ dollars ($___), calculated by applying the discount rate of ___ percent utilized by the Internal Revenue Service to value annuities in probate proceedings.

 

The purchase price to be paid to you was calculated using a discount rate of ___ percent.

 

The purchase price payable to you is less than the present value of the future payments stated above because the discount rate of your transaction is greater than the rate utilized by the Internal Revenue Service.

 

For comparison purposes:

 

If you did not sell your right to receive structured settlement payments, but instead borrowed the net amount of $___ and paid that loan back in installments with each of the payments you are now selling, the equivalent interest rate you would be paying for that loan would be ___% per year.

 

[The text and information set forth above under ‘IMPORTANT TERMS’ shall be in 14-point type and circumscribed by a box with a bold border]

 

To figure the net amount we are paying, we have charged you for the following expenses:

 

[itemize in a list by type and amount]

for a total of $___ in expenses.

 

You should get independent professional advice about whether selling your structured settlement payments is a good idea for you and for your dependents.

 

You are advised to seek independent legal or financial advice regarding the transaction and, under the law, the cost of that advice, up to one thousand five hundred dollars ($1,500), will be paid by the transferee, the person or entity to whom you have agreed to transfer and assign the payments in question. The transferee or purchaser’s accountant, counsel, or actuary may not advise you in this transaction.

 

You also should get independent professional advice from an accountant or lawyer experienced in tax matters about any income tax consequences from selling your structured settlement payments. We cannot give you the name of anyone to advise you.

 

Court approval is needed [14-point boldface type]. A court must approve any agreement you sign to sell your rights under a structured settlement. You will not receive any money until the court approves the sale. Court approval could take more than 30 days following the day you sign an agreement selling your rights under a structured settlement.

 

A sale of future structured settlement payments will mean that you will no longer receive the future payments that are sold. You are advised to enter into this transaction only after you have carefully considered the consequences of the transaction.

 

You may cancel the contract before court approval [14-point boldface type]. You may cancel the agreement selling (or transferring) your rights under a structured settlement without any cost or obligation. You may cancel at any time before the court approves the contract. You will get notice of the date of the court hearing.

If you want to cancel, you do not need any special form. But, you must cancel in writing. Send your cancellation to: [insert transferee’s name and address].

 

If you believe that you have been treated unfairly or have been misled, you should contact your local district attorney or the state Attorney General.”

 

 (c) The transfer agreement shall be written in at least 12-point type and shall be complete and without blank spaces to be completed after the payee’s signature. The transfer agreement shall set forth clear and conspicuously, and in no less than 12-point type, all of the following:

 

(1) A statement that the agreement is not effective until the date on which a court enters a final order approving the transfer agreement and that payment to the payee pursuant to the transfer agreement will be delayed up to 30 days or more after the date the payee signed the transfer agreement in order for the court to review and approve the transfer agreement.

 

(2) The amounts and due dates of the structured settlement payments to be transferred.

 

(3) The aggregate amount of the structured settlement payments to be transferred. This amount shall be disclosed in the form prescribed in subdivision (b).

 

(4) The aggregate amount of all expenses, if any, to be deducted from the purchase price to be paid to the payee in exchange for the payments to be transferred, and an itemization of all expenses by type and amount.

 

(5) The amount payable to the payee, net of all expenses, in exchange for the payments to be transferred. This amount shall be disclosed in the form prescribed in subdivision (b).

 

(6) The discounted present value of all structured settlement payments to be transferred and a statement that “This is the value of your structured settlement in current dollars.” This amount shall be disclosed in the form prescribed in subdivision (b).

 

(7) The federal rate, as described in subdivision (c) of Section 10134, used in determining the discounted present value.

 

(8) The effective equivalent interest rate, which shall be disclosed in the following statement:

 

“YOU WILL BE PAYING THE EQUIVALENT OF AN INTEREST RATE OF ___% PER YEAR.

 

Based on the net amount that you will receive from us and the amounts and timing of the structured settlement payments that you are transferring to us, if the transferred structured settlement payments were installment payments on a loan, with each payment applied first to accrued unpaid interest and then to principal, it would be as if you were paying interest to us of ___% per year, assuming funding on the effective date of transfer.”

 

This percentage amount shall be disclosed in the form prescribed in subdivision (b) in the space for “the equivalent interest rate you would be paying for this loan would be ___% per year.”

 

(9) The quotient (expressed as a percentage) obtained by dividing the net payment amount by the discounted present value of the payments.

 

(10) A statement that the payee should obtain independent professional advice regarding any federal and state income tax consequences arising from the proposed transfer, and that the transferee may not refer the payee to any specific adviser for that purpose.

 

(11) A statement that the court approving the transfer agreement retains continuing jurisdiction to interpret and monitor implementation of the agreement as justice may require.

 

(12) The following statement: “If you believe you were treated unfairly or were misled as to the nature of the obligations you assumed upon entering into this agreement, you should report those circumstances to your local district attorney or the office of the Attorney General.”

 

(13) The following statement printed in 14-point type, circumscribed by a box with a bold border, and set forth immediately above or adjacent to the space reserved for the payee’s signature: “You have the right to cancel this agreement without any cost or obligation until the date the court approves this agreement. You will receive notice of the court hearing date when approval may occur. You must cancel in writing and send your cancellation to [insert transferee’s name and address].”

 

(d) The contract for transferring the structured settlement payment rights may not violate Section 10138.

 

(e) At any time before the date on which a court enters a final order approving the transfer agreement pursuant to Section 10139.5, the payee may cancel the transfer agreement, without cost or further obligation, by providing written notice of cancellation to the transferee.

West’s Ann.Cal.Ins.Code § 10137.

Required conditions

A transfer of structured settlement payment rights is void unless a court reviews and approves the transfer and finds the following conditions are met:

 

(a) The transfer of the structured settlement payment rights is fair and reasonable and in the best interest of the payee, taking into account the welfare and support of his or her dependents.

 

(b) The transfer complies with the requirements of this article, will not contravene other applicable law, and the court has reviewed and approved the transfer as provided in Section 10139.5.

West’s Ann.Cal.Ins.Code § 10138.

Prohibited provisions; waiver

(a) A transfer agreement, as defined in subdivision (o) of Section 10134, shall not include any provision described in the paragraphs below. Any inclusion of a prohibited provision, with respect to a seller who is a California resident, shall make the provision void and unenforceable.

 

(1) Any provision that waives the seller’s right to sue under any law, or in which the seller agrees not to sue, or that waives jurisdiction or standing to sue under the contract.

 

(2) Any provision that requires the seller to indemnify and hold harmless the buyer, or to pay the buyer’s costs of defense, in any claim or action brought by the seller or on the seller’s behalf contesting the sale for any reason.

 

(3) Any provision that waives benefits or rights conferred by law with respect to garnishment of wages.

 

(4) Any provision providing that the contract is confidential or proprietary, belonging to the buyer.

 

(5) Any provision in which the seller stipulates to a confession of judgment.

 

(6) Any provision requiring the seller to pay the buyer’s attorney’s fees and costs if the purchase agreement is not completed.

 

(7) Any provision requiring the seller to pay any tax liability arising under the federal tax laws, other than the seller’s own tax liability, if any, that results from the transfer.

 

(8) Any provision providing for brokerage fees incurred in the contract to be deducted from the purchase price disclosed pursuant to paragraph (5) of subdivision (b) of Section 10136.

 

(9) If the payee is domiciled in California at the time that the transfer agreement is signed by the payee, any forum selection provision providing for jurisdiction to be in a court outside of California for any action arising under the contract.

 

(10) If the payee is domiciled in California at the time that the transfer agreement is signed by the payee, any choice-of-law provision that provides for controlling law to be other than California law in any action arising under the contract.

 

(11) A provision that provides the transferee with a security interest or collateral interest in any structured settlement payment rights that exceed the actual dollar amount of the structured settlement payment rights being transferred.

 

(12) Any provision that creates a “buyer’s first right of refusal” to purchase any remaining structured payment rights that the payee may desire to sell in the future.

 

(b) The provisions in this section may not be waived by agreement of the parties.

 

West’s Ann.Cal.Ins.Code § 10139.

Filing of documents with Attorney General; review; fee

(a) At the time of filing a petition pursuant to Section 10139.5 for court approval, the transferee shall file with the Attorney General a copy of the transferee’s petition for approval, a copy of the written disclosure statement required by subdivision (a) of Section 10136, a copy of the transfer agreement as defined in subdivision (o) of Section 10134, and, unless excepted pursuant to subparagraph (H) of paragraph (2) of subdivision (f) of Section 10139.5, a copy of the annuity contract, any qualified assignment agreement, the underlying structured settlement agreement, or any order or approval of any court or responsible administrative authority authorizing or approving the structured settlement, and a copy and proof of notice to the interested parties, and a verified statement from the transferee stating that all of the conditions set forth in Sections 10136, 10137, and 10138 have been met.

 

(b) The Attorney General may, but is not required to, review any transfer agreement in order to ensure that the transfer meets the requirements of this article.

 

(c) The Attorney General may charge a reasonable fee for the filing of the transfer agreement as provided in this section. The fee shall be paid by the transferee.

 

(d) This section does not apply to a transfer by a payee who is not a resident of California at the time the payee executes the transfer agreement.

 

West’s Ann.Cal.Ins.Code § 10139.1.

Subsequent transfers

Any subsequent transfer of any additional structured settlement payments between the payee and transferee may be made only after compliance with all of the requirements of this article.

 

West’s Ann.Cal.Ins.Code § 10139.2.

Mailing of notice

Any notice required by this article shall be deemed to have been given if addressed to the recipient’s last known address and deposited, first class postage paid, in the United States mail not less than five calendar days prior to the date on which notice is required.

West’s Ann.Cal.Ins.Code § 10139.3.

Waiver; transferee’s responsibility; prohibited penalties; tax liability; division of payments

(a) None of the provisions of this article may be waived by the payee.

 

(b) Compliance with the requirements set forth in Sections 10136, 10137, and 10138 shall be solely the responsibility of the transferee in any transfer of structured settlement payment rights.

 

(c) A payee who proposes to make a transfer of structured settlement payment rights shall not incur any penalty, shall not forfeit any application fee or other payment, and shall not otherwise incur any liability to the proposed transferee based on any failure of that transfer to satisfy the requirements of Sections 10136, 10137, and 10138.

 

(d) The transferee and any assignee shall be liable to the structured settlement obligor and the annuity issuer for any and all taxes incurred as a consequence of the transfer or as a consequence of any failure of the transferee or assignee to comply with this article or the terms of the structured settlement agreement.

 

(e) Neither the annuity issuer nor the structured settlement obligor may be required to divide any structured settlement payment between the payee and any transferee or assignee or between two or more transferees or assignees.

 

West’s Ann.Cal.Ins.Code § 10139.4.

Unfair business practices

A violation of this article by a transferee shall constitute an unfair business practice pursuant to Chapter 5 (commencing with Section 17200) of Part 2 of Division 7 of the Business and Professions Code and shall be subject to the penalties and other remedies of that chapter.

West’s Ann.Cal.Ins.Code § 10139.5.

Court approval of transfers; factors considered; contents of petition; effect of transfer; costs and fees; advisement of rights; continuing jurisdiction

 (a) A direct or indirect transfer of structured settlement payment rights is not effective and a structured settlement obligor or annuity issuer is not required to make any payment directly or indirectly to any transferee of structured settlement payment rights unless the transfer has been approved in advance in a final court order based on express written findings by the court that:

 

(1) The transfer is in the best interest of the payee, taking into account the welfare and support of the payee’s dependents. 

(2) The payee has been advised in writing by the transferee to seek independent professional advice regarding the transfer and has either received that advice or knowingly waived, in writing, the opportunity to receive the advice.

 

(3) The transferee has complied with the notification requirements pursuant to paragraph (2) of subdivision (f), the transferee has provided the payee with a disclosure form that complies with Section 10136, and the transfer agreement complies with Sections 10136 and 10138.

 

(4) The transfer does not contravene any applicable statute or the order of any court or other government authority.

 

(5) The payee understands the terms of the transfer agreement, including the terms set forth in the disclosure statement required by Section 10136.

 

(6) The payee understands and does not wish to exercise the payee’s right to cancel the transfer agreement.

 

(b) When determining whether the proposed transfer should be approved, including whether the transfer is fair, reasonable, and in the payee’s best interest, taking into account the welfare and support of the payee’s dependents, the court shall consider the totality of the circumstances, including, but not limited to, all of the following:

 

(1) The reasonable preference and desire of the payee to complete the proposed transaction, taking into account the payee’s age, mental capacity, legal knowledge, and apparent maturity level.

 

(2) The stated purpose of the transfer.

 

(3) The payee’s financial and economic situation.

 

(4) The terms of the transaction, including whether the payee is transferring monthly or lump sum payments or all or a portion of his or her future payments.

 

(5) Whether, when the settlement was completed, the future periodic payments that are the subject of the proposed transfer were intended to pay for the future medical care and treatment of the payee relating to injuries sustained by the payee in the incident that was the subject of the settlement and whether the payee still needs those future payments to pay for that future care and treatment.

 

(6) Whether, when the settlement was completed, the future periodic payments that are the subject of the proposed transfer were intended to provide for the necessary living expenses of the payee and whether the payee still needs the future structured settlement payments to pay for future necessary living expenses.

 

(7) Whether the payee is, at the time of the proposed transfer, likely to require future medical care and treatment for the injuries that the payee sustained in connection with the incident that was the subject of the settlement and whether the payee lacks other resources, including insurance, sufficient to cover those future medical expenses.

 

(8) Whether the payee has other means of income or support, aside from the structured settlement payments that are the subject of the proposed transfer, sufficient to meet the payee’s future financial obligations for maintenance and support of the payee’s dependents, specifically including, but not limited to, the payee’s child support obligations, if any. The payee shall disclose to the transferee and the court his or her court-ordered child support or maintenance obligations for the court’s consideration. 

(9) Whether the financial terms of the transaction, including the discount rate applied to determine the amount to be paid to the payee, the expenses and costs of the transaction for both the payee and the transferee, the size of the transaction, the available financial alternatives to the payee to achieve the payee’s stated objectives, are fair and reasonable.

 

(10) Whether the payee completed previous transactions involving the payee’s structured settlement payments and the timing and size of the previous transactions and whether the payee was satisfied with any previous transaction.

 

(11) Whether the transferee attempted previous transactions involving the payee’s structured settlement payments that were denied, or that were dismissed or withdrawn prior to a decision on the merits, within the past five years.

 

(12) Whether, to the best of the transferee’s knowledge after making inquiry with the payee, the payee has attempted structured settlement payment transfer transactions with another person or entity, other than the transferee, that were denied, or which were dismissed or withdrawn prior to a decision on the merits, within the past five years.

 

(13) Whether the payee, or his or her family or dependents, are in or are facing a hardship situation.

 

(14) Whether the payee received independent legal or financial advice regarding the transaction. The court may deny or defer ruling on the petition for approval of a transfer of structured settlement payment rights if the court believes that the payee does not fully understand the proposed transaction and that independent legal or financial advice regarding the transaction should be obtained by the payee.

 

(15) Any other factors or facts that the payee, the transferee, or any other interested party calls to the attention of the reviewing court or that the court determines should be considered in reviewing the transfer.

 

(c) Every petition for approval of a transfer of structured settlement payment rights, except as provided in subdivision (d), shall include, to the extent known after the transferee has made reasonable inquiry with the payee, all of the following:

 

(1) The payee’s name, address, and age.

 

(2) The payee’s marital status, and, if married or separated, the name of the payee’s spouse.

 

(3) The names, ages, and place or places of residence of the payee’s minor children or other dependents, if any.

 

(4) The amounts and sources of the payee’s monthly income and financial resources and, if presently married, the amounts and sources of the monthly income and financial resources of the payee’s spouse.

 

(5) Whether the payee is currently obligated under any child support or spousal support order, and, if so, the names, addresses, and telephone numbers of any individual, entity, or agency that is receiving child or spousal support from the payee under that order or that has jurisdiction over the order or the payments in question.

 

(6) Information regarding previous transfers or attempted transfers, as described in paragraph (11), (12), or (13) of subdivision (b). The transferee or payee may choose to provide this information by providing copies of pleadings, transaction documents, or orders involving any previous attempted or completed transfer or by providing the court a summary of available information regarding any previous transfer or attempted transfer, such as the date of the transfer or attempted transfer, the payments transferred or attempted to be transferred by the payee in the earlier transaction, the amount of money received by the payee in connection with the previous transaction, and generally the payee’s reasons for pursuing or completing a previous transaction. The transferee’s inability to provide the information required by this paragraph shall not preclude the court from approving the proposed transfer, if the court determines that the information is not available to the transferee after the transferee has made a reasonable effort to secure the information, including making an inquiry with the payee.

 

(d) With respect to the information required to be included in every petition for approval of a transfer of structured settlement payment rights pursuant to paragraphs (2), (3), (4), (5), and (6) of subdivision (c), that information shall be deemed to be included in the petition if it is provided at the scheduled hearing on the proposed transfer through oral testimony or documentary evidence filed with the court and made a part of the record consistent with the rules of evidence and procedure.

 

(e) Following a transfer of structured settlement payment rights under this article:

 

(1) The structured settlement obligor and the annuity issuer shall, as to all parties except the transferee, be discharged and released from any and all liability for the transferred payments.

 

(2) The transferee shall be liable to the structured settlement obligor and the annuity issuer if the transfer contravenes the terms of the structured settlement for the following:

 

(A) Any taxes incurred by those parties as a consequence of the transfer. 

(B) Any other liabilities or costs, including reasonable costs and attorney’s fees, arising from compliance by those parties with the order of the court or arising as a consequence of the transferee’s failure to comply with this article.

 

(3) Neither the annuity issuer nor the structured settlement obligor may be required to divide any periodic payment between the payee and any transferee or assignee or between two, or more, transferees or assignees.

 

(4) Any further transfer of structured settlement payment rights by the payee may be made only after compliance with all of the requirements of this article.

(f)(1) A petition under this article for approval of a transfer of structured settlement payment rights shall be made by the transferee and brought in the county in which the payee resides at the time the transfer agreement is signed by the payee, or, if the payee is not domiciled in California, in the county in which the payee resides or in the county where the structured settlement obligor or annuity issuer is domiciled.

 

(2) Not less than 20 days prior to the scheduled hearing on any petition for approval of a transfer of structured settlement payment rights under this article, the transferee shall file with the court and serve on all interested parties a notice of the proposed transfer and the petition for its authorization, and shall include the following with that notice:

 

(A) A copy of the transferee’s current petition and any other prior petition, whether approved or withdrawn, that was filed with the court in accordance with paragraph (6) of subdivision (c).

(B) A copy of the proposed transfer agreement and disclosure form required by paragraph (3) of subdivision (a).

 

(C) A listing of each of the payee’s dependents, together with each dependent’s age.

 

(D) A copy of the disclosure required in subdivision (b) of Section 10136.

 

(E) A copy of the annuity contract, if available.

 

(F) A copy of any qualified assignment agreement, if available.

 

(G) A copy of the underlying structured settlement agreement, if available.

 

(H) If a copy of a document described in subparagraph (E), (F), or (G) is unavailable or cannot be located, then the transferee is not required to attach a copy of that document to the petition or notice of the proposed transfer if the transferee satisfies the court that reasonable efforts to locate and secure a copy of the document have been made, including making inquiry with the payee. If the documents are available, but contain a confidentiality or nondisclosure provision, then the transferee shall summarize in the petition the payments due and owing to the payee, and, if requested by the court, shall provide copies of the documents to the court at a scheduled hearing.

 

(I) Proof of service showing compliance with the notification requirements of this section.

 

(J) Notification that any interested party is entitled to support, oppose, or otherwise respond to the transferee’s petition, either in person or by counsel, by submitting written comments to the court or by participating in the hearing.

(K) Notification of the time and place of the hearing and notification of the manner in which and the time by which written responses to the petition must be filed, which may not be less than 15 days after service of the transferee’s notice, in order to be considered by the court.

 

(L) If the payee entered into the structured settlement at issue within five years prior to the date of the transfer agreement, then the transferee shall provide the following notice to the payee’s attorney of record at the time the structured settlement was created, if the attorney is licensed to practice in California, at the attorney’s address on file with the State Bar of California. The notice shall be delivered by regular mail and shall contain the following language:

 

“Your former client, (insert name, address and telephone number of payee), the ‘payee,’ has entered into a contract with (insert name of transferee) to transfer and assign certain future structured settlement payment rights. The transaction is subject to court review and approval under California law. As the payee’s former attorney, you are entitled to receive this notice. You are not required to represent, advise, or consult with the payee in connection with the proposed transaction. You are not required to take any action at all in response to this notice. You may, but are not required to, contact the payee regarding the transaction. The payee is not required to consult with you or provide you any information regarding the transaction, but the payee may do so if he or she wishes.”

The notice to the former attorney described in this section is not required to be provided if the payee in the transaction was not a party to the original structured settlement at issue (for example, if the payee is an heir or beneficiary of the person who was a party to the original structured settlement). Also, if the payee cannot recall or identify his or her former attorney and if the identity of the former attorney cannot be ascertained from the available structured settlement documents, then the notice described in this subparagraph is not required to be provided and the transfer may proceed without the notice.

 

(g) All court costs and filing fees shall be paid by the transferee.

 

(h) No later than the time of filing the petition for court approval, the transferee shall advise the payee of the payee’s right to seek independent counsel and financial advice in connection with the transferee’s petition for court approval of the transfer agreement, and shall further advise the payee that if the payee retains counsel, a licensed certified public accountant, or a licensed actuary in connection with a petition for an order approving the transfer agreement, that the transferee shall pay the fees of the payee’s counsel, accountant, or actuary, regardless of whether the transfer agreement is approved, and regardless of whether the attorney, accountant, or actuary files any document or appears at the hearing on the petition for transfer, in an aggregate amount not to exceed one thousand five hundred dollars ($1,500). The transferee’s accountant, counsel, or actuary may not advise the payee.

 

(i) The court shall retain continuing jurisdiction to interpret and monitor the implementation and closing of the transaction that is the subject of the transfer agreement as justice requires.

 

Colorado

Colorado Structured Settlement Protection Act

COLO. REV. STAT ANN. § 13-23-101 et seq. (West 2004)

C.R.S.A. § 13-23-101.

Short title

This article shall be known and may be cited as the “Structured Settlement Protection Act”.

C.R.S.A. § 13-23-102.

Definitions

As used in this article, unless the context otherwise requires:

 

(1) “Annuity issuer” means an insurer that has issued a contract to fund periodic payments under a structured settlement.

(2) “Dependent” means a payee’s spouse, minor child, or any person for whom the payee is legally obligated to provide support, including maintenance.

 

(3) “Discounted present value” means the present value of future payments determined by discounting such payments to the present using the most recently published applicable federal rate for determining the present value of an annuity, as issued by the United States internal revenue service.

 

(4) “Gross advance amount” means the sum payable to the payee or for the payee’s account as consideration for a transfer of structured settlement payment rights before any reductions for transfer expenses or other deductions are made from such consideration.

 

(5) “Independent professional advice” means advice of an attorney, certified public accountant, actuary, or other licensed professional adviser.

 

(6) “Interested parties” means the payee, any beneficiary irrevocably designated under the annuity contract to receive payments following the payee’s death, the annuity issuer, the structured settlement obligor, and any other party who has continuing rights or obligations under such structured settlement. If a delegate child support enforcement unit is enforcing a payee’s legal obligation to support his or her dependent children, pursuant to section 26-13-105, C.R.S., “interested parties” shall also include the delegate child support enforcement unit.

 

(7) “Net advance amount” means the gross advance amount less the aggregate amount of the actual and estimated transfer expenses required to be disclosed under section 13-23-103.

 

(8) “Payee” means an individual who is receiving tax-free payments under a structured settlement and who proposes to make a transfer of payment rights thereunder.

 

(9) “Periodic payment” means a recurring payment or a scheduled future lump-sum payment.

 

(10) “Qualified assignment agreement” means an agreement providing for a qualified assignment within the meaning of section 130 of the federal “Internal Revenue Code of 1986”, as amended.

 

(11) “Responsible administrative authority” means any government authority vested by law with exclusive jurisdiction over the settled claim resolved by such structured settlement.

 

(12) “Settled claim” means the original tort claim resolved by a structured settlement.

 

(13) “Structured settlement” means an arrangement for periodic payment of damages for personal injuries or sickness established by settlement or judgment in resolution of a tort claim.

 

(14) “Structured settlement agreement” means the agreement, judgment, stipulation, or release embodying the terms of a structured settlement.

 

(15) “Structured settlement obligor” means the party who has the continuing obligation to make periodic payments to the payee under a structured settlement agreement or a qualified assignment agreement.

 

(16) “Structured settlement payment right” means the right to receive periodic payments under a structured settlement, whether from the structured settlement obligor or the annuity issuer, where:

 

(a) The payee is domiciled in Colorado or the domicile or principal place of business of the structured settlement obligor or the annuity issuer is Colorado; or

 

(b) The structured settlement agreement was approved by a court or responsible administrative authority in Colorado; or

 

(c) The structured settlement agreement is expressly governed by the laws of Colorado.

 

(17) “Terms of the structured settlement” means the terms of the structured settlement agreement, the annuity contract, a qualified assignment agreement, and any order or other approval of a court or responsible administrative authority or other government authority that authorized or approved such structured settlement.

 

(18) “Transfer” means a sale, assignment, pledge, hypothecation, or other alienation or encumbrance of a structured settlement payment right made by a payee for consideration; except that the term “transfer” does not include the creation or perfection of a security interest in a structured settlement payment right under a blanket security agreement entered into with an insured depository institution in the absence of any action to redirect the structured settlement payments to such insured depository institution, or an agent or successor in interest thereof, or otherwise to enforce such blanket security interest against the structured settlement payment rights.

 

(19) “Transfer agreement” means the agreement providing for a transfer of a structured settlement payment right.

 

(20) “Transferee” means a party acquiring or proposing to acquire a structured settlement payment right through a transfer.

 

(21) “Transfer expenses” means all expenses of a transfer that are required under the transfer agreement to be paid by the payee or deducted from the gross advance amount, including, without limitation, court filing fees, attorney fees, escrow fees, lien recordation fees, judgment and lien search fees, finders’ fees, commissions, and other payments to a broker or other intermediary. “Transfer expenses” does not include preexisting obligations of the payee payable for the payee’s account from the proceeds of a transfer.

 

C.R.S.A. § 13-23-103.

Required disclosures to payee

 (1) Not fewer than three days prior to the date on which a payee signs a transfer agreement, the transferee shall provide to the payee a separate disclosure statement, in bold type no smaller than fourteen points, setting forth:

 

(a) The amounts and due dates of the structured settlement payments to be transferred;

 

(b) The aggregate amount of such payments;

 

(c) The discounted present value of the payments to be transferred, which shall be identified as the “calculation of current value of the transferred structured settlement payments under federal standards for valuing annuities”, and the amount of the applicable federal rate used in calculating such discounted present value;

 

(d) The gross advance amount;

 

(e) An itemized listing of all applicable transfer expenses, other than attorney fees and related disbursements, payable in connection with the transferee’s application for approval of the transfer and the transferee’s best estimate of the amount of any attorney fees and related disbursements;

 

(f) The net advance amount;

 

(g) The amount of any penalties or liquidated damages payable by the payee in the event of a breach of the transfer agreement by the payee; and

 

(h) A statement that the payee has the right to cancel the transfer agreement, without penalty or further obligation, not later than the third business day after the date the agreement is signed by the payee.

C.R.S.A. § 13-23-104.

Approval of transfers of structured settlement payment rights

(1) A direct or indirect transfer of a structured settlement payment right shall not be effective and a structured settlement obligor or annuity issuer shall not be required to make a payment directly or indirectly to a transferee of a structured settlement payment right unless the transfer has been approved in advance in a final court order or order of a responsible administrative authority based on express findings by such court or responsible administrative authority that:

 

(a) The transfer is in the best interests of the payee, taking into account the welfare and support of the payee’s dependents;

 

(b) The payee has been advised in writing by the transferee to seek independent professional advice regarding the transfer and has either received such advice or knowingly and willingly waived such advice in writing; and

 

(c) The transfer does not contravene any applicable statute or the order of any court or other government authority.

 

C.R.S.A. § 13-23-105.

Effect of transfer of structured settlement payment right

 (1) Following a transfer of a structured settlement payment right pursuant to this article:

 

(a) The structured settlement obligor and the annuity issuer shall, as to all parties except the transferee, be discharged and released from all liability for the transferred payments;

 

(b) The transferee shall be liable to the structured settlement obligor and the annuity issuer:

 

(I) If the transfer contravenes the terms of the structured settlement, for any taxes incurred by such parties as a consequence of the transfer; and

 

(II) For any other liabilities or costs, including reasonable costs and attorney fees, arising from compliance by such parties with the order of the court or responsible administrative authority or arising as a consequence of the transferee’s failure to comply with the provisions of this article;

 

(c) Neither the annuity issuer nor the structured settlement obligor may be required to divide any periodic payment between the payee and a transferee or assignee or between two or more transferees or assignees; and

 

(d) Any further transfer of structured settlement payment rights by the payee may be made only after compliance with all of the requirements of this article.

 

C.R.S.A. § 13-23-106.

Procedure for approval of transfer

(1) An application under this article for approval of a transfer of a structured settlement payment right shall be made by the transferee and may be brought:

 

(a) In the district court for the county in which the payee resides;

 

(b) In the district court for the county in which the structured settlement obligor or the annuity issuer maintains its principal place of business; or

 

(c) In any court or before any responsible administrative authority that approved the structured settlement agreement.

(2) Not fewer than twenty days prior to the scheduled hearing on an application for approval of a transfer of structured settlement payment rights under section 13-23-104, the transferee shall file with the court or responsible administrative authority and serve on all interested parties a notice of the proposed transfer and the application for its authorization. The transferee shall file and serve:

 

(a) A copy of the transferee’s application;

 

(b) A copy of the transfer agreement;

 

(c) A copy of the disclosure statement required pursuant to section 13-23-103;

 

(d) A listing of each of the payee’s dependents, together with each dependent’s age;

 

(e) A notification that any interested party is entitled to support, oppose, or otherwise respond to the transferee’s application, either in person or by counsel, by submitting written comments to the court or responsible administrative authority or by participating in the hearing; and

 

(f) A notification of the time and place of the hearing and notification of the manner in which and the time by which written responses to the application must be filed, which shall be not fewer than fifteen days after service of the transferee’s notice, in order to be considered by the court or responsible administrative authority.

 

C.R.S.A. § 13-23-107.

General provisions--construction

(1) The provisions of this article may not be waived by any payee.

 

(2) Any transfer agreement entered into on or after July 1, 2004, by a payee who resides in Colorado shall provide that disputes under such transfer agreement, including any claim that the payee has breached the agreement, shall be determined in and under the laws of Colorado. No such transfer agreement shall authorize the transferee or any other party to confess judgment or consent to entry of judgment against the payee.

 

(3) A transfer of structured settlement payment rights shall not extend to any payments that are life-contingent unless, prior to the date on which the payee signs the transfer agreement, the transferee has established and has agreed to maintain procedures reasonably satisfactory to the annuity issuer and the structured settlement obligor for periodically confirming the payee’s survival and giving the annuity issuer and the structured settlement obligor prompt written notice in the event of the payee’s death.

 

(4) A payee who proposes to make a transfer of a structured settlement payment right shall not incur any penalty, forfeit any application fee or other payment, or otherwise incur any liability to the proposed transferee or any assignee based on a failure of such transfer to satisfy the conditions of this article.

 

(5) Nothing contained in this article shall be construed to authorize a transfer of a structured settlement payment right in contravention of any law or to imply that a transfer under a transfer agreement entered into prior to July 1, 2004, is valid or invalid.

 

(6) Compliance with the requirements set forth in section 13-23-103 and fulfillment of the conditions set forth in section 13-23-104 shall be solely the responsibility of the transferee in a transfer of structured settlement payment rights, and neither the structured settlement obligor nor the annuity issuer shall bear responsibility for, or any liability arising from, noncompliance with such requirements or failure to fulfill such conditions.

C.R.S.A. § 13-23-108.

Exceptions--judgment for periodic payment against a health care professional or institution--assignment of workers’ compensation benefits

Nothing in this article shall apply to a judgment entered pursuant to the provisions of part 2 of article 64 of this title or to compensation or benefits due under articles 40 to 47 of title 8, C.R.S.

Connecticut

Connecticut Transfer of Structured Settlement Payment Rights Act

CONN. GEN STAT ANN. § 52-225g et seq.  (2003)

C.G.S.A. § 52-225f.

Transfer of structured settlement payment rights prior to October 1, 2003

(a) For purposes of this section:

 

(1) “Annuity issuer” means an insurer that has issued any insurance contract used to fund periodic payments under a structured settlement;

 

(2) “Expenses” means all broker’s commissions, service charges, application or processing fees, closing costs, filing or administrative charges, legal fees, notary fees and other commissions, fees, costs and charges payable by the payee in connection with the proposed transfer or deductible from the gross consideration that would be paid to the payee in connection with the transfer;

 

(3) “Interested parties” means, with respect to any structured settlement, the payee, any beneficiary designated to receive payments following the payee’s death or, if the designated beneficiary is a minor, the designated beneficiary’s parent or guardian, the annuity issuer and the structured settlement obligor;

 

(4) “Payee” means an individual who is receiving payments under a structured settlement and proposes to make a transfer of payment rights thereunder;

 

(5) “Structured settlement” means an arrangement for periodic payment of damages established by settlement or judgment in resolution of a tort claim or for periodic payments in settlement of a workers’ compensation claim;

 

(6) “Structured settlement obligor” means, with respect to any structured settlement, the party that has the continuing periodic payment obligation to the payee under a structured settlement agreement or under an agreement providing for a qualified assignment within the meaning of Section 130 of the Internal Revenue Code of 1986,1 or any subsequent corresponding internal revenue code of the United States, as from time to time amended;

 

(7) “Structured settlement payment rights” means rights to receive periodic payments, including lump sum payments, under a structured settlement, whether from the settlement obligor or the annuity issuer;

 

(8) “Transfer” means any sale, assignment, pledge, hypothecation or other form of alienation or encumbrance made for consideration;

 

(9) “Transfer agreement” means the agreement providing for transfer of structured settlement payment rights from a payee to a transferee; and

 

(10) “Transferee” means any person receiving structured settlement payment rights resulting from a transfer.

 

(b) No transfer of structured settlement payment rights, either directly or indirectly, shall be effective by any payee domiciled in this state or by any payee entitled to receive payments under a structured settlement funded by an insurance contract issued by an insurer domiciled in this state or owned by an insurer or corporation domiciled in this state and no structured settlement obligor or annuity issuer shall be required to make any payment directly or indirectly to any transferee of any such transfer unless (1) not less than ten days prior to the date on which the payee entered into the transfer agreement, the transferee provided to the payee a written disclosure statement setting forth (A) the amounts and due dates of the structured settlement payments to be transferred; (B) the aggregate amount of the payments; (C) the gross amount of all expenses; (D) the amount payable to the payee, net of all expenses, in exchange for the payments; (E) the discounted present value of all structured settlement payments to be transferred and the discount rate used in determining such discounted present value; and (F) a statement that the payee may be subject to adverse federal and state income tax consequences as a result of the proposed transfer; and (2) such transfer has been approved by a court pursuant to subsection (c) of this section.

 

(c) (1) Prior to any transfer, the payee entitled to receive payments under such structured settlement shall commence a declaratory judgment action under section 52-29 for a determination as to whether the transfer of such structured settlement payment rights is in the best interests of the payee and is fair and reasonable to all interested parties under all of the circumstances then existing. The annuity issuer and the structured settlement obligor shall be made parties to such action. If the court determines, after hearing, that such transfer should be allowed, it shall approve such transfer upon such terms and conditions as it deems appropriate.

 

(2) The court in which the original action was or could have been filed or the court which has jurisdiction where the applicant resides shall have jurisdiction over any such action.

 

(3) The payee shall cause notice of the action to be served on all interested parties by a proper officer or other person lawfully empowered to make service. The notice of the action shall include (A) a copy of the payee’s application to the court for approval of the transfer, (B) a copy of the disclosure statement required under subsection (b) of this section and (C) notice of the hearing.

 

(4) The payee may seek an order setting the deadline for the filing of written objections. The payee shall give notice to all interested parties of the deadline for filing objections whether such deadline has been established by court order or by operation of the general statutes or court rule. Notice shall be mailed to all interested parties at least ten days before such deadline.

 

(5) The court shall hold a hearing on the application. The payee shall give notice of the hearing to all interested parties.

 

(d) Nothing contained in this section shall imply that any transfer under a transfer agreement dated prior to October 1, 1998, is binding upon any interested party or that any annuity issuer or structured settlement obligor is under any obligation to make transferred payments to the transferee of any such prior transfer.

 

(e) The provisions of this section may not be waived.

 

(f) The provisions of this section shall be applicable to transfer agreements executed on and after October 1, 1998, and prior to October 1, 2003.

 

C.G.S.A. § 52-225g.

 Transfer of structured settlement payment rights: Definitions

For the purposes of sections 52-225g to 52-225l inclusive:

 

(1) “Annuity issuer” means an insurer that has issued a contract to fund periodic payments under a structured settlement;

 

(2) “Dependents” include a payee’s spouse and minor children and all other persons for whom the payee is legally obligated to provide support, including alimony;

 

(3) “Discounted present value” means the present value of future payments determined by discounting the payments to the present using the most recently published applicable federal rate for determining the present value of an annuity, as issued by the United States Internal Revenue Service;

 

(4) “Gross advance amount” means the sum payable to the payee or for the payee’s account as consideration for a transfer of structured settlement payment rights before any reductions for transfer expenses or other deductions to be made from such consideration;

 

(5) “Independent professional advice” means advice of an attorney, certified public accountant, actuary or other licensed professional adviser;

 

(6) “Interested parties” means, with respect to any structured settlement, the payee, any beneficiary irrevocably designated under the annuity contract to receive payments following the payee’s death, the annuity issuer, the structured settlement obligor and any other party that has continuing rights or obligations under such structured settlement;

 

(7) “Net advance amount” means the gross advance amount less the aggregate amount of the actual and estimated transfer expenses required to be disclosed under subdivision (5) of section 52-225h;

 

(8) “Payee” means an individual who is receiving tax-free payments under a structured settlement and proposes to transfer payment rights under the structured settlement;

 

(9) “Periodic payments” includes both recurring payments and scheduled future lump-sum payments;

 

(10) “Qualified assignment agreement” means an agreement providing for a qualified assignment within the meaning of Section 130 of the Internal Revenue Code of 1986,1 or any subsequent corresponding internal revenue code of the United States, as from time to time amended;

 

(11) “Responsible administrative authority” means, with respect to a structured settlement, any government authority vested by law with exclusive jurisdiction over the settled claim resolved by such structured settlement;

 

(12) “Settled claim” means the original tort claim or workers’ compensation claim resolved by a structured settlement;

 

(13) “Structured settlement” means an arrangement for periodic payment of damages for personal injuries or sickness established by settlement or judgment in resolution of a tort claim or for periodic payments in settlement of a workers’ compensation claim;

 

(14) “Structured settlement agreement” means the agreement, judgment, stipulation or release embodying the terms of a structured settlement;

 

(15) “Structured settlement obligor” means, with respect to any structured settlement, the party that has the continuing obligation to make periodic payments to the payee under a structured settlement agreement or a qualified assignment agreement;

(16) “Structured settlement payment rights” means rights to receive periodic payments under a structured settlement, whether from the structured settlement obligor or the annuity issuer, where:

 

(A) The payee is domiciled in, or the domicile or principal place of business of the structured settlement obligor or the annuity issuer is located in, this state;

 

(B) The structured settlement agreement was approved by a court or responsible administrative authority in this state; or

 

(C) The structured settlement agreement is expressly governed by the laws of this state;

 

(17) “Terms of the structured settlement” include, with respect to any structured settlement, the terms of the structured settlement agreement, the annuity contract, any qualified assignment agreement, and any order or other approval of any court or responsible administrative authority or other government authority that authorized or approved such structured settlement;

 

(18) “Transfer” means any sale, assignment, pledge, hypothecation, or other alienation or encumbrance of structured settlement payment rights made by a payee for consideration, but does not include the creation or perfection of a security interest in structured settlement payment rights under a blanket security agreement entered into with an insured depository institution, in the absence of any action to redirect the structured settlement payments to such insured depository institution, or an agent or successor in interest thereof, or otherwise to enforce such blanket security interest against the structured settlement payment rights;

 

(19) “Transfer agreement” means the agreement providing for a transfer of structured settlement payment rights;

 

(20) “Transfer expenses” means all expenses of a transfer that are required under the transfer agreement to be paid by the payee or deducted from the gross advance amount, including, but not limited to, court filing fees, attorney’s fees, escrow fees, lien recordation fees, judgment and lien search fees, finders’ fees, commissions and other payments to a broker or other intermediary, but does not include preexisting obligations of the payee payable for the payee’s account from the proceeds of a transfer; and

 

(21) “Transferee” means a party acquiring or proposing to acquire structured settlement payment rights through a transfer.

C.G.S.A. § 52-225h.

Transfer of structured settlement payment rights: Required disclosures to payee

Not less than three days prior to the date on which the payee signs a transfer agreement, the transferee shall provide to the payee a separate disclosure statement, in boldface type at least fourteen points in size, setting forth:

 

(1) The amounts and due dates of the structured settlement payments to be transferred;

 

(2) The aggregate amount of such payments;

 

(3) The discounted present value of the payments to be transferred, which shall be identified as the “calculation of current value of the transferred structured settlement payments under federal standards for valuing annuities,” and the amount of the applicable federal rate used in calculating such discounted present value;

 

(4) The gross advance amount;

 

(5) An itemized listing of all applicable transfer expenses, other than attorney’s fees and related disbursements payable in connection with the transferee’s application for approval of the transfer, and the transferee’s best estimate of the amount of any such fees and disbursements;

 

(6) The net advance amount;

 

(7) The amount of any penalties or liquidated damages payable by the payee in the event of any breach of the transfer agreement by the payee; and

 

(8) A statement that the payee has the right to cancel the transfer agreement, without penalty or further obligation, not later than the third business day after the date the agreement is signed by the payee.

C.G.S.A. § 52-225i.

Transfer of structured settlement payment rights: Approval

No direct or indirect transfer of structured settlement payment rights shall be effective and no structured settlement obligor or annuity issuer shall be required to make any payment directly or indirectly to any transferee of structured settlement payment rights unless the transfer has been approved in advance in a final court order or order of a responsible administrative authority based on express findings by such court or responsible administrative authority that:

 

(1) The transfer is in the best interest of the payee, taking into account the welfare and support of the payee’s dependents;

 

(2) The payee has been advised in writing by the transferee to seek independent professional advice regarding the transfer and has either received such advice or knowingly waived such advice in writing; and

 

(3) The transfer does not contravene any applicable statute or the order of any court or other government authority.

C.G.S.A. § 52-225j.

Transfer of structured settlement payment rights: Effect

Following a transfer of structured settlement payment rights under sections 52-225g to 52-225l, inclusive:

 

(1) The structured settlement obligor and the annuity issuer shall, as to all parties except the transferee, be discharged and released from any and all liability for the transferred payments;

 

(2) The transferee shall be liable to the structured settlement obligor and the annuity issuer:

 

(A) If the transfer contravenes the terms of the structured settlement, for any taxes incurred by such parties as a consequence of the transfer, and

 

(B) For any other liabilities or costs, including reasonable costs and attorney’s fees, arising from compliance by such parties with the order of the court or responsible administrative authority or arising as a consequence of the transferee’s failure to comply with sections 52-225g to 52-225l, inclusive;

 

(3) Neither the structured settlement obligor nor the annuity issuer may be required to divide any periodic payment between the payee and any transferee or assignee or between two or more transferees or assignees; and

 

(4) Any further transfer of structured settlement payment rights by the payee may be made only after compliance with all of the requirements of sections 52-225g to 52-225l, inclusive.

C.G.S.A. § 52-225k.

Transfer of structured settlement payment rights: Procedure for approval

(a) An application under sections 52-225g to 52-225l, inclusive, for approval of a transfer of structured settlement payment rights shall be made by the transferee and may be brought in the superior court for the judicial district in which the payee resides or in which the structured settlement obligor or annuity issuer maintains its principal place of business or in the superior court or before the responsible administrative authority that approved the structured settlement agreement.

 

(b) Not less than twenty days prior to the scheduled hearing on any application for approval of a transfer of structured settlement payment rights under section 52-225i, the transferee shall file with the court or responsible administrative authority and serve on all interested parties a notice of the proposed transfer and the application for its approval, including with the notice:

 

(1) A copy of the transferee’s application;

 

(2) A copy of the transfer agreement;

 

(3) A copy of the disclosure statement required under section 52-225h;

 

(4) A listing of each of the payee’s dependents, together with each dependent’s age;

 

(5) Notification that any interested party is entitled to support, oppose or otherwise respond to the transferee’s application, either in person or by counsel, by submitting written comments to the court or responsible administrative authority or by participating in the hearing; and

 

(6) Notification of the time and place of the hearing and notification of the manner in which and the time by which written responses to the application must be filed, which shall be not less than fifteen days after service of the transferee’s notice, in order to be considered by the court or responsible administrative authority.

C.G.S.A. § 52-225l.

Transfer of structured settlement payment rights: General provisions

(a) The provisions of sections 52-225g to 52-225l, inclusive, may not be waived by any payee.

 

(b) Any transfer agreement entered into on or after October 1, 2003, by a payee who resides in this state shall provide that disputes under such transfer agreement, including any claim that the payee has breached the agreement, shall be determined in and under the laws of this state. No such transfer agreement shall authorize the transferee or any other party to confess judgment or consent to entry of judgment against the payee.

 

(c) No transfer of structured settlement payment rights shall extend to any payments that are life-contingent unless, prior to the date on which the payee signs the transfer agreement, the transferee has established and agreed to maintain procedures reasonably satisfactory to the structured settlement obligor and the annuity issuer for:

 

(1) Periodically confirming the payee’s survival; and

 

(2) Giving the structured settlement obligor and the annuity issuer prompt written notice in the event of the payee’s death.

 

(d) No payee who proposes to make a transfer of structured settlement payment rights shall incur any penalty, forfeit any application fee or other payment or otherwise incur any liability to the proposed transferee or any assignee based on any failure of such transfer to satisfy the conditions of sections 52-225g to 52-225l, inclusive.

 

(e) Nothing contained in sections 52-225g to 52-225l, inclusive, shall be construed to authorize any transfer of structured settlement payment rights in contravention of any law or to imply that any transfer under a transfer agreement entered into prior to October 1, 2003, is valid or invalid.

 

(f) Compliance with the requirements set forth in section 52-225h and fulfillment of the conditions set forth in section 52-225i of this act shall be solely the responsibility of the transferee in any transfer of structured settlement payment rights, and neither the structured settlement obligor nor the annuity issuer shall bear any responsibility for, or any liability arising from, noncompliance with such requirements or failure to fulfill such conditions.

 

(g) The provisions of sections 52-225g to 52-225l, inclusive, shall be applicable to transfer agreements executed on and after October 1, 2003.

Delaware

Delaware Structured Settlements Act

DEL. CODE ANN. tit. 10 § 6601 et seq. (West 2000)

Amended in 2005 and 2006

10 Del.C. § 6601.

Conditions to transfers of structured settlement payment rights

No direct or indirect transfer of structured settlement payment rights shall be effective and no structured settlement obligor or annuity issuer shall be required to make any payment directly or indirectly to any transferee of structured settlement payment rights unless the transfer has been authorized in advance in a final order of a court of competent jurisdiction or responsible administrative authority, based on express findings by such court or responsible administrative authority that:

 

(1) The transfer complies with the requirements of this chapter and will not contravene other applicable law;

 

(2) Not less than 10 days prior to the date on which the payee first incurred any obligation with respect to the transfer, the transferee has provided to the payee a disclosure statement in bold type, no smaller than 14 points, setting forth:

 

a. The amounts and due dates of the structured settlement payments to be transferred;

 

b. The aggregate amount of such payments;

c. The discounted present value of such payments, together with the discount rate used in determining such discounted present value;

 

d. The gross amount payable to the payee in exchange for such payments;

 

e. An itemized listing of all brokers’ commissions, service charges, application fees, processing fees, closing costs, filing fees, administrative fees, legal fees, notary fees and other commissions, fees, costs, expenses and charges payable by the payee or deductible from the gross amount otherwise payable to the payee;

 

f. The net amount payable to the payee after deduction of all commissions, fees, costs, expenses and charges described in paragraph (2)e. of this section;

g. The quotient (expressed as a percentage) obtained by dividing the net payment amount by the discounted present value of the payments; and

 

h. The amount of any penalty and the aggregate amount of any liquidated damages (inclusive of penalties) payable by the payee in the event of any breach of the transfer agreement by the payee;

 

(3) The transfer is fair and reasonable and in the best interests of the payee and the payee’s dependents;

 

(4) The payee has received independent professional advice regarding the legal, tax and financial implications of the transfer;

 

(5) If the transfer would contravene the terms of the structured settlement:

 

a. The transfer has been expressly approved in writing by:

 

1. Each interested party; provided, however, that the approval of the annuity issuer and the structured settlement obligor shall not be required if all other interested parties approve the transfer and waive any and all rights to require that the transferred payments be made to the payee in accordance with the terms of the structured settlement; and

 

2. Any court or government authority, other than the court or responsible administrative authority from which authorization of the transfer is sought under this chapter, which previously approved the structured settlement; and

 

b. Signed originals of all approvals required under paragraph (5)a. of this section have been filed with the court or responsible administrative authority from which authorization of the transfer is sought under this chapter, and originals or copies have been furnished to all interested parties; and

(6) The transferee has given written notice of the transferee’s name, address and taxpayer identification number to the annuity issuer and the structured settlement obligor and has filed a copy of such notice with the court or responsible administrative authority.

 

10 Del.C. § 6602.

Definitions

The following words, terms and phrases, when used in this chapter, shall have the meanings ascribed to them, except where the context clearly indicates a different meaning:

 

(1) “Annuity issuer” shall mean an insurer that has issued an insurance contract used to fund periodic payments under a structured settlement;

 

(2) “Applicable law” shall mean:

 

a. The federal laws of the United States;

 

b. The laws of this State, including principles of equity applied in the courts of this State; and

 

c. The laws of any other jurisdiction:

 

1. Which is the domicile of the payee or any other interested party;

 

2. Under whose laws a structured settlement agreement was approved by a court; or

 

3. In whose courts a settled claim was pending when the parties entered into a structured settlement agreement;

 

(3) “Dependents” shall include a payee’s spouse and minor children and all other family members and other persons for whom the payee is legally obligated to provide support, including alimony;

 

(4) “Discounted present value” shall mean the fair present value of future payments, as determined by discounting such payments to the present using the most recently published applicable federal rate for determining the present value of an annuity, as issued by the United States Internal Revenue Service;

 

(5) “Favorable tax determination” shall mean, with respect to a proposed transfer of structured settlement payment rights, any of the following authorities that definitively establishes that the federal income tax treatment of the structured settlement for the parties to the structured settlement agreement and any qualified assignment agreement, other than the payee, will not be affected by such transfer:

 

a. A provision of the United States Internal Revenue Code, United States Code Title 26 [26 U.S.C. § 130], as amended from time to time, or a United States Treasury regulation adopted pursuant thereto;

 

b. A revenue ruling or revenue procedure issued by the United States Internal Revenue Service;

 

c. A private letter ruling by the United States Internal Revenue Service with respect to such transfer;

 

d. A decision of the United States Supreme Court or a decision of a lower federal court in which the United States Internal Revenue Service has acquiesced;

 

(6) “Federal hardship standard” shall mean a federal standard applicable to transfers of structured settlement payment rights based on findings of a court or responsible administrative authority regarding the payees’ needs, as contained in the United States Internal Revenue Code, United States Code Title 26, as amended from time to time, or in a United States Treasury regulation adopted pursuant thereto;

 

(7) “Independent professional advice” shall mean the advice of an attorney, certified public accountant, actuary or other licensed professional adviser:

 

a. Who is engaged by a payee to render advice concerning the legal, tax and financial implications of a transfer of structured settlement payment rights;

 

b. Who is not in any manner affiliated with or compensated by the transferee of such transfer; and

 

c. Whose compensation for rendering such advice is not affected by whether a transfer occurs or does not occur.

 

(8) “Interested parties” shall mean, with respect to any structured settlement, the payee, any beneficiary designated under the annuity contract to receive payments following the payee’s death, the annuity issuer, the structured settlement obligor, and any other party that has continuing rights or obligations under such structured settlement;

 

(9) “Payee” shall mean an individual who is receiving tax-free damage payments under a structured settlement and proposes to make a transfer of payment rights thereunder;

 

(10) “Qualified assignment agreement” shall mean an agreement providing for a qualified assignment within the meaning of § 130 of the United States Internal Revenue Code, United States Code Title 26 (26 U.S.C. § 130), as amended from time to time;

(11) “Responsible administrative authority” shall mean, with respect to a structured settlement, any government authority vested by law with exclusive jurisdiction over the settled claim resolved by such structured settlement;

 

(12) “Settled claim” shall mean the original tort claim or workers’ compensation claim resolved by a structured settlement;

 

(13) “Structured settlement” shall mean an arrangement for periodic payment of damages for personal injuries established by settlement or judgment in resolution of a tort claim or for periodic payments in settlement of a workers’ compensation claim;

 

(14) “Structured settlement agreement” shall mean the agreement, judgment, stipulation or release embodying the terms of a structured settlement, including the rights of the payee to receive periodic payments;

 

(15) “Structured settlement obligor” shall mean, with respect to any structured settlement, the party that has the continuing periodic payment obligation to the payee under a structured settlement agreement or a qualified assignment agreement;

 

(16) “Structured settlement payment rights” shall mean rights to receive periodic payments (including lump sum payments) under a structured settlement, whether from the settlement obligor or the annuity issuer, where:

 

a. The payee, the settlement obligor, the annuity issuer, or any other interested party is domiciled in this State;

 

b. The structured settlement agreement was approved by a court or responsible administrative authority in this State; or

 

c. The settled claim was pending before the courts of this State when the parties entered into the structured settlement agreement;

 

(17) “Terms of the structured settlement” shall include, with respect to any structured settlement, the terms of the structured settlement agreement, the annuity contract, any qualified assignment agreement and any order or approval of any court or responsible administrative authority or other government authority authorizing or approving such structured settlement;

 

(18) “Transfer” shall mean any sale, assignment, pledge, hypothecation or other form of alienation or encumbrance made by a payee for consideration;

 

(19) “Transfer agreement” shall mean the agreement providing for transfer of structured settlement payment rights from a payee to a transferee; and

 

(20) “Transferee” or “payor” shall mean the person, firm or entity purchasing or receiving the assignment, pledge, hypothecation or other form of alienation or encumbrance made by a payee for consideration under a structured settlement agreement.

10 Del.C. § 6603.

Jurisdiction; procedure for approval of transfers

 (a) The Superior Court shall have nonexclusive jurisdiction over any application for authorization, under § 6601 of this title, of a transfer of structured settlement payment rights, except that if the structured settlement payment rights are held by a trustee, the Court of Chancery shall have exclusive jurisdiction over any application for authorization of a transfer of such rights.

 

(b) Not less than 20 days prior to the scheduled hearing on any application for authorization of a transfer of structured settlement payment rights under § 6601(2) of this title, the transferee shall file with the Court and serve on any other government authority which previously approved the structured settlement and on all interested parties a notice of the proposed transfer and application of its authorization, including in such notice:

 

(1) A copy of the transferee’s application;

 

(2) A copy of the transfer agreement;

 

(3) A copy of the disclosure statement required under § 6601(2) of this title;

 

(4) Notification that any interested party is entitled to support, oppose or otherwise respond to the transferee’s application, either in person or by counsel, by submitting written comments to the Court or responsible administrative authority or by participating in the hearing; and

 

(5) Notification of the time and place of the hearing and notification of the manner in which and the time by which written responses to the application must be filed (which shall be not less than 15 days after service of the transferee’s notice) in order to be considered by the Court or responsible administrative authority.

 

(c) Those parties, persons and officials named in § 6603(b) of this title shall have standing to raise, appear and be heard on any matter relating to an application for authorization of a transfer of structured settlement payment rights under this chapter.

(d) In cases where the payee shall not be represented by counsel, or where the payee and the transferee shall be represented by the same counsel, and the Court, in the exercise of its reasonable discretion, finds that the payee does not adequately comprehend the substance of the transaction, the Court may appoint an attorney ad litem who shall advise the Court if, in their opinion, the requirements of § 6601 of this title have been met. The costs and fees incurred by such attorney ad litem shall be borne by the payor or transferee and shall not be passed on to the payee or deducted from the payee’s structured settlement agreement proceeds, provided that such costs do not exceed $500. 

10 Del.C. § 6604.

No waiver; no penalties

(a) The provisions of this chapter shall not be waived.

 

(b) No payee who proposes to make a transfer of structured settlement payment rights shall inure any penalty, forfeit any application fee or other payment, or otherwise incur any liability to the proposed transferee based on any failure of such transfer to satisfy the conditions of § 6601 of this title.

 

Florida

Florida Transfers of structured settlement payment rights Act

FLA. STAT ANN. § 626.99296 et seq. (West 2001)

West’s F.S.A. § 626.99296.

Transfers of structured settlement payment rights

(1) Purpose.--The purpose of this section is to protect recipients of structured settlements who are involved in the process of transferring structured settlement payment rights.

 

(2) Definitions.--As used in this section, the term:

 

(a) “Annuity issuer” means an insurer that has issued an annuity contract to be used to fund periodic payments under a structured settlement.

 

(b) “Applicable law” means any of the following, as applicable in interpreting the terms of a structured settlement:

 

1. The laws of the United States;

 

2. The laws of this state, including principles of equity applied in the courts of this state; and

 

3. The laws of any other jurisdiction:

 

a. That is the domicile of the payee or any other interested party;

 

b. Under whose laws a structured settlement agreement was approved by a court; or

 

c. In whose courts a settled claim was pending when the parties entered into a structured settlement agreement.

 

(c) “Applicable federal rate” means the most recently published applicable rate for determining the present value of an annuity, as issued by the United States Internal Revenue Service pursuant to s. 7520 of the United States Internal Revenue Code,1 as amended.

 

(d) “Assignee” means any party that acquires structured settlement payment rights directly or indirectly from a transferee of such rights.

 

(e) “Dependents” means a payee’s spouse and minor children and all other family members and other persons for whom the payee is legally obligated to provide support, including spousal maintenance.

 

(f) “Discount and finance charge” means the sum of all charges that are payable directly or indirectly from assigned structured settlement payments and imposed directly or indirectly by the transferee and that are incident to a transfer of structured settlement payment rights, including:

 

1. Interest charges, discounts, or other compensation for the time value of money;

 

2. All application, origination, processing, underwriting, closing, filing, and notary fees and all similar charges, however denominated; and

 

3. All charges for commissions or brokerage, regardless of the identity of the party to whom such charges are paid or payable.

 

The term does not include any fee or other obligation incurred by a payee in obtaining independent professional advice concerning a transfer of structured settlement payment rights.

 

(g) “Discounted present value” means, with respect to a proposed transfer of structured settlement payment rights, the fair present value of future payments, as determined by discounting the payments to the present using the most recently published applicable federal rate as the discount rate.

 

(h) “Independent professional advice” means advice of an attorney, certified public accountant, actuary, or other licensed professional adviser:

 

1. Who is engaged by a payee to render advice concerning the legal, tax, and financial implications of a transfer of structured settlement payment rights;

 

2. Who is not in any manner affiliated with or compensated by the transferee of the transfer; and

 

3. Whose compensation for providing the advice is not affected by whether a transfer occurs or does not occur.

 

(i) “Interested parties” means:

 

1. The payee;

 

2. Any beneficiary irrevocably designated under the annuity contract to receive payments following the payee’s death or, if such designated beneficiary is a minor, the designated beneficiary’s parent or guardian;

3. The annuity issuer;

4. The structured settlement obligor; or

 

5. Any other party who has continuing rights or obligations under the structured settlement.

 

(j) “Payee” means an individual who is receiving tax-free damage payments under a structured settlement and proposes to make a transfer of payment rights under the structured settlement.

 

(k) “Qualified assignment agreement” means an agreement providing for a qualified assignment, as authorized by 26 U.S.C. s. 130 of the United States Internal Revenue Code, as amended.

 

(l) “Settled claim” means the original tort claim resolved by a structured settlement.

 

(m) “Structured settlement” means an arrangement for periodic payment of damages for personal injuries established by settlement or judgment in resolution of a tort claim.

 

(n) “Structured settlement agreement” means the agreement, judgment, stipulation, or release embodying the terms of a structured settlement, including the rights of the payee to receive periodic payments.

 

(o) “Structured settlement obligor” means the party who is obligated to make continuing periodic payments to the payee under a structured settlement agreement or a qualified assignment agreement.

 

(p) “Structured settlement payment rights” means rights to receive periodic payments, including lump-sum payments under a structured settlement, whether from the structured settlement obligor or the annuity issuer, if:

 

1. The payee or any other interested party is domiciled in this state;

 

2. The structured settlement agreement was approved by a court of this state; or

 

3. The settled claim was pending before the courts of this state when the parties entered into the structured settlement agreement.

 

(q) “Terms of the structured settlement” means the terms of the structured settlement agreement; the annuity contract; a qualified assignment agreement; or an order or approval of a court or other government authority authorizing or approving the structured settlement.

 

(r) “Transfer” means a sale, assignment, pledge, hypothecation, or other form of alienation or encumbrance made by a payee for consideration.

 

(s) “Transfer agreement” means the agreement providing for transfer of structured settlement payment rights from a payee to a transferee.

 

(t) “Transferee” means a person who is receiving or who will receive structured settlement payment rights resulting from a transfer.

 

(3) Conditions to transfers of structured settlement payment rights and structured settlement agreements.--

 

(a) A direct or indirect transfer of structured settlement payment rights is not effective and a structured settlement obligor or annuity issuer is not required to make a payment directly or indirectly to a transferee of structured settlement payment rights unless the transfer is authorized in advance in a final order by a court of competent jurisdiction which is based on the written express findings by the court that:

 

1. The transfer complies with this section and does not contravene other applicable law;

 

2. At least 10 days before the date on which the payee first incurred an obligation with respect to the transfer, the transferee provided to the payee a disclosure statement in bold type, no smaller than 14 points in size, which specifies:

 

a. The amounts and due dates of the structured settlement payments to be transferred;

 

b. The aggregate amount of the payments;

 

c. The discounted present value of the payments, together with the discount rate used in determining the discounted present value;

 

d. The gross amount payable to the payee in exchange for the payments;

 

e. An itemized listing of all brokers’ commissions, service charges, application fees, processing fees, closing costs, filing fees, referral fees, administrative fees, legal fees, and notary fees and other commissions, fees, costs, expenses, and charges payable by the payee or deductible from the gross amount otherwise payable to the payee;

 

f. The net amount payable to the payee after deducting all commissions, fees, costs, expenses, and charges described in sub-subparagraph e.;

 

g. The quotient, expressed as a percentage, obtained by dividing the net payment amount by the discounted present value of the payments, which must be disclosed in the following statement: “The net amount that you will receive from us in exchange for your future structured settlement payments represent ___ percent of the estimated current value of the payments based upon the discounted value using the applicable federal rate”;

h. The effective annual interest rate, which must be disclosed in the following statement: “Based on the net amount that you will receive from us and the amounts and timing of the structured settlement payments that you are turning over to us, you will, in effect, be paying interest to us at a rate of ___ percent per year”; and

 

i. The amount of any penalty and the aggregate amount of any liquidated damages, including penalties, payable by the payee in the event of a breach of the transfer agreement by the payee;

 

3. The payee has established that the transfer is in the best interests of the payee, taking into account the welfare and support of the payee’s dependents;

 

4. The payee has received, or waived his or her right to receive, independent professional advice regarding the legal, tax, and financial implications of the transfer;

 

5. The transferee has given written notice of the transferee’s name, address, and taxpayer identification number to the annuity issuer and the structured settlement obligor and has filed a copy of the notice with the court;

 

6. The transfer agreement provides that if the payee is domiciled in this state, any disputes between the parties will be governed in accordance with the laws of this state and that the domicile state of the payee is the proper venue to bring any cause of action arising out of a breach of the agreement; and

 

7. The court has determined that the net amount payable to the payee is fair, just, and reasonable under the circumstances then existing.

 

(b) If a proposed transfer would contravene the terms of the structured settlement, upon the filing of a written objection by any interested party and after considering the objection and any response to it, the court may grant, deny, or impose conditions upon the proposed transfer which the court deems just and proper given the facts and circumstances and in accordance with established principles of law. Any order approving a transfer must require that the transferee indemnify the annuity issuer and the structured settlement obligor for any liability, including reasonable costs and attorney’s fees, which arises from compliance by the issuer or obligor with the order of the court.

 

(c) Any provision in a transfer agreement which gives a transferee power to confess judgment against a payee is unenforceable to the extent that the amount of the judgment would exceed the amount paid by the transferee to the payee, less any payments received from the structured settlement obligor or payee.

 

(d) In negotiating a structured settlement of claims brought by or on behalf of a claimant who is domiciled in this state, the structured settlement obligor must disclose in writing to the claimant or the claimant’s legal representative all of the following information that is not otherwise specified in the structured settlement agreement:

 

1. The amounts and due dates of the periodic payments to be made under the structured settlement agreement. In the case of payments that will be subject to periodic percentage increases, the amounts of future payments may be disclosed by identifying the base payment amount, the amount and timing of scheduled increases, and the manner in which increases will be compounded;

 

2. The amount of the premium payable to the annuity issuer;

 

3. The discounted present value of all periodic payments that are not life-contingent, together with the discount rate used in determining the discounted present value;

 

4. The nature and amount of any costs that may be deducted from any of the periodic payments;

 

5. Where applicable, that any transfer of the periodic payments is prohibited by the terms of the structured settlement and may otherwise be prohibited or restricted under applicable law; and

 

6. That any transfer of the periodic payments by the claimant may subject the claimant to serious adverse tax consequences.

 

(4) Jurisdiction; procedure for approval of transfers.--At least 20 days before the scheduled hearing on an application for authorizing a transfer of structured settlement payment rights under this section, the transferee must file with the court and all interested parties a notice of the proposed transfer and the application for its authorization. The notice must include:

 

(a) A copy of the transferee’s application to the court;

 

(b) A copy of the transfer agreement;

 

(c) A copy of the disclosure statement required under subsection (3);

 

(d) Notification that an interested party may support, oppose, or otherwise respond to the transferee’s application, in person or by counsel, by submitting written comments to the court or by participating in the hearing; and

 

(e) Notification of the time and place of the hearing and notification of the manner in which and the time by which any written response to the application must be filed in order to be considered by the court. A written response to an application must be filed within 15 days after service of the transferee’s notice.

 

(5) Waiver prohibited; no penalties incurred.--

 

(a) The provisions of this section may not be waived.

 

(b) If a transfer of structured settlement payment rights fails to satisfy the conditions of subsection (3), the payee who proposed the transfer does not incur any penalty, forfeit any application fee or other payment, or otherwise incur any liability to the proposed transferee.

 

(6) Noncompliance.--

 

(a) If a transferee violates the requirements for stipulating the discount and finance charge provided for in subsection (3), neither the transferee nor any assignee may collect from the transferred payments, or from the payee, any amount in excess of the net advance amount, and the payee may recover from the transferee or any assignee:

 

1. A refund of any excess amounts previously received by the transferee or any assignee;

 

2. A penalty in an amount determined by the court, but not in excess of three times the aggregate amount of the discount and finance charge; and

 

3. Reasonable costs and attorney’s fees.

 

(b) If the transferee violates the disclosure requirements in subsection (3), the transferee and any assignee are liable to the payee for:

 

1. A penalty in an amount determined by the court, but not in excess of three times the amount of the discount and finance charge; and

 

2. Reasonable costs and attorney’s fees.

 

(c) A transferee or assignee is not liable for any penalty in any action brought under this section if the transferee or assignee establishes by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error, notwithstanding the transferee’s maintenance of procedures reasonably designed to avoid such errors.

 

(d) Notwithstanding any other law, an action may not be brought under this section more than 1 year after the due date of:

 

1. The last transferred structured settlement payment, in the case of a violation of the requirements for stipulating the discount and finance charge provided for in subsection (3).

 

2. The first transferred structured settlement payment, in the case of a violation of the disclosure requirements of subsection (3).

 

(e) When any interested party has reason to believe that any transferee has violated this section, any interested party may bring a civil action for injunctive relief, penalties, and any other relief that is appropriate to secure compliance with this section.

 

Georgia

Georgia structured settlement Protection Act

GA. CODE ANN. § 51-12-70 et seq. (1999)

Amended 2000, 2001, 2003 & 2015

Ga. Code Ann., § 51-12-70

Definitions

Effective: July 1, 2015

As used in this article, the term:

 

(1) “Attorney General” means the Attorney General or his or her designee.

 

(2) “Annuity issuer” means an insurer that has issued an insurance contract used to fund periodic payments under a structured settlement.

 

(3) “Applicable law” means:

 

(A) The federal laws of the United States;

 

(B) The laws of this state, including principles of equity applied in the courts of this state; and

 

(C) The laws of any other jurisdiction:

 

(i) Which is the domicile of the payee or any other interested party;

 

(ii) Under whose laws a structured settlement agreement was approved by a court or responsible administrative authority; or

 

(iii) In whose courts a settled claim was pending when the parties entered into a structured settlement agreement.

 

(4) “Discounted present value” means the fair present value of future payments, as determined by discounting such payments to the present using the most recently published applicable federal rate for determining the present value of an annuity, as issued by the United States Internal Revenue Service.

 

(5) “Interested parties” means, with respect to any structured settlement agreement, the payee, any beneficiary designated under the annuity contract to receive payments following the payee’s death, the annuity issuer, the structured settlement obligor, and any other party that has continuing rights or obligations under such structured settlement.

(6) “Payee” means an individual who is receiving tax-free damage payments under a structured settlement and proposes to make a transfer of payment rights thereunder.

 

(7) “Qualified assignment agreement” means an agreement providing for a qualified assignment within the meaning of Section 130 of the United States Internal Revenue Code, United States Code Title 26.

 

(8) “Settled claim” means the original tort claim or workers’ compensation claim resolved by a structured settlement.

 

(9) “Structured settlement” means an arrangement for periodic payment of damages for personal injuries established by settlement or judgment in resolution of a tort claim or for periodic payments in settlement of a workers’ compensation claim.

 

(10) “Structured settlement agreement” means the agreement, judgment, stipulation, or release embodying the terms of a structured settlement, including the rights of the payee to receive periodic payments.

 

(11) “Structured settlement obligor” means, with respect to any structured settlement, the party that has the continuing periodic payment obligation to the payee under a structured settlement agreement or a qualified assignment agreement.

 

(12) “Structured settlement payment rights” means rights to receive periodic payments (including lump sum payments) under a structured settlement, whether from the settlement obligor or the annuity issuer, where:

 

(A) The payee or any other interested party is domiciled in this state;

 

(B) The structured settlement agreement was approved by a court or responsible administrative authority in this state; or

 

(C) The settled claim was pending before the courts of this state when the parties entered into the structured settlement agreement.

 

(13) “Terms of the structured settlement” includes, with respect to any structured settlement, the terms of the structured settlement agreement, the annuity contract, any qualified assignment agreement, and any order or approval of any court or responsible administrative authority or other government authority authorizing or approving such structured settlement.

 

(14) “Transfer” means any sale, assignment, pledge, hypothecation, or other form of alienation or encumbrance made by a payee for consideration, but does not include:

 

(A) Any transaction which is expressly provided for in the structured settlement agreement and is executed within 30 days after execution of the structured settlement agreement; or

(B) Any testamentary disposition by the payee.

 

(15) “Transfer agreement” means the agreement providing for the transfer of structured settlement payment rights from a payee to a transferee.

 

Ga. Code Ann., § 51-12-71

Transfer not effective unless certain disclosures made; notice of transfer

Effective: July 1, 2015

 (a) No direct or indirect transfer of structured settlement payment rights shall be effective and no structured settlement obligor or annuity issuer shall be required to make any payment directly or indirectly to any transferee of structured settlement payment rights unless the transfer has been approved in advance in a final court order by a court of competent jurisdiction or order of any government authority vested by law with exclusive jurisdiction over the settled claim resolved by the structured settlement based on express findings by the court or government authority that:

 

 (1) The transfer complies with the requirements of this article and does not contravene any federal or state statute or the order of any court or any responsible administrative authority;

 

 (2) The transfer is in the best interest of the payee taking into account the welfare and support of the payee’s dependents;

 

 (3) Not less than ten days prior to the date on which the transfer agreement is executed in writing, the transferee has provided to the payee an informational pamphlet relating to transfers of structured settlements as provided for in subsection (b) of Code Section 51-12-73, when available, and a separate disclosure statement in bold type, no smaller than 14 points, setting forth:

 

 (A) The amounts and due dates of the structured settlement payments to be transferred;

 

 (B) The aggregate amount of such payments;

 

 (C) The discounted present value of such payments, together with the discount rate used in determining such discounted present value;

 

 (D) The gross amount payable to the payee in exchange for such payments;

 

 (E) An itemized listing of all brokers’ commissions, service charges, application fees, processing fees, closing costs, filing fees, administrative fees, legal fees, notary fees and other commissions, fees, costs, expenses, and charges payable by the payee or deductible from the gross amount otherwise payable to the payee;

 

 (F) The net amount payable to the payee after deduction of all commissions, fees, costs, expenses, and charges described in subparagraph (E) of this paragraph;

(G) The quotient (expressed as a percentage) obtained by dividing the net payment amount by the discounted present value of the payments; and

 

 (H) The amount of any penalty and the aggregate amount of any liquidated damages (inclusive of penalties) payable by the payee in the event of any breach of the transfer agreement by the payee; and

 

 (4) The transferee has given written notice of the transferee’s name, address, and taxpayer identification number to the annuity issuer and the structured settlement obligor and has filed a copy of the notice with the court.

 

 (b) At least 20 days before the hearing which is scheduled on an application for authorizing a transfer of structured settlement payment rights under this Code section, the transferee shall file with the court and deliver to all interested parties a notice of the proposed transfer and the application for its authorization. The notice shall include the following:

 

 (1) A copy of the transferee’s application to the court;

 

 (2) A copy of the transfer agreement;

 

 (3) A copy of the disclosure statement required under paragraph (3) of subsection (a) of this Code section;

 

 (4) Notification that an interested party may support, oppose, or otherwise respond to the transferee’s application, either in person or through counsel, by participating in the hearing or by submitting written comments to the court; and

(5) A rule nisi containing notification of the time and place of the hearing and notification of the manner in and the time by which any written response to the application must be filed in order to be considered by the court. A written response shall be filed within 15 days after service of the transferee’s notice.

(c) Delivery of notice as required by subsection (b) of this Code section may be made as provided in Code Section 9-11-4 or by registered or certified mail, return receipt requested. Notice by registered or certified mail is effective upon the date of delivery as shown on the return receipt. If notice by registered or certified mail is refused or returned undelivered, notice shall be delivered as provided in Code Section 9-11-4.

 

 (d) The venue for any application brought under this Code section shall be in the county in which any transferee or transferor resides or in any county in which any of the transferees or transferors have consented to venue.

 

Ga. Code Ann., § 51-12-72

Transfer to be executed in writing and filed; right of rescission

Effective: July 1, 2015

(a) Any transfer agreement of structured settlement payment rights must, in addition to the other requirements of this article, be executed in writing and filed as provided in Code Section 51-12-71. The transfer agreement shall not be so executed until after the expiration of the ten-day period provided for in paragraph (3) of subsection (a) of Code Section 51-12-71.

(b) No payee shall incur any obligation of any type with respect to a proposed transfer of structured settlement payment rights prior to the execution in writing of the transfer agreement.

(c) Any payee who executes in writing a transfer agreement shall have the right to rescind the transfer at any time within the next 21 days following the written execution of the transfer agreement or at the hearing provided for in subsection (b) of Code Section 51-12-71, whichever event occurs last. The transferee shall furnish to the payee at the time of execution of the transfer agreement a notice to the payee allowing the payee 21 days to cancel the transfer. This right to cancel shall not limit or otherwise affect the payee’s right to cancel pursuant to any other provision of applicable law. The notice shall serve as the cover sheet to the transfer documents. It shall be on a separate sheet of paper with no other written or pictorial material, in at least ten-point bold type, double spaced, and shall read substantially as follows:

 

 “NOTICE OF CANCELLATION RIGHTS:

 

Please read this form completely and carefully. It contains valuable cancellation rights.

 

You may cancel this transaction at any time prior to 5:00 P.M. of the twenty-first day following receipt of this notice or at the hearing on the application for authorization of a transfer of structured settlement payment rights, whichever event occurs last.

 

This cancellation right cannot be waived in any manner.

 

To cancel, sign this form, and mail or deliver it to the address below by 5:00 P.M. of (the twenty-first day following the transaction) . It is best to mail it by certified mail or statutory overnight delivery, return receipt requested, and to keep a photocopy of the signed form and your post office receipt.

 

Address to which cancellation is to be returned.

 

__________________________________________________

 

I (we) hereby cancel this transaction.

 

_________________________

 

Payee’s Signature

 

Date __________.”

 

Ga. Code Ann., § 51-12-73

Rules, regulations, and orders; instructional pamphlets

Effective: July 1, 2015

 (a) The Attorney General is authorized to promulgate, adopt, and issue rules, regulations, and orders necessary or convenient to carry out the provisions and purposes of this article. Any such rules of a substantive nature shall be promulgated only when it is determined by the Attorney General, in the reasonable exercise of his or her discretion and on the basis of his or her expertise and the facts, submissions, evidence, and all information before him or her, that such rules are needed to prohibit or control acts or practices which create the probability of actual injury to payees.

 

(b) The Attorney General shall prepare a pamphlet containing information designed to help payees evaluate proposed transfers of structured settlements and shall distribute such pamphlets free of charge, except that persons engaged in the business of purchasing structured settlement payment rights may be charged a reasonable fee for such pamphlets.

 

Ga. Code Ann., § 51-12-74

Enforcement procedures

Effective: July 1, 2015

 (a) Chapter 13 of Title 50, the “Georgia Administrative Procedure Act,” shall apply to all actions and proceedings of an administrative nature taken by the Attorney General pursuant to this article, except where the Attorney General is acting under Part 2 of Article 15 of Chapter 1 of Title 10, the “Fair Business Practices Act of 1975.” A violation of this article shall also be considered a violation of Part 2 of Article 15 of Chapter 1 of Title 10, the “Fair Business Practices Act of 1975.”

 

(b) In addition to any other proceedings authorized by this article, the Attorney General may bring a civil action in the superior courts to enjoin any violation or threatened violation of any provision of this article or any rule, regulation, or order issued by the Attorney General pursuant to this article.

 

Ga. Code Ann., § 51-12-75

Penalties for violations

Effective: July 1, 2015

 (a) In order to enforce this article or any orders, rules, and regulations promulgated pursuant thereto, the Attorney General may issue an administrative order imposing a penalty not to exceed $1,000.00 for each violation, whenever he or she determines, after a hearing, that any person has violated any provisions of this article or any rules, regulations, or orders promulgated under this article.

 

(b) The hearing and any administrative review thereof shall be conducted in accordance with the procedure for contested cases under Chapter 13 of Title 50, the “Georgia Administrative Procedure Act.” Any person who has exhausted all administrative remedies available and who is aggrieved or adversely affected by a final order or action of the Attorney General shall have the right of judicial review thereof in accordance with Chapter 13 of Title 50, the “Georgia Administrative Procedure Act.” All penalties recovered as provided in this Code section shall be paid into the state treasury.

 

(c) The Attorney General may file, in the superior court of the county in which the person under an order resides, or if the person is a corporation, in the superior court of the county in which the corporation under an order maintains its principal place of business, or in the superior court of the county in which the violation occurred, a certified copy of the final order of the Attorney General unappealed from or of a final order of the Attorney General affirmed upon appeal. Thereupon, the court shall render judgment in accordance therewith and shall notify the parties. Such judgment shall have the same effect and proceedings in relation thereto shall thereafter be the same as though the judgment had been rendered in an action duly heard and determined by such court.

 

(d) The penalty prescribed in this Code section shall be concurrent, alternative, and cumulative with any and all other civil, criminal, or alternative rights, remedies, forfeitures, or penalties provided, allowed, or available to the Attorney General with respect to any violation of this article and any order, rules, or regulations promulgated pursuant thereto.

 

Ga. Code Ann., § 51-12-76

Waiver prohibited; penalties for failure to finalize transfers prohibited

Effective: July 1, 2015

(a) The provisions of this article may not be waived.

 

(b) No payee who proposes to make a transfer of structured settlement payment rights shall incur any penalty, forfeit any application fee or other payment, or otherwise incur any liability to the proposed transferee based on:

 

(1) Any failure of such transfer to satisfy the conditions of this article; or

 

(2) Any failure by the payee to execute the transfer agreement or any cancellation by the payee within the time prescribed in Code Section 51-12-72.

 

Ga. Code Ann., § 51-12-77

Construction

Effective: July 1, 2015

Nothing contained in this article shall be construed to authorize any transfer of structured settlement payment rights in contravention of applicable law or to give effect to any transfer of structured settlement payment rights that is invalid under applicable law.

 

Hawaii

HRS § 676-1

Definitions

As used in this chapter, unless the context otherwise requires:

 

“Annuity issuer” means an insurer that has issued a contract to fund periodic payments under a structured settlement.

 

“Dependents” include a payee’s spouse and minor children and all other persons for whom the payee is legally obligated to provide support, including alimony.

 

“Discounted present value” means the present value of future payments, determined by discounting the payments to the present using the most recently published applicable federal rate for determining the present value of an annuity, as issued by the United States Internal Revenue Service.

 

“Gross advance amount” means the sum payable to the payee or for the payee’s account as consideration for a transfer of structured settlement payment rights before any reductions for transfer expenses or other deductions to be made from the consideration.

 

“Independent professional advice” means advice of an attorney, certified public accountant, actuary, or other licensed professional adviser.

 

“Interested party” means, with respect to any structured settlement, the payee, any beneficiary irrevocably designated under the annuity contract to receive payments following the payee’s death, the annuity issuer, the structured settlement obligor, and any other party that has continuing rights or obligations under the structured settlement.

 

“Net advance amount” means the gross advance amount less the aggregate amount of the actual and estimated transfer expenses required to be disclosed under section 676-2(5).

 

“Payee” means an individual who is receiving tax free payments under a structured settlement and proposes to make a transfer of the payment rights.

 

“Periodic payments” includes both recurring payments and scheduled future lump sum payments.

 

“Qualified assignment agreement” means an agreement providing for a qualified assignment within the meaning of section 130 of the United States Internal Revenue Code, United States Code title 26, as amended from time to time.

 

“Responsible administrative authority” means, with respect to a structured settlement, any government authority vested by law with exclusive jurisdiction over the settled claim resolved by the structured settlement.

 

“Settled claim” means the original tort claim resolved by a structured settlement.

 

“Structured settlement” means an arrangement for periodic payment of damages for personal injuries or sickness established by settlement or judgment in resolution of a tort claim.

 

“Structured settlement agreement” means the agreement, judgment, stipulation, or release embodying the terms of a structured settlement.

 

“Structured settlement obligor” means, with respect to any structured settlement, the party that has the continuing obligation to make periodic payments to the payee under a structured settlement agreement or a qualified assignment agreement.

 

“Structured settlement payment rights” means rights to receive periodic payments under a structured settlement, whether from the structured settlement obligor or the annuity issuer, where:

 

(1) The payee is domiciled in, or the domicile or principal place of business of the structured settlement obligor or the annuity issuer is located in, this State;

 

 (2) The structured settlement agreement was approved by a court or responsible administrative authority in this State; or

 

 (3) The structured settlement agreement is expressly governed by the laws of this State.

 

“Terms of the structured settlement” include, with respect to any structured settlement, the terms of the structured settlement agreement, the annuity contract, any qualified assignment agreement, and any order or other approval of any court or responsible administrative authority or other government authority that authorized or approved the structured settlement.

 

“Transfer” means any sale, assignment, pledge, hypothecation, or other alienation or encumbrance of structured settlement payment rights made by a payee for consideration; provided that the term “transfer” shall not include the creation or perfection of a security interest in structured settlement payment rights under a blanket security agreement entered into with an insured depository institution, in the absence of any action to redirect the structured settlement payments to such insured depository institution, or an agent or successor in interest, or otherwise to enforce the blanket security interest against the structured settlement payment rights.

 

“Transfer agreement” means the agreement providing for a transfer of structured settlement payment rights.

 

“Transferee” means a party acquiring or proposing to acquire structured settlement payment rights through a transfer.

 

“Transfer expenses” means all expenses of a transfer that are required under the transfer agreement to be paid by the payee or deducted from the gross advance amount, including, without limitation, court filing fees, attorneys fees, escrow fees, lien recordation fees, judgment and lien search fees, finders’ fees, commissions, and other payments to a broker or other intermediary. “Transfer expenses” shall not include preexisting obligations of the payee payable for the payee’s account from the proceeds of a transfer.

HRS § 676-2

Required disclosures to payee

Not less than three days prior to the date on which a payee signs a transfer agreement, the transferee shall provide to the payee a separate disclosure statement, in bold type no smaller than fourteen points, setting forth:

 

(1) The amounts and due dates of the structured settlement payments to be transferred;

 

 (2) The aggregate amount of the payments in paragraph (1);

 

 (3) The discounted present value of the payments to be transferred, which shall be identified as the “calculation of current value of the transferred structured settlement payments under federal standards for valuing annuities”, and the amount of the applicable federal rate used in calculating the discounted present value;

 

 (4) The gross advance amount;

 

 (5) An itemized listing of all applicable transfer expenses, other than attorneys’ fees and related disbursements payable in connection with the transferee’s application for approval of the transfer, and the transferee’s best estimate of the amount of any of the fees and disbursements stated in this paragraph;

 

 (6) The net advance amount;

 

 (7) The amount of any penalties or liquidated damages payable by the payee in the event of any breach of the transfer agreement by the payee; and

 

 (8) A statement that the payee has the right to cancel the transfer agreement, without penalty or further obligation, not later than the third business day after the date the agreement is signed by the payee.

HRS § 676-3

Approval of transfers of structured settlement payment rights

No direct or indirect transfer of structured settlement payment rights shall be effective and no structured settlement obligor or annuity issuer shall be required to make any payment directly or indirectly to any transferee of structured settlement payment rights, unless the transfer has been approved in advance in a final court order or order of a responsible administrative authority based upon express findings by the court or responsible administrative authority that:

 

(1) The transfer is in the best interest of the payee, taking into account the welfare and support of the payee’s dependents;

 

(2) The payee has been advised in writing by the transferee to seek independent professional advice regarding the transfer and has either received the advice or knowingly waived the advice in writing; and

 

(3) The transfer does not contravene any applicable statute or the order of any court or other government authority.

HRS § 676-4

Effects of transfer of structured settlement payment rights

Following a transfer of structured settlement payment rights under this chapter:

 

 (1) The structured settlement obligor and the annuity issuer, as to all parties except the transferee, shall be discharged and released from any and all liability for the transferred payments;

(2) The transferee shall be liable to the structured settlement obligor and the annuity issuer:

 

 (A) For any taxes incurred by the parties as a consequence of the transfer, if the transfer contravenes the terms of the structured settlement; and

 

 (B) For any other liabilities or costs, including reasonable costs and attorneys’ fees, arising from compliance by the parties with the order of the court or responsible administrative authority, or arising as a consequence of the transferee’s failure to comply with this chapter;

 

 (3) Neither the annuity issuer nor the structured settlement obligor may be required to divide any periodic payment between the payee and any transferee or assignee or between two or more transferees or assignees; and

 

 (4) Any further transfer of structured settlement payment rights by the payee may be made only after compliance with all of the requirements of this chapter.

 

HRS § 676-5

Procedure for approval of transfers

(a) An application under this chapter for approval of a transfer of structured settlement payment rights shall be made by the transferee and may be brought in any court or before any responsible administrative authority:

 

(1) In the county in which the payee resides;

 

(2) In the county in which the structured settlement obligor or the annuity issuer maintains its principal place of business; or

 

(3) That approved the structured settlement agreement.

 

(b) To apply for approval of a transfer of structured settlement payment rights under section 676-3, the transferee shall file with the court or responsible administrative authority and serve on all interested parties a notice of the proposed transfer and the application for its authorization. The notice shall include:

 

(1) A copy of the transferee’s application;

 

(2) A copy of the transfer agreement;

 

(3) A copy of the disclosure statement required under section 676-2;

 

(4) A listing of each of the payee’s dependents, together with each dependent’s age;

 

(5) Notification that any interested party is entitled to support, oppose, or otherwise respond to the transferee’s application, either in person or by counsel, by submitting written comments to the court or responsible administrative authority or by participating in the hearing; and

 

(6) Notification of the time and place of the hearing and notification of the manner in which and the time by which written responses to the application shall be filed, to be considered by the court or responsible administrative authority; provided that the written responses shall be filed not less than fifteen days after service of the transferee’s notice.

HRS § 676-6

General provisions construction

(a) The provisions of this chapter may not be waived by any payee.

 

 (b) Any transfer agreement entered into on or after May 26, 2006, by a payee who resides in this State shall provide that disputes under the transfer agreement, including any claim that the payee has breached the agreement, shall be determined in and under the laws of this State. No transfer agreement shall authorize the transferee or any other party to confess judgment or consent to entry of judgment against the payee.

 

 (c) No transfer of structured settlement payment rights shall extend to any payments that are life-contingent unless, prior to the date on which the payee signs the transfer agreement, the transferee has established and has agreed to maintain procedures reasonably satisfactory to the annuity issuer and the structured settlement obligor for:

 

(1) Periodically confirming the payee’s survival; and

 

 (2) Giving the annuity issuer and the structured settlement obligor prompt written notice in the event of the payee’s death.

 

 (d) No payee who proposes to make a transfer of structured settlement payment rights shall incur any penalty, forfeit any application fee or other payment, or otherwise incur any liability to the proposed transferee or any assignee based on any failure of the transfer to satisfy the conditions of this chapter.

 

 (e) Nothing contained in this chapter shall be construed to authorize any transfer of structured settlement payment rights in contravention of any law or to imply that any transfer under a transfer agreement entered into prior to May 26, 2006, is valid or invalid.

 

 (f) Compliance with the requirements set forth in section 676-2 and fulfillment of the conditions set forth in section 676-3 shall be solely the responsibility of the transferee in any transfer of structured settlement payment rights, and neither the structured settlement obligor nor the annuity issuer shall bear any responsibility for, or any liability arising from, noncompliance with the requirements or failure to fulfill the conditions.

 

Idaho

Idaho structured settlement Protection Act

IDAHO CODE ANN. § 28-9-109 (West 2001)

Amended 2002, 2004 & 2012

I.C. § 28-9-109

Scope

 (a) Except as otherwise provided in subsections (c) and (d), this chapter applies to:

 

 (1) A transaction, regardless of its form, that creates a security interest in personal property or fixtures by contract;

 

(2) An agricultural lien;

 

(3) A sale of accounts, chattel paper, payment intangibles or promissory notes;

 

 (4) A consignment;

 

 (5) A security interest arising under section 28-2-401, 28-2-505, 28-2-711(3) or 28-12-508(5), as provided in section 28-9-110; and

(6) A security interest arising under section 28-4-210 or 28-5-120.

 

 (b) The application of this chapter to a security interest in a secured obligation is not affected by the fact that the obligation is itself secured by a transaction or interest to which this chapter does not apply.

 

 (c) This chapter does not apply to the extent that:

 

 (1) A statute, regulation, or treaty of the United States preempts this chapter;

 

 (2) Another statute of this state expressly governs the creation, perfection, priority or enforcement of a security interest created by this state or a governmental unit of this state;

 

 (3) A statute of another state, a foreign country, or a governmental unit of another state or a foreign country, other than a statute generally applicable to security interests, expressly governs creation, perfection, priority or enforcement of a security interest created by the state, country or governmental unit; or

 

 (4) The rights of a transferee beneficiary or nominated person under a letter of credit are independent and superior under section 28-5-114.

 

 (d) This chapter does not apply to:

 

 (1) A landlord’s lien, other than an agricultural lien;

 

(2) A lien, other than an agricultural lien, given by statute or other rule of law for services or materials, but section 28-9-333 applies with respect to priority of the lien;

 

 (3) An assignment of a claim for wages, salary or other compensation of an employee;

 

 (4) A sale of accounts, chattel paper, payment intangibles or promissory notes as part of a sale of the business out of which they arose;

 

 (5) An assignment of accounts, chattel paper, payment intangibles or promissory notes which is for the purpose of collection only;

 

 (6) An assignment of a right to payment under a contract to an assignee that is also obligated to perform under the contract;

 

 (7) An assignment of a single account, payment intangible or promissory note to an assignee in full or partial satisfaction of a preexisting indebtedness;

 

 (8) A transfer of an interest in or an assignment of a claim under a policy of insurance, other than an assignment by or to a health care provider of a health care insurance receivable and any subsequent assignment of the right to payment, but sections 28-9-315 and 28-9-322 apply with respect to proceeds and priorities in proceeds;

 

 (9) An assignment of a right represented by a judgment, other than a judgment taken on a right to payment that was collateral;

 

 (10) A right of recoupment or set-off, but:

 

 (A) section 28-9-340 applies with respect to the effectiveness of rights of recoupment or set-off against deposit accounts; and

 

 (B) section 28-9-404 applies with respect to defenses or claims of an account debtor;

 

 (11) The creation or transfer of an interest in or lien on real property, including a lease or rents thereunder, except to the extent that provision is made for:

 

 (A) liens on real property in sections 28-9-203 and 28-9-308;

(B) fixtures in section 28-9-334;

 

 (C) fixture filings in sections 28-9-501, 28-9-502, 28-9-512, 28-9-516 and 28-9-519; and

 

 (D) security agreements covering personal and real property in section 28-9-604;

 

(12) An assignment of a claim arising in tort, other than a commercial tort claim, but sections 28-9-315 and 28-9-322 apply with respect to proceeds and priorities in proceeds;

(13)(A) A claim or right to receive compensation for injuries or sickness as described in (i) 26 U.S.C. section 104(a)(1) and (ii) on and after the effective date of this chapter, in 26 U.S.C. section 104(a)(2), as those sections may be amended from time to time. Notwithstanding the foregoing, this chapter (other than sections 28-9-406(d) and 28-9-408(a) and (c), Idaho Code, in the case of transfers made on and after the effective date of this chapter) shall apply to such compensation as described in 26 U.S.C. section 104(a)(2) if the sale, pledge, assignment or other transfer of rights to receive such compensation under a structured settlement is approved by the final order of a court pursuant to, and otherwise complies with, the requirements of paragraph (B) of this subsection.

(B)(i) Definitions. For purposes of this subsection:

 

1. “annuity issuer” means an insurer that has issued a contract to fund periodic payments under a structured settlement;

 

2. “dependents” include a payee’s spouse and minor children and all other persons for whom the payee is legally obligated to provide support, including alimony;

 

3. “discounted present value” means the present value of future payments determined by discounting such payments to the present using the most recently published applicable federal rate for determining the present value of an annuity, as issued by the United States internal revenue service;

 

4. “gross advance amount” means the sum payable to the payee or for the payee’s account as consideration for a transfer of structured settlement payment rights before any reductions for transfer expenses or other deductions to be made from such consideration;

 

5. “independent professional advice” means advice of an attorney, certified public accountant, actuary or other licensed professional adviser;

 

6. “interested parties” means, with respect to any structured settlement, the payee, any beneficiary irrevocably designated under the annuity contract to receive payments following the payee’s death, the annuity issuer, the structured settlement obligor, and any other party that has continuing rights or obligations under such structured settlement;

7. “net advance amount” means the gross advance amount less the aggregate amount of the actual and estimated transfer expenses required to be disclosed under paragraph (B)(ii)5. of this subsection;

 

8. “payee” means an individual who is receiving tax free payments under a structured settlement and proposes to make a transfer of payment rights thereunder;

 

9. “periodic payments” includes both recurring payments and scheduled future lump sum payments;

 

10. “qualified assignment agreement” means an agreement providing for a qualified assignment within the meaning of 26 U.S.C. section 130, as amended from time to time;

 

11. “settled claim” means the original tort claim resolved by a structured settlement;

 

12. “structured settlement” means an arrangement for periodic payment of damages for personal injuries or sickness established by settlement or judgment in resolution of a tort claim;

 

13. “structured settlement agreement” means the agreement, judgment, stipulation, or release embodying the terms of a structured settlement;

 

14. “structured settlement obligor” means, with respect to any structured settlement, the party that has the continuing obligation to make periodic payments to the payee under a structured settlement agreement or a qualified assignment agreement;

 

15. “structured settlement payment rights” means rights to receive periodic payments under a structured settlement, whether from the structured settlement obligor or the annuity issuer, where:

A. the payee is domiciled in, or the domicile or principal place of business of the structured settlement obligor or the annuity issuer is located in, this state; or

B. the structured settlement agreement was approved by a court in this state; or

 

C. the structured settlement agreement is expressly governed by the laws of this state;

 

16. “terms of the structured settlement” include, with respect to any structured settlement, the terms of the structured settlement agreement, the annuity contract, any qualified assignment agreement and any order or other approval of any court or other government authority that authorized or approved such structured settlement;

 

17. “transfer” means any sale, assignment, pledge, hypothecation or other alienation or encumbrance of structured settlement payment rights made by a payee for consideration; provided that the term “transfer” does not include the creation or perfection of a security interest in structured settlement payment rights under a blanket security agreement entered into with an insured depository institution, in the absence of any action to redirect the structured settlement payments to such insured depository institution, or an agent or successor in interest thereof, or otherwise to enforce such blanket security interest against the structured settlement payment rights;

 

18. “transfer agreement” means the agreement providing for a transfer of structured settlement payment rights;

 

19. “transfer expenses” means all expenses of a transfer that are required under the transfer agreement to be paid by the payee or deducted from the gross advance amount, including, without limitation, court filing fees, attorney’s fees, escrow fees, lien recordation fees, judgment and lien search fees, finder’s fees, commissions, and other payments to a broker or other intermediary; “transfer expenses” do not include preexisting obligations of the payee payable for the payee’s account from the proceeds of a transfer;

 

20. “transferee” means a party acquiring or proposing to acquire structured settlement payment rights through a transfer.

 

 (ii) Required disclosures to payee. Not less than three (3) days prior to the date on which a payee signs a transfer agreement, the transferee shall provide to the payee a separate disclosure statement, in bold type no smaller than fourteen (14) points, setting forth:

 

1. the amounts and due dates of the structured settlement payments to be transferred;

 

2. the aggregate amount of such payments;

 

3. the discounted present value of the payments to be transferred, which shall be identified as the “calculation of current value of the transferred structured settlement payments under federal standards for valuing annuities,” and the amount of the applicable federal rate used in calculating such discounted present value;

 

4. the gross advance amount;

 

5. an itemized listing of all applicable transfer expenses, other than attorney’s fees and related disbursements payable in connection with the transferee’s application for approval of the transfer, and the transferee’s best estimate of the amount of any such fees and disbursements;

 

6. the net advance amount;

 

7. the amount of any penalties or liquidated damages payable by the payee in the event of any breach of the transfer agreement by the payee; and

8. a statement that the payee has the right to cancel the transfer agreement, without penalty or further obligation, not later than the third business day after the date the agreement is signed by the payee.

 

 (iii) Approval of transfers of structured settlement payment rights.

 

1. No direct or indirect transfer of structured settlement payment rights shall be effective and no structured settlement obligor or annuity issuer shall be required to make any payment directly or indirectly to any transferee of structured settlement payment rights unless the transfer has been approved in advance in a final court order based on express findings by such court that:

 

A. the transfer is in the best interest of the payee, taking into account the welfare and support of the payee’s dependents;

 

B. the payee has been advised in writing by the transferee to seek independent professional advice regarding the transfer and has either received such advice or knowingly waived such advice in writing; and

 

C. the transfer does not contravene any applicable statute or the order of any court or other government authority.

 

 (iv) Effects of transfer of structured settlement payment rights. Following a transfer of structured settlement payment rights under this subsection:

 

1. The structured settlement obligor and the annuity issuer shall, as to all parties except the transferee, be discharged and released from any and all liability for the transferred payments;

 

2. The transferee shall be liable to the structured settlement obligor and the annuity issuer:

 

A. if the transfer contravenes the terms of the structured settlement, for any taxes incurred by such parties as a consequence of the transfer; and

 

B. for any other liabilities or costs, including reasonable costs and attorney’s fees, arising from compliance by such parties with the order of the court or arising as a consequence of the transferee’s failure to comply with this subsection;

 

3. Neither the annuity issuer nor the structured settlement obligor may be required to divide any periodic payment between the payee and any transferee or assignee or between two (2) or more transferees or assignees; and

 

4. Any further transfer of structured settlement payment rights by the payee may be made only after compliance with all of the requirements of this subsection.

 

 (v) Procedure for approval of transfers.

 

1. An application under this subsection for approval of a transfer of structured settlement payment rights shall be made by the transferee and may be brought in the county in which the payee resides, in the county in which the structured settlement obligor or the annuity issuer maintains its principal place of business, or in any court which approved the structured settlement agreement.

 

2. Not less than twenty (20) days prior to the scheduled hearing on any application for approval of a transfer of structured settlement payment rights under paragraph (B)(iii) of this subsection, the transferee shall file with the court and serve on all interested parties a notice of the proposed transfer and the application for its authorization, including with such notice:

 

A. a copy of the transferee’s application;

 

B. a copy of the transfer agreement;

 

C. a copy of the disclosure statement required under paragraph (B)(ii) of this subsection;

 

D. a listing of each of the payee’s dependents, together with each dependent’s age;

 

E. notification that any interested party is entitled to support, oppose or otherwise respond to the transferee’s application, either in person or by counsel, by submitting written comments to the court or by participating in the hearing; and

 

F. notification of the time and place of the hearing and notification of the manner in which and the time by which written responses to the application must be filed (which shall be not less than fifteen (15) days after service of the transferee’s notice) in order to be considered by the court.

 

 (vi) General provisions--construction.

 

1. The provisions of this subsection may not be waived by any payee.

 

2. Any transfer agreement entered into on or after the effective date of this subsection by a payee who resides in this state shall provide that disputes under such transfer agreement, including any claim that the payee has breached the agreement, shall be determined in and under the laws of this state. No such transfer agreement shall authorize the transferee or any other party to confess judgment or consent to entry of judgment against the payee.

 

3. No transfer of structured settlement payment rights shall extend to any payments that are life-contingent unless, prior to the date on which the payee signs the transfer agreement, the transferee has established and has agreed to maintain procedures reasonably satisfactory to the annuity issuer and the structured settlement obligor for (i) periodically confirming the payee’s survival, and (ii) giving the annuity issuer and the structured settlement obligor prompt written notice in the event of the payee’s death.

 

4. No payee who proposes to make a transfer of structured settlement payment rights shall incur any penalty, forfeit any application fee or other payment, or otherwise incur any liability to the proposed transferee or any assignee based on any failure of such transfer to satisfy the conditions of this subsection.

 

5. Nothing contained in this subsection shall be construed to authorize any transfer of structured settlement payment rights in contravention of any law or to imply that any transfer under a transfer agreement entered into prior to the effective date of this subsection is valid or invalid.

 

6. Compliance with the requirements set forth in paragraph (B)(ii) of this subsection and fulfillment of the conditions set forth in paragraph (B)(iii) of this subsection shall be solely the responsibility of the transferee in any transfer of structured settlement payment rights, and neither the structured settlement obligor nor the annuity issuer shall bear any responsibility for, or any liability arising from, noncompliance with such requirements or failure to fulfill such conditions.

 

 (vii) Effective date. This subsection shall apply to any transfer of structured settlement payment rights under a transfer agreement entered into on or after the thirtieth day after the date of enactment of this subsection; provided however, that nothing contained herein shall imply that any transfer under a transfer agreement reached prior to such date is either effective or ineffective; or

 

 (14) A claim or right to receive benefits under a special needs trust as described in 42 U.S.C. section 1396p(d)(4), as amended from time to time.

UNIFORM COMMERCIAL CODE COMMENT

1. Source. Former Sections 9-102, 9-104.

 

2. Basic Scope Provision. Subsection (a)(1) derives from former Section 9-102(1) and (2). These subsections have been combined and shortened. No change in meaning is intended. Under subsection (a)(1), all consensual security interests in personal property and fixtures are covered by this Article, except for transactions excluded by subsections (c) and (d). As to which transactions give rise to a “security interest,” the definition of that term in Section 1-201 must be consulted. When a security interest is created, this Article applies regardless of the form of the transaction or the name that parties have given to it.

 

3. Agricultural Liens. Subsection (a)(2) is new. It expands the scope of this Article to cover agricultural liens, as defined in Section 9-102.

 

4. Sales of Accounts, Chattel Paper, Payment Intangibles, Promissory Notes, and Other Receivables. Under subsection (a)(3), as under former Section 9-102, this Article applies to sales of accounts and chattel paper. This approach generally has been successful in avoiding difficult problems of distinguishing between transactions in which a receivable secures an obligation and those in which the receivable has been sold outright. In many commercial financing transactions the distinction is blurred.

Subsection (a)(3) expands the scope of this Article by including the sale of a “payment intangible” (defined in Section 9-102 as “a general intangible under which the account debtor’s principal obligation is a monetary obligation”) and a “promissory note” (also defined in Section 9-102). To a considerable extent, this Article affords these transactions treatment identical to that given sales of accounts and chattel paper. In some respects, however, sales of payment intangibles and promissory notes are treated differently from sales of other receivables. See, e.g., Sections 9-309 (automatic perfection upon attachment), 9-408 (effect of restrictions on assignment). By virtue of the expanded definition of “account” (defined in Section 9-102), this Article now covers sales of (and other security interests in) “health-care-insurance receivables” (also defined in Section 9-102). Although this Article occasionally distinguishes between outright sales of receivables and sales that secure an obligation, neither this Article nor the definition of “security interest” (Section 1-201(37)) delineates how a particular transaction is to be classified. That issue is left to the courts.

 

5. Transfer of Ownership in Sales of Receivables. A “sale” of an account, chattel paper, a promissory note, or a payment intangible includes a sale of a right in the receivable, such as a sale of a participation interest. The term also includes the sale of an enforcement right. For example, a “[p]erson entitled to enforce” a negotiable promissory note (Section 3-301) may sell its ownership rights in the instrument. See Section 3-203, Comment 1 (“Ownership rights in instruments may be determined by principles of the law of property, independent of Article 3, which do not depend upon whether the instrument was transferred under Section 3-203.”). Also, the right under Section 3-309 to enforce a lost, destroyed, or stolen negotiable promissory note may be sold to a purchaser who could enforce that right by causing the seller to provide the proof required under that section. This Article rejects decisions reaching a contrary result, e.g., Dennis Joslin Co. v. Robinson Broadcasting, 977 F.Supp. 491 (D.D.C.1997).

 

Nothing in this section or any other provision of Article 9 prevents the transfer of full and complete ownership of an account, chattel paper, an instrument, or a payment intangible in a transaction of sale. However, as mentioned in Comment 4, neither this Article nor the definition of “security interest” in Section 1-201 provides rules for distinguishing sales transactions from those that create a security interest securing an obligation. This Article applies to both types of transactions. The principal effect of this coverage is to apply this Article’s perfection and priority rules to these sales transactions. Use of terminology such as “security interest,” “debtor,” and “collateral” is merely a drafting convention adopted to reach this end, and its use has no relevance to distinguishing sales from other transactions. See PEB Commentary No. 14.

 

Following a debtor’s outright sale and transfer of ownership of a receivable, the debtor-seller retains no legal or equitable rights in the receivable that has been sold. See Section 9-318(a). This is so whether or not the buyer’s security interest is perfected. (A security interest arising from the sale of a promissory note or payment intangible is perfected upon attachment without further action. See Section 9-309.) However, if the buyer’s interest in accounts or chattel paper is unperfected, a subsequent lien creditor, perfected secured party, or qualified buyer can reach the sold receivable and achieve priority over (or take free of) the buyer’s unperfected security interest under Section 9-317. This is so not because the seller of a receivable retains rights in the property sold; it does not. Nor is this so because the seller of a receivable is a “debtor” and the buyer of a receivable is a “secured party” under this Article (they are). It is so for the simple reason that Sections 9-318(b), 9-317, and 9-322 make it so, as did former Sections 9-301 and 9-312. Because the buyer’s security interest is unperfected, for purposes of determining the rights of creditors of and purchasers for value from the debtor-seller, under Section 9-318(b) the debtor-seller is deemed to have the rights and title it sold. Section 9-317 subjects the buyer’s unperfected interest in accounts and chattel paper to that of the debtor-seller’s lien creditor and other persons who qualify under that section.

 

6. Consignments. Subsection (a)(4) is new. This Article applies to every “consignment.” The term, defined in Section 9-102, includes many but not all “true” consignments (i.e., bailments for the purpose of sale). If a transaction is a “sale or return,” as defined in revised Section 2-326, it is not a “consignment.” In a “sale or return” transaction, the buyer becomes the owner of the goods, and the seller may obtain an enforceable security interest in the goods only by satisfying the requirements of Section 9-203.

Under common law, creditors of a bailee were unable to reach the interest of the bailor (in the case of a consignment, the consignor-owner). Like former Section 2-326 and former Article 9, this Article changes the common-law result; however, it does so in a different manner. For purposes of determining the rights and interests of third-party creditors of, and purchasers of the goods from, the consignee, but not for other purposes, such as remedies of the consignor, the consignee is deemed to acquire under this Article whatever rights and title the consignor had or had power to transfer. See Section 9-319. The interest of a consignor is defined to be a security interest under revised Section 1-201(37), more specifically, a purchase-money security interest in the consignee’s inventory. See Section 9-103(d). Thus, the rules pertaining to lien creditors, buyers, and attachment, perfection, and priority of competing security interests apply to consigned goods. The relationship between the consignor and consignee is left to other law. Consignors also have no duties under Part 6. See Section 9-601(g).

 

Sometimes parties characterize transactions that secure an obligation (other than the bailee’s obligation to returned bailed goods) as “consignments.” These transactions are not “consignments” as contemplated by Section 9-109(a)(4). See Section 9-102. This Article applies also to these transactions, by virtue of Section 9-109(a)(1). They create a security interest within the meaning of the first sentence of Section 1-201(37).

 

This Article does not apply to bailments for sale that fall outside the definition of “consignment” in Section 9-102 and that do not create a security interest that secures an obligation.

7. Security Interest in Obligation Secured by Non-Article 9 Transaction. Subsection (b) is unchanged in substance from former Section 9-102(3). The following example provides an illustration.

 

Example 1: O borrows $10,000 from M and secures its repayment obligation, evidenced by a promissory note, by granting to M a mortgage on O’s land. This Article does not apply to the creation of the real-property mortgage. However, if M sells the promissory note to X or gives a security interest in the note to secure M’s own obligation to X, this Article applies to the security interest thereby created in favor of X. The security interest in the promissory note is covered by this Article even though the note is secured by a real-property mortgage. Also, X’s security interest in the note gives X an attached security interest in the mortgage lien that secures the note and, if the security interest in the note is perfected, the security interest in the mortgage lien likewise is perfected. See Sections 9-203, 9-308.

It also follows from subsection (b) that an attempt to obtain or perfect a security interest in a secured obligation by complying with non-Article 9 law, as by an assignment of record of a real-property mortgage, would be ineffective. Finally, it is implicit from subsection (b) that one cannot obtain a security interest in a lien, such as a mortgage on real property, that is not also coupled with an equally effective security interest in the secured obligation. This Article rejects cases such as In re Maryville Savings & Loan Corp., 743 F.2d 413 (6th Cir.1984), clarified on reconsideration, 760 F.2d 119 (1985).

 

8. Federal Preemption. Former Section 9-104(a) excluded from Article 9 “a security interest subject to any statute of the United States, to the extent that such statute governs the rights of parties to and third parties affected by transactions in particular types of property.” Some (erroneously) read the former section to suggest that Article 9 sometimes deferred to federal law even when federal law did not preempt Article 9. Subsection (c)(1) recognizes explicitly that this Article defers to federal law only when and to the extent that it must--i.e., when federal law preempts it.

9. Governmental Debtors. Former Section 9-104(e) excluded transfers by governmental debtors. It has been revised and replaced by the exclusions in new paragraphs (2) and (3) of subsection (c). These paragraphs reflect the view that Article 9 should apply to security interests created by a State, foreign country, or a “governmental unit” (defined in Section 9-102) of either except to the extent that another statute governs the issue in question. Under paragraph (2), this Article defers to all statutes of the forum State. (A forum cannot determine whether it should consult the choice-of-law rules in the forum’s UCC unless it first determines that its UCC applies to the transaction before it.) Paragraph (3) defers to statutes of another State or a foreign country only to the extent that those statutes contain rules applicable specifically to security interests created by the governmental unit in question.

Example 2: A New Jersey state commission creates a security interest in favor of a New York bank. The validity of the security interest is litigated in New York. The relevant security agreement provides that it is governed by New York law. To the extent that a New Jersey statute contains rules peculiar to creation of security interests by governmental units generally, to creation of security interests by state commissions, or to creation of security interests by this particular state commission, then that law will govern. On the other hand, to the extent that New Jersey law provides that security interests created by governmental units, state commissions, or this state commission are governed by the law generally applicable to secured transactions (i.e., New Jersey’s Article 9), then New York’s Article 9 will govern.

Example 3: An airline that is an instrumentality of a foreign country creates a security interest in favor of a New York bank. The analysis used in the previous example would apply here. That is, if the matter is litigated in New York, New York law would govern except to the extent that the foreign country enacted a statute applicable to security interests created by governmental units generally or by the airline specifically.

 

The fact that New York law applies does not necessarily mean that perfection is accomplished by filing in New York. Rather, it means that the court should apply New York’s Article 9, including its choice-of-law provisions. Under New York’s Section 9-301, perfection is governed by the law of the jurisdiction in which the debtor is located. Section 9-307 determines the debtor’s location for choice-of-law purposes.

 

If a transaction does not bear an appropriate relation to the forum State, then that State’s Article 9 will not apply, regardless of whether the transaction would be excluded by paragraph (3).

 

Example 4: A Belgian governmental unit grants a security interest in its equipment to a Swiss secured party. The equipment is located in Belgium. A dispute arises and, for some reason, an action is brought in a New Mexico state court. Inasmuch as the transaction bears no “appropriate relation” to New Mexico, New Mexico’s UCC, including its Article 9, is inapplicable. See Section 1-105(1). New Mexico’s Section 9-109(c) on excluded transactions should not come into play. Even if the parties agreed that New Mexico law would govern, the parties’ agreement would not be effective because the transaction does not bear a “reasonable relation” to New Mexico. See Section 1-105(1).

 

Conversely, Article 9 will come into play only if the litigation arises in a UCC jurisdiction or if a foreign choice-of-law rule leads a foreign court to apply the law of a UCC jurisdiction. For example, if issues concerning a security interest granted by a foreign airline to a New York bank are litigated overseas, the court may be bound to apply the law of the debtor’s jurisdiction and not New York’s Article 9.

10. Certain Statutory and Common-Law Liens; Interests in Real Property. With few exceptions (nonconsensual agricultural liens being one), this Article applies only to consensual security interests in personal property. Following former Section 9-104(b) and (j), paragraphs (1) and (11) of subsection (d) exclude landlord’s liens and leases and most other interests in or liens on real property. These exclusions generally reiterate the limitations on coverage (i.e., “by contract,” “in personal property and fixtures”) made explicit in subsection (a)(1). Similarly, most jurisdictions provide special liens to suppliers of many types of services and materials, either by statute or by common law. With the exception of agricultural liens, it is not necessary for this Article to provide general codification of this lien structure, which is determined in large part by local conditions and which is far removed from ordinary commercial financing. As under former Section 9-104(c), subsection (d)(2) excludes these suppliers’ liens (other than agricultural liens) from this Article. However, Section 9-333 provides a rule for determining priorities between certain possessory suppliers’ liens and security interests covered by this Article.

 

11. Wage and Similar Claims. As under former Section 9-104(d), subsection (d)(3) excludes assignments of claims for wages and the like from this Article. These assignments present important social issues that other law addresses. The Federal Trade Commission has ruled that, with some exceptions, the taking of an assignment of wages or other earnings is an unfair act or practice under the Federal Trade Commission Act. See 16 C.F.R. Part 444. State statutes also may regulate such assignments.

 

12. Certain Sales and Assignments of Receivables; Judgments. In general this Article covers security interests in (including sales of) accounts, chattel paper, payment intangibles, and promissory notes. Paragraphs (4), (5), (6), and (7) of subsection (d) exclude from the Article certain sales and assignments of receivables that, by their nature, do not concern commercial financing transactions. These paragraphs add to the exclusions in former Section 9-104(f) analogous sales and assignments of payment intangibles and promissory notes. For similar reasons, subsection (d)(9) retains the exclusion of assignments of judgments under former Section 9-104(h) (other than judgments taken on a right to payment that itself was collateral under this Article).

 

13. Insurance. Subsection (d)(8) narrows somewhat the broad exclusion of interests in insurance policies under former Section 9-104(g). This Article now covers assignments by or to a health-care provider of “health-care-insurance receivables” (defined in Section 9-102).

 

14. Set-Off. Subsection (d)(10) adds two exceptions to the general exclusion of set-off rights from Article 9 under former Section 9-104(i). The first takes account of new Section 9-340, which regulates the effectiveness of a set-off against a deposit account that stands as collateral. The second recognizes Section 9-404, which affords the obligor on an account, chattel paper, or general intangible the right to raise claims and defenses against an assignee (secured party).

15. Tort Claims. Subsection (d)(12) narrows somewhat the broad exclusion of transfers of tort claims under former Section 9-104(k). This Article now applies to assignments of “commercial tort claims” (defined in Section 9-102) as well as to security interests in tort claims that constitute proceeds of other collateral (e.g., a right to payment for negligent destruction of the debtor’s inventory). Note that once a claim arising in tort has been settled and reduced to a contractual obligation to pay, the right to payment becomes a payment intangible and ceases to be a claim arising in tort.

 

This Article contains two special rules governing creation of a security interest in tort claims. First, a description of collateral in a security agreement as “all tort claims” is insufficient to meet the requirement for attachment. See Section 9-108(e). Second, no security interest attaches under an after-acquired property clause to a tort claim. See Section 9-204(b). In addition, this Article does not determine whom the tortfeasor must pay to discharge its obligation. Inasmuch as a tortfeasor is not an “account debtor,” the rules governing waiver of defenses and discharge of an obligation by an obligor (Sections 9-403, 9-404, 9-405, and 9-406) are inapplicable to tort-claim collateral.

 

16. Deposit Accounts. Except in consumer transactions, deposit accounts may be taken as original collateral under this Article. Under former Section 9-104(l), deposit accounts were excluded as original collateral, leaving security interests in deposit accounts to be governed by the common law. The common law is nonuniform, often difficult to discover and comprehend, and frequently costly to implement. As a consequence, debtors who wished to use deposit accounts as collateral sometimes were precluded from doing so as a practical matter. By excluding deposit accounts from the Article’s scope as original collateral in consumer transactions, subsection (d)(13) leaves those transactions to law other than this Article. However, in both consumer and non-consumer transactions, sections 9-315 and 9-322 apply to deposit accounts as proceeds and with respect to priorities in proceeds.

 

This Article contains several safeguards to protect debtors against inadvertently encumbering deposit accounts and to reduce the likelihood that a secured party will realize a windfall from a debtor’s deposit accounts. For example, because “deposit account” is a separate type of collateral, a security agreement covering general intangibles will not adequately describe deposit accounts. Rather, a security agreement must reasonably identify the deposit accounts that are the subject of a security interest, e.g., by using the term “deposit accounts.” See Section 9-108. To perfect a security interest in a deposit account as original collateral, a secured party (other than the bank with which the deposit account is maintained) must obtain “control” of the account either by obtaining the bank’s authenticated agreement or by becoming the bank’s customer with respect to the deposit account. See Sections 9-312(b)(1), 9-104. Either of these steps requires the debtor’s consent.

This Article also contains new rules that determine which State’s law governs perfection and priority of a security interest in a deposit account (Section 9-304), priority of conflicting security interests in and set-off rights against a deposit account (Sections 9-327, 9-340), the rights of transferees of funds from an encumbered deposit account (Section 9-332), the obligations of the bank (Section 9-341), enforcement of security interests in a deposit account (Section 9-607(c)), and the duty of a secured party to terminate control of a deposit account (Section 9-208(b)).

 

Illinois

Illinois Structured Settlement Protection Act

215 ILL. COMP. STAT. ANN. 153/1 et seq. (West 2004; amended in 2015)

215 ILCS 153/1

Short title

§ 1. Short title. This Act may be cited as the Structured Settlement Protection Act.

215 ILCS 153/5

Definitions

§ 5. Definitions. For purposes of this Act:

 

“Annuity issuer” means an insurer that has issued a contract to fund periodic payments under a structured settlement.

 

“Dependents” include a payee’s spouse and minor children and all other persons for whom the payee is legally obligated to provide support, including maintenance.

 

“Discounted present value” means the present value of future payments determined by discounting such payments to the present using the most recently published Applicable Federal Rate for determining the present value of an annuity, as issued by the United States Internal Revenue Service.

 

“Gross advance amount” means the sum payable to the payee or for the payee’s account as consideration for a transfer of structured settlement payment rights before any reductions for transfer expenses or other deductions to be made from such consideration.

 

“Independent professional advice” means advice of an attorney, certified public accountant, actuary, or other licensed professional adviser.

 

“Interested parties” means, with respect to any structured settlement, the payee, any beneficiary irrevocably designated under the annuity contract to receive payments following the payee’s death, the annuity issuer, the structured settlement obligor, and any other party to the structured settlement that has continuing rights or obligations to receive or make payments under such structured settlement.

 

“Net advance amount” means the gross advance amount less the aggregate amount of the actual and estimated transfer expenses required to be disclosed under item (5) of Section 10 of this Act.

 

“Payee” means an individual who is receiving tax free payments under a structured settlement and proposes to make a transfer of payment rights thereunder.

 

“Periodic payments” includes both recurring payments and scheduled future lump sum payments.

 

“Qualified assignment agreement” means an agreement providing for a qualified assignment within the meaning of Section 130 of the United States Internal Revenue Code, United States Code Title 26, as amended from time to time.

 

“Settled claim” means the original tort claim resolved by a structured settlement.

 

“Structured settlement” means an arrangement for periodic payment of damages for personal injuries or sickness established by settlement or judgment in resolution of a tort claim.

 

“Structured settlement agreement” means the agreement, judgment, stipulation, or release embodying the terms of a structured settlement.

 

“Structured settlement obligor” means, with respect to any structured settlement, the party that has the continuing obligation to make periodic payments to the payee under a structured settlement agreement or a qualified assignment agreement.

 

“Structured settlement payment rights” means rights to receive periodic payments under a structured settlement, whether from the structured settlement obligor or the annuity issuer, when:

 

 (1) the payee is domiciled in, or the domicile or principal place of business of the structured settlement obligor or the annuity issuer is located in, this State;

(2) the structured settlement agreement was approved by a court in this State; or

 

 (3) the structured settlement agreement is expressly governed by the laws of this State.

 

“Terms of the structured settlement” include, with respect to any structured settlement, the terms of the structured settlement agreement, the annuity contract, any qualified assignment agreement, and any order or other approval of any court or other government authority that authorized or approved such structured settlement.

 

“Transfer” means any sale, assignment, pledge, hypothecation, or other alienation or encumbrance of structured settlement payment rights made by a payee for consideration; provided that the term “transfer” does not include the creation or perfection of a security interest in structured settlement payment rights under a blanket security agreement entered into with an insured depository institution in the absence of any action to redirect the structured settlement payments to such insured depository institution or an agent or successor in interest thereof or otherwise to enforce such blanket security interest against the structured settlement payment rights.

 

“Transfer agreement” means the agreement providing for a transfer of structured settlement payment rights.

 

“Transfer expenses” means all expenses of a transfer that are required under the transfer agreement to be paid by the payee or deducted from the gross advance amount, including, without limitation, court filing fees, attorneys fees, escrow fees, lien recordation fees, judgment and lien search fees, finders’ fees, commissions, and other payments to a broker or other intermediary; “transfer expenses” do not include preexisting obligations of the payee payable for the payee’s account from the proceeds of a transfer.

 

“Transferee” means a party acquiring or proposing to acquire structured settlement payment rights through a transfer.

215 ILCS 153/10

Required disclosures to payee

§ 10. Required disclosures to payee. Not less than 10 days prior to the date on which a payee signs a transfer agreement, the transferee shall provide to the payee a separate disclosure statement, in bold type no smaller than 14 points, setting forth all of the following:

 

 (1) the amounts and due dates of the structured settlement payments to be transferred;

 

 (2) the aggregate amount of the payments;

 

 (3) the discounted present value of the payments to be transferred, which shall be identified as the “calculation of current value of the transferred structured settlement payments under federal standards for valuing annuities”, and the amount of the Applicable Federal Rate used in calculating the discounted present value;

 

 (4) the gross advance amount;

 

 (5) an itemized listing of all applicable transfer expenses, other than attorneys’ fees and related disbursements payable in connection with the transferee’s application for approval of the transfer, and the transferee’s best estimate of the amount of any such fees and disbursements;

 

 (6) the net advance amount;

 

 (7) the amount of any penalties or liquidated damages payable by the payee in the event of any breach of the transfer agreement by the payee;

 

 (8) a statement that the payee has the right to cancel the transfer agreement, without penalty or further obligation, not later than the third business day after the date the agreement is signed by the payee; and

 

 (9) the effective annual interest rate, which must be disclosed in the following statement: “Based on the net amount that you will receive from us and the amounts and timing of the structured settlement payments that you are turning over to us, you will, in effect, be paying interest to us at a rate of ... percent per year.”.

 

215 ILCS 153/15

Approval of transfers of structured settlement payment rights

§ 15. Approval of transfers of structured settlement payment rights. No direct or indirect transfer of structured settlement payment rights shall be effective and no structured settlement obligor or annuity issuer shall be required to make any payment directly or indirectly to any transferee of structured settlement payment rights unless the transfer has been approved in advance in a final court order based on express findings by such court that:

 

(1) the transfer is in the best interest of the payee, taking into account the welfare and support of the payee’s dependents;

 

(2) the payee has been advised in writing by the transferee to seek independent professional advice regarding the transfer and has either received such advice or knowingly waived in writing the opportunity to seek and receive such advice; and

 

(3) the transfer does not contravene any applicable statute or the order of any court or other government authority.

 

215 ILCS 153/20

Effects of transfer of structured settlement payment rights

§ 20. Effects of transfer of structured settlement payment rights. Following a transfer of structured settlement payment rights approved under this Act:

 

(1) the structured settlement obligor and the annuity issuer shall, as to all parties except the transferee or an assignee designated by the transferee, be discharged and released from any and all liability for the transferred payments, and the discharge and release shall not be affected by the failure of any party to the transfer to comply with this Act or with the order of the court approving the transfer;

 

(2) the transferee shall be liable to the structured settlement obligor and the annuity issuer:

 

(A) if the transfer contravenes the terms of the structured settlement, for any taxes incurred by the parties as a consequence of the transfer; and

 

(B) for any other liabilities or costs, including reasonable costs and attorneys’ fees, arising from compliance by the structured settlement obligor or annuity issuer with the order of the court or from failure of any party to the transfer to comply with this Act;

 

(3) neither the annuity issuer nor the structured settlement obligor may be required to divide any periodic payment between the payee and any transferee or assignee or between 2 or more transferees or assignees; and

 

(4) any further transfer of structured settlement payment rights by the payee may be made only after compliance with all of the requirements of this Act.

215 ILCS 153/25

Procedure for approval of transfers

§ 25. Procedure for approval of transfers.

 

(a) No annuity issuer or structured settlement obligor may make payments on a structured settlement to anyone other than the payee or beneficiary of the payee without prior approval of the circuit court. No payee or beneficiary of a payee of a structured settlement may assign in any manner the structured settlement payment rights without the prior approval of the circuit court.

 

 (b) An application under this Act for approval of a transfer of structured settlement payment rights shall be made by the transferee and shall be brought in the circuit court of the county in which the payee is domiciled, except that, if the payee is not domiciled in this State, the application may be filed in the court in this State that approved the structured settlement agreement or in the circuit court of the county in this State in which the structured settlement obligor or annuity issuer has its principal place of business.

 

 (c) A hearing shall be held on an application for approval of a transfer of structured settlement payment rights. The payee shall appear in person at the hearing unless the court determines that good cause exists to excuse the payee from appearing. Not less than 20 days prior to the scheduled hearing on an application, the transferee shall file with the court and serve on all interested parties a notice of the proposed transfer and the application, including the information and documentation required under subsection (d) of this Section.

 

 (d) In addition to complying with the other requirements of this Act, the application shall include:

 

 (1) the payee’s name, age, and county of domicile and the number and ages of the payee’s dependents;

 

 (2) a copy of the transfer agreement and disclosure statement;

 

 (3) a description of the reasons why the payee seeks to complete the proposed transfer;

 

 (4) a summary of:

 

 (i) any prior transfers by the payee to the transferee or an affiliate, or through the transferee or an affiliate to an assignee, within the 4 years preceding the date of the transfer agreement and any proposed transfers by the payee to the transferee or an affiliate, or through the transferee or an affiliate to an assignee, applications for approval of which were denied within the 2 years preceding the date of the transfer agreement;

 

 (ii) any prior transfers by the payee to any person or entity other than the transferee or an affiliate or an assignee of a transferee or affiliate within the 3 years preceding the date of the transfer agreement and any prior proposed transfers by the payee to any person or entity other than the transferee or an affiliate or an assignee of a transferee or affiliate, applications for approval which were denied within the one year preceding the date of the current transfer agreement, to the extent that the transfers or proposed transfers have been disclosed to the transferee by the payee in writing or otherwise are actually known by the transferee;

(5) notification that any interested party is entitled to support, oppose, or otherwise respond to the transferee’s application, either in person or by counsel, by submitting written comments to the court or by participating in the hearing; and

 

(6) notification of the time and place of the hearing and notification of the manner in which and the time by which written responses to the application must be filed, which shall be not less than 5 days prior to the hearing, in order to be considered by the court.

 

215 ILCS 153/30

General provisions; construction

§ 30. General provisions; construction.

 

(a) The provisions of this Act may not be waived by any payee.

 

 (b) Any transfer agreement entered into on or after the effective date of this Act by a payee who is domiciled in this State shall provide that disputes under the transfer agreement, including any claim that the payee has breached the agreement, shall be determined in and under the laws of this State. No such transfer agreement shall authorize the transferee or any other party to confess judgment or consent to entry of judgment against the payee.

 

 (c) No transfer of structured settlement payment rights shall extend to any payments that are life-contingent unless, prior to the date on which the payee signs the transfer agreement, the transferee has established and has agreed to maintain procedures reasonably satisfactory to the annuity issuer and the structured settlement obligor for (1) periodically confirming the payee’s survival, and (2) giving the annuity issuer and the structured settlement obligor prompt written notice in the event of the payee’s death.

(d) No payee who proposes to make a transfer of structured settlement payment rights shall incur any penalty, forfeit any application fee or other payment, or otherwise incur any liability to the proposed transferee or any assignee based on any failure of the transfer to satisfy the conditions of this Act.

 

 (e) Nothing contained in this Act shall be construed to authorize any transfer of structured settlement payment rights in contravention of any law. A court shall not be precluded from hearing an application for approval of a transfer of payment rights under a structured settlement where the terms of the structured settlement prohibit sale, assignment, or encumbrance of such payment rights, nor shall the interested parties be precluded from waiving or asserting their rights under those terms. The court hearing an application for approval of a transfer of payment rights under such a settlement shall have authority to rule on the merits of the application and any objections to such application.

 

 (f) Compliance with the requirements set forth in Section 10 of this Act and fulfillment of the conditions set forth in Section 15 of this Act shall be solely the responsibility of the transferee in any transfer of structured settlement payment rights, and neither the structured settlement obligor nor the annuity issuer shall bear any responsibility for, or any liability arising from, non-compliance with those requirements or failure to fulfill those conditions.

 

 (g) Following issuance of a court order approving a transfer of structured settlement payment rights under this Act, the structured settlement obligor and annuity issuer may rely on the court order in redirecting future structured settlement payments to the transferee or an assignee in accordance with the order.

 

(h) The changes made to this Section by this amendatory Act of the 99th General Assembly are declarative of existing law.

215 ILCS 153/35

Applicability

§ 35. Applicability. This Act shall apply to any transfer of structured settlement payment rights under a transfer agreement entered into on or after the 30th day after the effective date of this Act, including any transfer in which the structured settlement obligor and annuity issuer have affirmatively waived, or have not objected to the transfer based upon, the terms of the settlement prohibiting sale, assignment, or encumbrance of the payee’s structured settlement payment rights. The changes made to this Section by this amendatory Act of the 99th General Assembly are declarative of existing law.

 

Indiana

Indiana Annuity Structured Settlements Act

IND. CODE ANN. § 34-50-2-1 et. Seq. (West 2001)

IC 34-50-2-1

 “Interested party” defined

Sec. 1. As used in this chapter, “interested party” refers to:

 

 (1) the payee;

 

 (2) the annuity issuer;

 

 (3) the structured settlement agreement obligor;

 

 (4) the payee’s counsel who assisted in the establishment of the structured settlement;

 

 (5) a dependent of the payee; or

 

 (6) a family member or relative who is acting as a caregiver for the payee.

IC 34-50-2-2

 “Structured settlement” defined

Sec. 2. As used in this chapter, “structured settlement” means periodic payments of damages established by a settlement or a court judgment in resolution of a tort claim for personal injury.

 

IC 34-50-2-3

 “Transfer” defined

Sec. 3. As used in this chapter, “transfer” means a:

 

(1) sale;

 

(2) assignment;

 

(3) pledge;

 

 (4) hypothecation; or

 

 (5) any other form of alienation or encumbrance;

 

of structured settlement payment rights made by a payee for consideration.

IC 34-50-2-4

 “Transferee” defined

Sec. 4. As used in this chapter, “transferee” means a party acquiring or proposing to acquire structured settlement payment rights through a transfer agreement.

IC 34-50-2-5

Court approval of transfers required

Sec. 5. A direct or indirect transfer of structured settlement payment rights is not effective, and a structured settlement obligor or annuity issuer is not required to make a payment directly or indirectly to a transferee, unless an Indiana court of competent jurisdiction has approved the transfer in a final order in accordance with sections 7 and 8 of this chapter.

IC 34-50-2-6

Disclosure statements

Sec. 6. Not less than ten (10) days before the date on which a payee becomes obligated under a transfer agreement, the transferee shall provide to the payee and other interested parties a disclosure statement, in boldface type of not less than fourteen (14) points in size, that includes the following:

 

 (1) The amounts and due dates of the structured settlement payments to be transferred under the transfer agreement.

 

 (2) The aggregate amount of the payments disclosed under subdivision (1).

 

 (3) An estimate of the present fair market value of the future periodic payments under the structured settlement agreement.

(4) The gross amount payable to the payee as consideration for the transfer of the structured settlement payments disclosed under subdivision (1).

 

 (5) An itemized list of all:

 

 (A) commissions;

 

(B) fees;

 

 (C) costs;

 

 (D) expenses; and

 

 (E) charges;

 

payable by the payee or deductible from the gross amount payable to the payee, as disclosed under subdivision (4).

 

 (6) The net amount payable to the payee after any deduction is made from the gross amount payable to the payee, as described in subdivision (5).

(7) The quotient, expressed as a percentage, obtained by dividing the net amount payable to the payee, as disclosed under subdivision (6), by the estimate of the present fair market value of the future periodic payments, as disclosed under subdivision (3).

 

 (8) The amount of any penalty and the aggregate amount of any liquidated damages, including penalties, payable by the payee in the event of a breach of the transfer agreement by the payee.

IC 34-50-2-7

Final orders; findings

Sec. 7. An Indiana court of competent jurisdiction may approve a transfer of structured settlement payment rights only in a final order that is based on the express findings of the court. The express findings must include all of the following:

 

(1) The consideration that the payee will receive for the transfer reasonably reflects the present fair market value of the future periodic payments under the structured settlement agreement.

 

(2) The transfer is in the best interest of the payee.

 

(3) The transfer will not materially impair the payee’s ability to discharge the payee’s obligations to the payee’s dependents.

 

(4) If the transferee is the applicant, the transferee has provided to the payee a disclosure statement in accordance with section 6 of this chapter.

IC 34-50-2-8

Applications for approval of transfers

Sec. 8. (a) An application under this chapter for approval of a transfer of structured settlement payment rights must be filed in:

 

(1) the Indiana court in which the underlying tort action was pending; or

 

(2) the court of general jurisdiction in the Indiana county in which the payee resides.

 

(b) The following apply to an application filed under subsection (a):

 

(1) Upon filing of the application, the court shall set a date and time for a hearing on the application not earlier than twenty (20) days after the application is filed and shall notify the applicant of the date, time, and place of the hearing. The court shall give precedence to a hearing set under this section in accordance with Indiana Trial Rule 40.

 

(2) The applicant shall file with the court and shall serve on:

 

(A) all interested parties;

 

(B) the annuity issuer; and

 

 (C) the structured settlement obligor;

 

in the manner prescribed in the rules of civil procedure for the service of process, a notice of the proposed transfer.

 

 (3) The notice required under subdivision (2) shall include:

 

 (A) a copy of the application;

 

 (B) a copy of the proposed transfer agreement, including the transferee’s:

 

 (i) name;

 

 (ii) address; and

 

 (iii) taxpayer identification number;

 

(C) a copy of the disclosure statement provided by the transferee under section 6 of this chapter whenever the application is filed by a person other than the payee;

 

 (D) notification of the date, time, and place of the hearing on the application; and

 

 (E) notification that an interested party may support, oppose, or otherwise respond to the application, either in person or by counsel, by:

 

 (i) submitting to the court a written response containing the interested party’s support of, opposition to, or comments on the application; or

 

 (ii) participating in the hearing.

 

 (4) At the conclusion of the hearing on an application filed under subsection (a), the court may enter an order:

 

 (A) granting approval with or without modification; or

 

 (B) denying approval;

 

of the transfer. If the court grants approval of the transfer, the court shall include in the order all of the express findings required under section 7 of this chapter. If the court denies the approval of the transfer, the court shall include in the order the reasons for the denial.

 

 (5) An order of the court made under subdivision (4) is a final and appealable order.

IC 34-50-2-9

Effect of disapproval of transfers; waiver prohibited; unlawful transfers

Sec. 9. (a) A payee who proposes to make a transfer of structured settlement payment rights does not:

 

 (1) incur a penalty;

 

 (2) forfeit an application fee or other payment; or

 

 (3) otherwise incur a liability to the proposed transferee;

 

if the transfer is not approved by a court under section 7 of this chapter.

 

 (b) A provision of this chapter may not be waived.

 

(c) This chapter does not:

 

(1) authorize a transfer of structured settlement payment rights in contravention of applicable law; or

 

(2) give effect to a transfer of structured settlement payment rights that is void under applicable law.

IC 34-50-2-10

Immunities

Sec. 10. After a transfer that has been approved in accordance with this chapter, a structured settlement obligor and an annuity issuer are immune from liability to a payee, or to a party other than a transferee who is claiming through the payee, for paying structured settlement payments to a transferee.

IC 34-50-2-11

Failure to provide disclosure statement as incurable deceptive act

Sec. 11. Failure of a transferee of structured settlement payment rights to timely provide a true and complete disclosure statement to a payee under this chapter in connection with a direct or indirect transfer of structured settlement payment rights is an incurable deceptive act under IC 24-5-0.5.

Iowa

Iowa Structured Settlement Protection Act

IOWA CODE ANN. § 682.2 et seq. (West 2001)

I.C.A. § 682.1

Short title

This chapter shall be known and may be cited as the “Structured Settlement Protection Act”.

I.C.A. § 682.2

Definitions

As used in this chapter, unless the context otherwise requires:

 

1. “Annuity issuer” means an issuer that has issued an insurance contract used to fund periodic payments under a structured settlement.

 

2. “Dependents” means a payee’s spouse and minor children and all other family members and other persons for whom the payee is legally obligated to provide support, including alimony.

 

3. “Discounted present value” means the fair present value of future payments, as determined by discounting such payments to the present using the most recently published applicable federal rate for determining the present value of an annuity, as issued by the United States internal revenue service.

 

4. “Gross advance amount” means the sum payable to the payee or for the payee’s account as consideration for a transfer of structured settlement payment rights before any reductions for transfer expenses or other deductions to be made from such consideration.

 

5. “Independent professional advice” means advice of an attorney, certified public accountant, actuary, or other licensed professional advisor.

 

6. “Interested parties” means, with respect to a structured settlement, the payee, a beneficiary irrevocably designated under the annuity contract to receive payments following the payee’s death, the annuity issuer, the structured settlement obligor, and any other party that has continuing rights or obligations under the structured settlement.

 

7. “Net advance amount” means the gross advance amount less the aggregate amount of the actual and estimated transfer expenses required to be disclosed under section 682.3, subsection 5.

 

8. “Payee” means an individual who is receiving tax-free payments under a structured settlement and proposes to make a transfer of payment rights.

 

9. “Periodic payments” means both recurring payments and scheduled future lump sum payments.

 

10. “Qualified assignment agreement” means an agreement providing for a qualified assignment within the meaning of section 130 of the Internal Revenue Code.

11. “Responsible administrative authority” means, with respect to a structured settlement, any government authority vested by law with exclusive jurisdiction over the settled claim resolved by the structured settlement.

12. “Settled claim” means the original tort claim or workers’ compensation claim resolved by a structured settlement.

 

13. “Structured settlement” means an arrangement for periodic payment of damages for personal injuries established by settlement or judgment in resolution of a tort claim or for periodic payments in settlement of a workers’ compensation claim.

 

14. “Structured settlement agreement” means the agreement, judgment, stipulation, or release embodying the terms of a structured settlement.

 

15. “Structured settlement obligor” means, with respect to a structured settlement, the party that has the continuing periodic payment obligation to the payee under a structured settlement agreement or a qualified assignment agreement.

 

16. “Structured settlement payment rights” means rights to receive periodic payments under a structured settlement, whether from the structured settlement obligor or the annuity issuer, if any of the following exists:

 

a. One of the following is true:

 

(1) The payee is domiciled in this state.

 

(2) The domicile or principal place of business of a structured settlement obligor or the annuity issuer is located in this state.

 

b. The structured settlement agreement was approved by a court or responsible administrative authority in this state.

 

c. The structured settlement agreement is expressly governed by the laws of this state.

 

17. “Terms of the structured settlement” means, with respect to a structured settlement, the terms of the structured settlement agreement, the annuity contract, any qualified assignment agreement, and any order or approval of any court or responsible administrative authority or other government authority authorizing or approving the structured settlement.

 

18. “Transfer” means any sale, assignment, pledge, hypothecation, or other alienation or encumbrance of structured settlement payment rights made by a payee for consideration. “Transfer” does not include the creation or perfection of a security interest in structured settlement payment rights under a blanket security agreement entered into with an insured depository institution, in the absence of any action to redirect the structured settlement payments to such insured depository institution, or an agent or successor in interest thereof, or otherwise to enforce such blanket security interest against the structured settlement payment rights.

 

19. “Transfer agreement” means the agreement providing for transfer of structured settlement payment rights.

 

20. “Transferee” means a party acquiring or proposing to acquire structured settlement payment rights through a transfer.

 

21. “Transfer expenses” means all expenses of a transfer that are required under the transfer agreement to be paid by the payee or deducted from the gross advance amount, including, without limitation, court filing fees, attorney fees, escrow fees, lien recordation fees, judgment and lien search fees, finders’ fees, commissions, and other payments to a broker or other intermediary. “Transfer expenses” does not include preexisting obligations of the payee payable for the payee’s account from the proceeds of a transfer.

 

I.C.A. § 682.3

Required disclosures to payee

Not less than three days prior to the date on which a payee signs a transfer agreement, the transferee shall provide to the payee a separate disclosure statement, in bold type no smaller than fourteen points, setting forth all of the following:

 

1. The amounts and due dates of the structured settlement payments to be transferred.

 

2. The aggregate amount of the structured settlement payments.

 

3. The discounted present value of the payments to be transferred which shall be identified as the “calculation of current value of the transferred structured settlement payments under federal standards for valuing annuities”, and the amount of the applicable federal rate used in calculating the discounted present value.

 

4. The gross advance amount.

 

5. An itemized listing of all applicable transfer expenses, other than attorney fees and related disbursements payable in connection with the transferee’s application for approval of the transfer, and the transferee’s best estimate of the amount of any such fees and disbursements.

 

6. The net advance amount.

 

7. The amount of any penalties or liquidated damages payable by the payee in the event of any breach of the transfer agreement by the payee.

 

8. A statement that the payee has the right to cancel the transfer agreement, without penalty or further obligation, not later than the third business day after the agreement is signed by the payee.

I.C.A. § 682.4

Approval of transfers of structured settlement payment rights

1. A transfer of structured settlement payment rights shall not be effective and a structured settlement obligor or annuity issuer shall not be required to make any payment directly or indirectly to a transferee of structured settlement payment rights unless the transfer has been approved in advance in a final court order or order of a responsible administrative authority based on express findings by such court or responsible administrative authority regarding all of the following:

 

a. The transfer is in the best interest of the payee, taking into account the welfare and support of the payee’s dependents.

 

b. The payee has been advised in writing by the transferee to seek independent professional advice regarding the transfer and has either received such advice or knowingly waived such advice in writing.

 

c. The transfer does not contravene any applicable statute or the order of any court or other government authority.

 

2. If the structured settlement agreement or transfer agreement includes a provision requiring the terms of the structured settlement agreement or transfer agreement to remain confidential, the court or responsible administrative authority shall conduct in camera proceedings relating to the approval of the transfer agreement and shall not include any financial terms from the structured settlement agreement or the transfer agreement in the order required under subsection 1.

 

I.C.A. § 682.5

Effects of transfer of structured settlement payment rights

1. The structured settlement obligor and the annuity issuer shall, as to all parties except the transferee, be discharged and released from any and all liability for the transferred payments.

 

2. The transferee shall be liable to the structured settlement obligor and the annuity issuer for all of the following:

 

a. If the transfer contravenes the terms of the structured settlement, any taxes incurred by the structured settlement obligor and the annuity issuer as a consequence of the transfer.

 

b. Any other liabilities or costs, including reasonable costs and attorney fees, arising from compliance by such parties with the order of the court or responsible administrative authority or arising as a consequence of the transferee’s failure to comply with this chapter.

 

3. An annuity issuer and the structured settlement obligor shall not be required to divide any periodic payment between the payee and any transferee or assignee or between two or more transferees or assignees.

4. Any further transfer of structured settlement payment rights by the payee may be made only after compliance with all of the requirements of this chapter.

 

I.C.A. § 682.6

Procedure for approval of transfers

1. An application under this chapter for approval of a transfer of structured settlement payment rights shall be made by the transferee and may be brought in the county in which the payee resides, in the county in which the structured settlement obligor or the annuity issuer maintains its principal place of business, or in any court or before any responsible administrative authority which approved the structured settlement agreement.

 

2. Not less than twenty days prior to the scheduled hearing on any application for approval of a transfer of structured settlement payment rights under section 682.4, the transferee shall file with the court or responsible administrative authority and serve on all interested parties a notice of the proposed transfer and the application for its authorization. All of the following shall be included with the notice:

 

a. A copy of the transferee’s application.

 

b. A copy of the transfer agreement.

 

c. A copy of the disclosure statement required under section 682.3.

 

d. A listing of each of the payee’s dependents, together with each dependent’s age.

 

e. Notification that any interested party is entitled to support, oppose, or otherwise respond to the transferee’s application, either in person or by counsel, by submitting written comments to the court or responsible administrative authority, or by participating in the hearing.

 

f. Notification of the time and place of the hearing and notification of the manner in which and the time by which written responses to the application must be filed, which shall not be less than fifteen days after service of the transferee’s notice, in order to be considered by the court or responsible administrative authority.

 

3. If a structured settlement agreement or transfer agreement includes a provision requiring the terms of the structured settlement agreement or transfer agreement to remain confidential, the financial terms of the structured settlement agreement and the transfer agreement shall be made available to the court or responsible administrative authority for purposes of any in camera proceedings, but shall not be disclosed in the copies of the transfer agreement and disclosure statement filed as a part of the public record.

I.C.A. § 682.7

General provisions--construction--penalties

1. The provisions of this chapter shall not be waived by a payee.

 

2. A transfer agreement entered into on or after the thirtieth day after July 1, 2001, by a payee who resides in this state shall provide that disputes under the transfer agreement, including any claim that the payee has breached the agreement, shall be determined under the laws of this state. A transfer agreement shall not authorize the transferee or any other party to confess judgment or consent to entry of judgment against the payee.

 

3. A transfer of structured settlement payment rights shall not extend to any payments that are life-contingent unless, prior to the date on which the payee signs the transfer agreement, the transferee has established and has agreed to maintain procedures reasonably satisfactory to the annuity issuer and the structured settlement obligor for both of the following:

 

a. Periodically confirming the payee’s survival.

 

b. Giving the annuity issuer and the structured settlement obligor prompt written notice in the event of the payee’s death.

 

4. A payee who proposes to make a transfer of structured settlement payment rights shall not incur any penalty, forfeit any application fee or other payment, or otherwise incur any liability to the proposed transferee or any assignee based on any failure of the transfer to satisfy the conditions of this chapter.

5. This chapter shall not be construed to authorize any transfer of structured settlement payment rights in contravention of any law or to imply that any transfer under a transfer agreement entered into prior to July 1, 2001, is valid or invalid.

 

6. Compliance with the requirements set forth in section 682.3 and fulfillment of the conditions set forth in section 682.4 shall be solely the responsibility of the transferee in any transfer of structured settlement payment rights, and neither the structured settlement obligor nor the annuity issuer shall bear any responsibility for, or any liability arising from, noncompliance with the requirements or failure to fulfill the conditions.

Kansas

Kansas Structured Settlement Protection Act

KAN. STAT. ANN. § 40-464 et seq. (West 2005)

K.S.A. 40-461

Structured settlement protection act; definitions

For purposes of this act:

(a) “Annuity issuer” means an insurer that has issued a contract to fund periodic payments under a structured settlement.

 

(b) “Dependents” include a payee’s spouse and minor children and all other persons for whom the payee is legally obligated to provide support, including alimony.

 

(c) “Discounted present value” means the present value of future payments determined by discounting such payments to the present using the most recently published applicable federal rate for determining the present value of an annuity, as issued by the United States internal revenue service.

 

(d) “Gross advance amount” means the sum payable to the payee or for the payee’s account as consideration for a transfer of structured settlement payment rights before any reductions for transfer expenses or other deductions to be made from such consideration.

 

(e) “Independent professional advice” means advice of an attorney, certified public accountant, actuary or other licensed professional adviser.

 

(f) “Interested parties” means, with respect to any structured settlement, the payee, any beneficiary irrevocably designated under the annuity contract to receive payments following the payee’s death, the annuity issuer, the structured settlement obligor and any other party that has continuing rights or obligations under such structured settlement.

 

(g) “Net advance amount” means the gross advance amount less the aggregate amount of the actual and estimated transfer expenses required to be disclosed under subsection (e) of K.S.A. 40-462, and amendments thereto.

 

(h) “Payee” means an individual who receives tax free payments under a structured settlement and proposes to make a transfer of payment rights thereunder.

 

(i) “Periodic payments” include both recurring payments and scheduled future lump sum payments.

 

(j) “Qualified assignment agreement” means an agreement providing for a qualified assignment within the meaning of section 130 of the United States internal revenue code.

 

(k) “Responsible administrative authority” means, with respect to a structured settlement, any government authority vested by law with exclusive jurisdiction over the settled claim resolved by such structured settlement.

 

(l) “Settled claim” means the original tort claim resolved by a structured settlement.

 

(m) “Structured settlement” means an arrangement for periodic payment of damages for personal injuries or sickness established by settlement or judgment in resolution of a tort claim.

 

(n) “Structured settlement agreement” means the agreement, judgment, stipulation or release embodying the terms of a structured settlement.

 

(o) “Structured settlement obligor” means, with respect to any structured settlement, the party that has the continuing obligation to make periodic payments to the payee under a structured settlement agreement or a qualified assignment agreement.

 

(p) “Structured settlement payment rights” means rights to receive periodic payments under a structured settlement, whether from the structured settlement obligor or the annuity issuer, where:

 

(1) The payee is domiciled in this state or the domicile or principal place of business of the structured settlement obligor or the annuity issuer is located in this state;

 

(2) the structured settlement agreement was approved by a court or responsible administrative authority in this state; or

 

(3) the structured settlement agreement is expressly governed by the laws of this state.

 

(q) “Terms of the structured settlement” include the terms of the structured settlement agreement, the annuity contract, any qualified assignment agreement and any order or other approval of any court or responsible administrative authority or other government authority that authorized or approved such structured settlement.

(r) “Transfer” means any sale, assignment, pledge, hypothecation or other alienation or encumbrance of structured settlement payment rights made by a payee for consideration. Transfer does not include the creation or perfection of a security interest in structured settlement payment rights under a blanket security agreement entered into with an insured depository institution, in the absence of any action to redirect the structured settlement payments to such insured depository institution, or an agent or successor in interest thereof, or otherwise to enforce such blanket security interest against the structured settlement payment rights.

 

(s) “Transfer agreement” means the agreement providing for a transfer of structured settlement payment rights.

 

(t) “Transfer expenses” means all expenses of a transfer that are required under the transfer agreement to be paid by the payee or deducted from the gross advance amount, including, without limitation, court filing fees, attorneys fees, escrow fees, lien recordation fees, judgment and lien search fees, finders’ fees, commissions and other payments to a broker or other intermediary. Transfer expenses do not include any preexisting obligations of the payee payable for the payee’s account from the proceeds of a transfer.

 

(u) “Transferee” means a party acquiring or proposing to acquire structured settlement payment rights through a transfer.

K.S.A. 40-462

Same; disclosure statement, contents

The transferee shall provide to the payee a separate disclosure statement not less than three days prior to the date on which a payee signs a transfer agreement. Such disclosure statement shall set forth in bold type no smaller than 14 points:

 

(a) The amounts and due dates of the structured settlement payments to be transferred.

 

(b) The aggregate amount of such payments.

 

(c) The discounted present value of the payments to be transferred, which shall be identified as the calculation of current value of the transferred structured settlement payments under federal standards for valuing annuities, and the amount of the applicable federal rate used in calculating such discounted present value.

 

(d) The gross advance amount.

 

(e) An itemized listing of all applicable transfer expenses, other than attorneys’ fees and related disbursements payable in connection with the transferee’s application for approval of the transfer, and the transferee’s best estimate of the amount of any such fees and disbursements.

 

(f) The net advance amount.

 

(g) The amount of any penalties or liquidated damages payable by the payee in the event of any breach of the transfer agreement by the payee.

 

(h) A statement that the payee has the right to cancel the transfer agreement, without penalty or further obligation, not later than the third business day after the date the agreement is signed by the payee.

K.S.A. 40-463

Same; approval of transfer; required findings

(a) No direct or indirect transfer of structured settlement payment rights shall be effective and no structured settlement obligor or annuity issuer shall be required to make any payment directly or indirectly to any transferee of structured settlement payment rights unless the transfer has been approved in advance in a final court order or order of a responsible administrative authority based on express findings by such court or responsible administrative authority that the:

 

(1) Transfer is in the best interest of the payee, taking into account the welfare and support of the payee’s dependents;

(2) payee has been advised in writing by the transferee to seek independent professional advice regarding the transfer and has either received such advice or knowingly waived such advice in writing; and

 

(3) transfer does not contravene any applicable statute or the order of any court or other government authority.

K.S.A. 40-464

Same; discharge of structured settlement obligor and annuity issuer, when; liability of transferee

Following a transfer of structured settlement payment rights under this act:

(a) The structured settlement obligor and the annuity issuer shall be discharged and released from any and all liability for the transferred payments as to all parties except the transferee.

 

(b) The transferee shall be liable to the structured settlement obligor and the annuity issuer:

 

(1) If the transfer contravenes the terms of the structured settlement, for any taxes incurred by such parties as a consequence of the transfer; and

 

(2) for any other liabilities or costs, including reasonable costs and attorneys’ fees, arising from compliance by such parties with the order of the court or responsible administrative authority or arising as a consequence of the transferee’s failure to comply with this act.

 

(c) Neither the annuity issuer nor the structured settlement obligor may be required to divide any periodic payment between the payee and any transferee or assignee or between two or more transferees or assignees.

 

(d) Any further transfer of structured settlement payment rights by the payee may be made only after compliance with all of the requirements of this act.

 

K.S.A. 40-465

Same; application for approval of transfer of structured settlement payment rights; procedure

(a) An application for approval of a transfer of structured settlement payment rights shall be made by the transferee and may be brought in:

 

(1) The county in which the payee resides;

 

(2) the county in which the structured settlement obligor or the annuity issuer maintains its principal place of business; or

 

(3) any court or before any responsible administrative authority which approved the structured settlement agreement.

 

(b) The transferee shall file with the court or responsible administrative authority and serve on all interested parties a notice of the proposed transfer and the application for its authorization not less than 20 days prior to the scheduled hearing on any application for approval of a transfer of structured settlement payment rights under K.S.A. 40-463, and amendments thereto. Such notice shall include:

 

(1) A copy of the transferee’s application;

 

(2) a copy of the transfer agreement;

 

(3) a copy of the disclosure statement required under K.S.A. 40-462, and amendments thereto;

 

(4) a listing of each of the payee’s dependents, together with each dependent’s age;

 

(5) notification that any interested party is entitled to support, oppose or otherwise respond to the transferee’s application, either in person or by counsel, by submitting written comments to the court or responsible administrative authority or by participating in the hearing; and

 

(6) notification of the time and place of the hearing and notification of the manner in which and the time, which shall not be less than 15 days after service of the transferee’s notice, by which written responses to the application must be filed in order to be considered by the court or responsible administrative authority.

 

K.S.A. 40-466

Same; limitations on provisions of transfer agreement

(a) The provisions of this act may not be waived by any payee.

 

(b) Any transfer agreement entered into by a payee who resides in this state on or after the effective date of this act shall provide that disputes under such transfer agreement, including any claim that the payee has breached the agreement, shall be determined in and under the laws of this state. No such transfer agreement shall authorize the transferee or any other party to confess judgment or consent to entry of judgment against the payee.

 

(c) No transfer of structured settlement payment rights shall extend to any payments that are life-contingent unless, prior to the date on which the payee signs the transfer agreement, the transferee has established and has agreed to maintain procedures reasonably satisfactory to the annuity issuer and the structured settlement obligor for:

 

(1) Periodically confirming the payee’s survival; and

 

(2) giving the annuity issuer and the structured settlement obligor prompt written notice in the event of the payee’s death.

 

(d) No payee who proposes to make a transfer of structured settlement payment rights shall incur any penalty, forfeit any application fee or other payment, or otherwise incur any liability to the proposed transferee or any assignee based on any failure of such transfer to satisfy the conditions of this act.

 

(e) No provision of this act shall be construed to authorize any transfer of structured settlement payment rights in contravention of any law or to imply the validity of any transfer under a transfer agreement entered into prior to the effective date of this act.

 

(f) Compliance with the requirements of K.S.A. 40-462, and amendments thereto, and fulfillment of the conditions of K.S.A. 40-463, and amendments thereto, shall be solely the responsibility of the transferee in any transfer of structured settlement payment rights. Neither the structured settlement obligor nor the annuity issuer shall bear any responsibility for, or any liability arising from, non-compliance with such requirements or failure to fulfill such conditions.

K.S.A. 40-467

Same; citation of act; applicability to workers compensation

(a) K.S.A. 40-461 through 40-467, and amendments thereto, shall be known as and may be cited as the structured settlement protection act.

 

(b) No provision of this act shall apply to any settlement of any claim for or award of workers compensation.

 

Kentucky

Kentucky Transfer of Structured Settlement Payment Rights Act

KY. REV. STAT. ANN. §§ 430.435 (West 1998)

KRS § 454.430

Definitions for KRS 454.430 to 454.435

As used in KRS 454.430 to 454.435:

 

(1) “Annuity issuer” means an insurer that has issued an annuity contract to be used to fund periodic payments under a structured settlement;

(2) “Payee” means an individual who is receiving tax-free damage payments under a structured settlement and who wants to make a transfer of payment rights under the structured settlement agreement;

 

(3) “Protected parties” means, with respect to any structured settlement, the payee, any named beneficiary designated in the annuity contract or structured settlement to receive payments following the payee’s death, or, if the named beneficiary is a minor, the named beneficiary’s parent or guardian, the annuity issuer, and the structured settlement obligor;

 

(4) “Qualified assignment agreement” means an agreement providing for a qualified assignment that meets the requirements of Section 130 of the Internal Revenue Code, 26 U.S.C. sec. 130, as amended from time to time;

 

(5) “Settled claim” means the original tort claim resolved by a structured settlement;

 

(6) “Structured settlement” means an arrangement for periodic payment of damages for personal injuries established by settlement or judgment in resolution of a tort claim;

 

(7) “Structured settlement obligor” means, with respect to any structured settlement, the party that has the continuing periodic payment obligation to the payee under a structured settlement agreement or a qualified assignment agreement;

 

(8) “Structured settlement payment rights” means rights to receive periodic payments, including lump sum payments under a structured settlement, whether from the settlement obligor or the annuity issuer, where:

 

(a) The payee or any other protected party is domiciled in this state; or

 

(b) The settled claim was pending before the courts of this state when the structured settlement was reached;

 

(9) “Transfer” means any sale, assignment, pledge, hypothecation, or other form of alienation or encumbrance made for consideration; and

 

(10) “Transfer agreement” means the agreement providing for transfer of structured settlement payment rights from a payee to a transferee.

 

KRS § 454.431

Requirement for court approval of transfer of structured settlement payment rights; express findings that are required

No transfer of structured settlement payment rights shall be effective and no structured settlement obligor or annuity issuer shall be required to make any payment directly or indirectly to any transferee of any transfer of structured settlement payment rights unless the transfer has been approved in advance in an order of a court of competent jurisdiction, based on the court’s express findings that:

 

(1) The transfer complies with the requirements of KRS 454.430 to 454.435 and does not contravene other applicable law;

 

(2) Not less than ten (10) days prior to the date on which the payee entered into the transfer agreement, the transferee has provided to the payee a disclosure statement in bold type, no smaller than fourteen (14) point, setting forth:

 

(a) The amounts and due dates of the structured settlement payments to be transferred;

 

(b) The aggregate amount of the payments;

 

(c) The discounted present value of the payments, together with the discount rate or rates used in determining the discounted present value;

 

(d) The gross amount payable to the payee in exchange for the payments;

 

(e) An itemized listing of all brokers’ commissions, service charges, application or processing fees, closing costs, filing or administrative charges, legal fees, notary fees and other commissions, fees, costs, expenses, and charges payable by the payee or deductible from the gross amount otherwise payable to the payee; and

 

(f) The amount of any penalty and the aggregate amount of any liquidated damages, including penalties, payable by the payee in the event of any breach of the transfer agreement by the payee;

 

(3) The payee has established that the transfer is necessary to enable the payee to avoid imminent financial hardship;

 

(4) The transferee has given written notice of the transferee’s name, address, and taxpayer identification number to the annuity issuer and the structured settlement obligor and had filed a copy of the notice with the court; and

 

(5) The payee has consented in writing to the transfer.

KRS § 454.435

Jurisdiction of the Circuit Court; notice and hearing requirements; nonwaiverability of KRS 454.430 to 454.435

 (1) The Circuit Court in the county in which the original action was or could have been filed, or the county where the applicant resides, shall have jurisdiction over any application for approval of a transfer of structured settlement payment rights under KRS 454.431.

 

(2) Not less than twenty (20) days prior to the scheduled hearing on any application for court approval of a transfer of structured settlement payment rights under KRS 454.431, the payee or transferee shall file with the court and serve on all protected parties a notice of the proposed transfer and the application for its approval, including in the notice:

 

(a) A copy of the transferee’s application to the court;

 

(b) A copy of the disclosure statement required under KRS 454.431(2); and

 

(c) Notification of the time and place of the hearing and notification of the manner in which and the time by which written responses to the application must be filed, which shall be not less than ten (10) days after service of the transferee’s notice, in order to be considered by the court.

 

(3) The provisions of KRS 454.430 to 454.435 may not be waived.

 

KRS § 454.450

Definitions for KRS 452.453 and 454.455

(1) As used in KRS 452.453 and 454.455, “tobacco grower” means any person who is a resident of Kentucky engaged in the production of growing tobacco or receives proceeds from the sale of tobacco in Kentucky for consumption or use. “Tobacco grower” as used in this section includes, but is not limited to, farm operator, owner/operator, cash tenant, landlord of a share tenant, share tenant, or share cropper.

 

(2) As used in KRS 452.453 and 454.455, “warehouseman” means the owner, operator, manager, lessee, or proprietor of a warehouse engaged in selling tobacco, or his or her agents or employees.

 

KRS § 454.455

Proof required for damages against tobacco growers and warehousemen; costs that may be awarded to prevailing defendant

 (1) In a civil action against a tobacco grower for damages alleged to have occurred as a result of use or consumption of tobacco products, in order for liability to be found against a tobacco grower, the plaintiff shall prove by clear and convincing evidence that the tobacco that caused the alleged damage was planted, cultivated, and harvested by that specific tobacco grower and not by any other person.

(2) In a civil action against a warehouseman for damages alleged to have occurred as a result of use or consumption of tobacco products, in order for liability to be found against a warehouseman, the plaintiff shall prove by clear and convincing evidence that the tobacco that caused the alleged damage was sold by that specific warehouseman and not by any other person.

 

 (3) If a suit against a tobacco grower or a warehouseman is dismissed or the defendant prevails at trial, the defendant may be entitled to three (3) times the entire costs of defending the action, including but not limited to legal fees, expert witnesses, and other expenses arising from the defense of the action.

 

Louisiana

Louisiana Transfer of Structured Settlement Rights Act

LA. REV. STAT. ANN. § 9:2715 (2001; amended in 2003)

LSA-R.S. 9:§ 2715.

Transfer of structured settlement rights

A. As used in this Section, the following terms shall mean:

(1) “Annuity issuer” means an insurer that has issued an annuity contract to be used to fund periodic payments under a structured settlement.

(2) “Discounted present value” means the fair present value of future payments, as determined by discounting payments to the present using the most recently published applicable federal rate for determining the present value of an annuity, as issued by the United States Internal Revenue Service.

(3) “Independent professional advice” means advice of an attorney, certified public accountant, actuary, or other licensed professional adviser:

(a) Who is engaged by a payee to render advice concerning the legal, tax, and financial implications of a transfer of structured settlement payment rights;

(b) Who is not affiliated with or compensated by the transferee of the transfer; and

(c) Whose compensation is not affected by whether a transfer occurs.

(4) “Interested parties” means the payee, each beneficiary designated under the annuity contract to receive payments following the payee's death, the annuity issuer, the structured settlement obligor, and any other party that has continuing rights or obligations under a structured settlement.

(5) “Payee” means an individual who receives damage payments that are not subject to income taxation under a structured settlement and proposes to make a transfer of payment rights.

(6) “Structured settlement” means an arrangement for periodic payment of damages for personal injury established by a settlement or judgment in resolution of a tort claim. “Structured settlement” does not include an arrangement for periodic payment of damages for personal injury established by a judgment of confession.

(7) “Structured settlement agreement” means an agreement, judgment, stipulation, or release embodying the terms of a structured settlement.

(8) “Structured settlement obligor” means a party who has the continuing periodic payment obligation to the payee under a structured settlement agreement or a qualified assignment agreement.

(9) “Structured settlement payment rights” means the rights to receive periodic payments, including lump-sum payments under a structured settlement, whether from the settlement obligor or the annuity issuer, if:

(a) The transferee or payee is domiciled in this state;

(b) The structured settlement agreement was approved by a court in this state; or

(c) The settled claim was pending before a court of this state when the parties entered into the structured settlement agreement.

(10) “Terms of the structured settlement” includes the terms of the structured settlement agreement, the annuity contract, a qualified assignment, and an order or approval of a court or responsible administrative authority authorizing or approving a structured settlement.

(11) “Transfer” means a sale, assignment, pledge, hypothecation, or other form of alienation or encumbrance made by a payee for consideration.

(12) “Transfer agreement” means the agreement providing for the transfer of structured settlement payment rights from a payee to a transferee.

(13) “Transferee” means a person who is receiving or will receive structured settlement payment rights from a payee.

B. The direct or indirect transfer of structured settlement payment rights shall not be effective nor shall a structured settlement obligor or annuity issuer be required to make a payment directly or indirectly to a transferee of structured settlement payment rights unless all of the following requirements are met:

(1) The transfer of structured settlement payment rights has been authorized in advance by ex parte order of a court of competent jurisdiction which had jurisdiction over the original tort or workers' compensation claim resolved by the structured settlement or in which the original tort or workers' compensation claim could have been brought, or in the parish where the payee resides at the time of filing the ex parte petition. At least twenty days prior to the issuance of the order, the transferee shall file a petition for transfer with the caption “Ex Parte Petition for Transfer of Structured Settlement Rights by (name of Transferee).”

(2) The transferee shall include with the petition, a copy of the transferee's application, a copy of the transfer agreement, and a disclosure statement to the payee in bold type, no smaller than 14 points, acknowledged by the payee specifying the following:

(a) The amounts and due dates of the structured settlement payments to be transferred.

(b) The aggregate amount of the payments.

(c) The discounted present value of the payments, together with the discount rate used in determining the discounted present value.

(d) The gross amount payable to the payee in exchange for the payments and an itemized listing of all brokers' commissions, service charges, application fees, processing fees, closing costs, filing fees, referral fees, administrative fees, legal fees, notary fees, and other commissions, fees, costs, expenses, and charges payable by the payee or deductible from the gross amount otherwise payable to the payee.

(e) The net amount payable to the payee after deduction of all commissions, fees, costs, expenses, and charges described in Subparagraph (d) of this Paragraph.

(f) The quotient, expressed as a percentage, obtained by dividing the net payment amount by the discounted present value of the payments, which shall be disclosed in the following statement: “The net amount that you will receive from us in exchange for your future structured settlement payments represents ___% of the estimated current value of the payments”.

(g) The effective annual interest rate, which rate shall be disclosed in the following statement: “Based on the net amount that you will receive from us and the amounts and timing of the structured settlement payments that you are turning over to us, you will, in effect, be paying interest to us at a rate of ___% per year”.

(h) The amount of any penalty and the aggregate amount of any liquidated damages, including penalties, payable by the payee in the event of a breach of the transfer agreement by the payee.

(i) The transferee has given written notice of the transferee's name, address, and taxpayer identification number to the annuity issuer and the structured settlement obligor.

(j) The transfer agreement provides that if the payee is domiciled in this state, any disputes between the parties will be governed, interpreted, construed, and enforced in accordance with the laws of this state and that the domicile state of the payee is the proper place of venue to bring any cause of action arising out of a breach of the agreement.

C. The court shall enter an order approving the transfer based on a finding of all of the following:

(1) That the payee received independent professional advice regarding the legal, tax, and financial implications of the transfer.

(2) That the transferee disclosed to the payee the discounted present value.

D. All costs of court for filing the petition for transfer of structured settlement rights shall be paid by the transferee.

E. If a transfer of structure settlement payment rights has been authorized under this Section, neither the annuity issuer nor the structured settlement obligor shall have any liability to the payee or to any other party for any payment made to the transferee in accordance with the authorization.

F. The provisions of this Section may not be waived.

G. This Section shall not be construed to authorize a transfer of structured settlement payment rights in contravention of applicable law or to give effect to a transfer of structured settlement payment rights that is invalid under applicable law.

H. A provision in a transfer agreement giving a transferee power to confess judgment against a payee is unenforceable to the extent that the amount of the judgment would exceed the amount paid by the transferee to the payee, less any payments received from the structured settlement obligor or the payee.

I. This Section shall not be construed to authorize any transfer of workers' compensation payment rights in contravention of applicable law or to give effect to any transfer of workers' compensation or other payment rights that is invalid under applicable law.

J. Any person who acquires directly or indirectly structured settlement payment rights in a structured settlement factoring transaction in advance of an order required by this Section may be subject to the tax imposed under the Internal Revenue Code, 26 U.S.C. 5891.

Maine

Maine Protection of Beneficiaries of Structured Settlements Act

1.ME. REV. ST ANN. tit. 24-A, § 2241 et seq. (1999)

24-A M.R.S.A. § 2241

Definitions

As used in this chapter, unless the context otherwise indicates, the following terms have the following meanings.

 

1. Annuity issuer. “Annuity issuer” means an insurer that has issued an insurance contract used to fund periodic payments under a structured settlement.

2. Applicable law. “Applicable law” means:

 

A. Federal law;

 

B. The laws of this State, including principles of equity applied in the courts of this State; and

 

C. The laws of any other jurisdiction:

 

 (1) That is the domicile of the payee or any other interested party;

 

(2) Under whose laws a structured settlement agreement was approved by a court or responsible administrative authority; or

 

(3) In whose courts a settled claim was pending when the parties entered into a structured settlement agreement.

 

3. Dependents. “Dependents” means a payee’s spouse and minor children and all other family members and other persons for whom the payee is legally obligated to provide support, including alimony.

 

4. Discounted present value. “Discounted present value” means the fair present value of future payments as determined by discounting such payments to the present using the applicable federal rate for determining the present value of an annuity most recently published by the United States Internal Revenue Service.

 

5. Favorable tax determination. “Favorable tax determination,” with respect to a proposed transfer of structured settlement payment rights, means any of the following authorities that definitively establishes that the federal income tax treatment of the structured settlement for the parties, other than the payee, to the structured settlement agreement and any qualified assignment agreement will not be affected by that transfer:

 

A. A provision of the United States Internal Revenue Code or a United States Treasury regulation adopted pursuant to the code;

 

B. A revenue ruling or revenue procedure issued by the United States Internal Revenue Service;

 

C. A private letter ruling by the United States Internal Revenue Service with respect to that transfer; or

 

D. A decision by the United States Supreme Court or a decision of a lower federal court in which the United States Internal Revenue Service has acquiesced.

 

6. Federal hardship standard. “Federal hardship standard” means a federal standard applicable to transfers of structured settlement payment rights based on findings of a court or responsible administrative authority regarding the payee’s needs, as contained in the United States Internal Revenue Code or in a United States Treasury regulation adopted pursuant to the code.

 

7. Independent professional advice. “Independent professional advice” means advice of an attorney, certified public accountant, actuary or other licensed professional advisor:

 

A. Who is engaged by a payee to render advice concerning the legal, tax and financial implications of a transfer of structured settlement payment rights;

 

B. Who is not in any manner affiliated with or compensated by the transferee of that transfer; and

 

C. Whose compensation for rendering advice is not affected by whether a transfer occurs or does not occur.

 

8. Interested parties. “Interested parties” means the payee, any beneficiary designated under the annuity contract to receive payments following the payee’s death and any other party that has continuing rights or obligations under the contract. For purposes of this chapter, “interested parties” does not include the structured settlement obligor or the annuity issuer.

 

9. Payee. “Payee” means an individual who is receiving tax-free damage payments under a structured settlement and proposes to make a transfer of payment rights under that settlement.

 

10. Qualified assignment agreement. “Qualified assignment agreement” means an agreement providing for a qualified assignment within the meaning of Section 130 of the United States Internal Revenue Code, United States Code, Title 26.

 

11. Responsible administrative authority. “Responsible administrative authority” means any government authority vested by law with exclusive jurisdiction over the settled claim resolved by a structured settlement.

 

12. Settled claim. “Settled claim” means the original tort claim or workers’ compensation claim resolved by a structured settlement.

 

13. Structured settlement. “Structured settlement” means an arrangement for periodic payment of damages for personal injuries established by settlement or judgment in resolution of a tort claim or for periodic payments in settlement of a workers’ compensation claim.

 

14. Structured settlement agreement. “Structured settlement agreement” means the agreement, judgment, stipulation or release embodying the terms of a structured settlement, including the rights of the payee to receive periodic payments.

15. Structured settlement obligor. “Structured settlement obligor” means the party that has the continuing periodic payment obligation to the payee under a structured settlement agreement or a qualified assignment agreement.

 

16. Structured settlement payment rights. “Structured settlement payment rights” means rights to receive periodic payments, including lump sum payments, under a structured settlement, whether from the settlement obligor or the annuity issuer, when:

 

A. The payee, structured settlement obligor, annuity issuer or any other interested party is domiciled in this State;

 

B. The structured settlement agreement was approved by a court or responsible administrative authority in this State; or

 

C. The settled claim was pending before the courts of this State when the parties entered into the structured settlement agreement.

 

17. Terms of structured settlement. “Terms of a structured settlement” means the terms of a structured settlement agreement, an annuity contract, any qualified assignment agreement and any order or approval of any court or responsible administrative authority or other government authority authorizing or approving the structured settlement.

 

18. Transfer. “Transfer” means any sale, assignment, pledge, hypothecation or other form of alienation or encumbrance made by a payee for consideration.

 

19. Transfer agreement. “Transfer agreement” means the agreement providing for transfer of structured settlement payment rights from a payee to a transferee.

 

20. Transferee. “Transferee” means a person that becomes entitled to receive structured settlement payment rights as a result of a transfer agreement.

 

24-A M.R.S.A. § 2242

Notice and registration requirements of transferees of structured settlements

1. Notice. A transferee of structured settlement payment rights that intends to do business in this State shall, prior to doing business, pay the appropriate fee at the rate established in section 601 and furnish notice to the superintendent to:

 

A. Identify the state in which the transferee is domiciled;

 

B. Identify the principal place of business of the group; and

 

C. Provide such other information as may be required by the superintendent.

2. Registration. The transferee shall register with the superintendent and designate an agent solely for the purpose of receiving service of legal documents or process.

 

3. Application of law. Any transferee that was doing business in this State prior to the effective date of this chapter within 30 days after the effective date of this chapter shall furnish notice to the superintendent pursuant to the requirements of subsection 1 and shall comply with the requirements of subsection 2.

 

4. Notice of change. A transferee that intends to do business or is doing business in this State shall notify the superintendent within 10 days of any subsequent changes in any information or other items provided pursuant to this section.

 

24-A M.R.S.A. § 2243

Transfer of structured settlement payment rights

1. Application. This section applies to any transfer of structured settlement payment rights under a transfer agreement entered into on or after the effective date of this section. This section may not be construed to imply that any transfer under a transfer agreement reached prior to the effective date of this section is effective.

 

2. Requirements for transfer. A direct or indirect transfer of structured settlement payment rights is not effective and a structured settlement obligor or annuity issuer is not required to make any payment directly or indirectly to any transferee of structured settlement payment rights unless the transfer has been authorized in advance in a final order of a court of competent jurisdiction or a responsible administrative authority, based on express findings by that court or responsible administrative authority that:

 

A. The transfer complies with the requirements of this chapter and does not contravene other applicable law;

 

B. Not less than 10 days prior to the date on which the payee first incurred any obligation with respect to the transfer, the transferee provided to the payee a disclosure statement in bold type, no smaller than 14 points, setting forth:

 

(1) The amounts and due dates of the structured settlement payments to be transferred;

 

(2) The aggregate amount of those payments;

 

(3) The discounted present value of those payments together with the discount rate used in determining that discounted present value;

 

(4) The gross amount payable to the payee in exchange for the payments;

 

(5) An itemized listing of all brokers’ commissions, service charges, application fees, processing fees, closing costs, filing fees, administrative fees, legal fees, notary fees and other commissions, fees, costs, expenses and charges payable by the payee or deductible from the gross amount otherwise payable to the payee;

 

(6) The net amount payable to the payee after deduction of all commissions, fees, costs, expenses and charges described in subparagraph (5);

 

(7) The quotient, expressed as a percentage, obtained by dividing the net payment amount by the discounted present value of the payments; and

 

(8) The amount of any penalty and the aggregate amount of any liquidated damages, inclusive of penalties, payable by the payee in the event of any breach of the transfer agreement by the payee;

 

C. The payee has established that the transfer is necessary to enable the payee, the payee’s dependents or both to avoid imminent financial hardship, and the transfer is not expected to subject the payee, the payee’s dependents or both to undue financial hardship in the future, except that if a federal hardship standard was in effect at the time the payee and the transferee entered into the transfer agreement, in lieu of the foregoing finding the court or responsible administrative authority must make an express finding that the transfer qualifies under that federal hardship standard;

 

D. The payee has received independent professional advice regarding the legal, tax and financial implications of the transfer;

 

E. If the transfer would contravene the terms of the structured settlement:

 

(1) The transfer has been expressly approved in writing by:

 

(a) Each interested party; and

 

(b) Any court or government authority, other than the court or responsible administrative authority from which authorization of the transfer is sought under this chapter, that previously approved the structured settlement; and

 

(2) Signed originals of all approvals required under subparagraph (1) have been filed with the court or responsible administrative authority from which authorization of the transfer is sought under this chapter and originals or copies have been furnished to all interested parties;

 

F. If the transfer would contravene the terms of the structured settlement, the transfer agreement does not have adverse tax consequences to the structured settlement obligor or annuity issuer. The structured settlement obligor or annuity issuer must demonstrate to the court or responsible administrative authority that the transfer agreement, if approved, will have adverse tax consequences; and

 

G. The transferee has given written notice of the transferee’s name, address and taxpayer identification number to the annuity issuer and the structured settlement obligor and has filed a copy of that notice with the court or responsible administrative authority.

 

24-A M.R.S.A. § 2244

Jurisdiction; filing

1. Jurisdiction. The Superior Court has nonexclusive jurisdiction over any application for authorization under this chapter of a transfer of structured settlement payment rights.

 

2. Filing. Not less than 30 days prior to the scheduled hearing on any application for authorization of a transfer of structured settlement payment rights under this chapter, the transferee shall file with the court or responsible administrative authority and serve on any other government authority that previously approved the structured settlement, all interested parties, the structured settlement obligor and annuity issuer a notice of the proposed transfer and the application of its authorization, including in that notice:

 

A. A copy of the transferee’s application;

 

B. A copy of the transfer agreement;

 

C. A copy of the disclosure statement required under section 2243, subsection 2, paragraph B;

D. Notification that any interested party, structured settlement obligor or annuity issuer is entitled to support, oppose or otherwise respond to the transferee’s application, either in person or by counsel, by submitting written comments to the court or responsible administrative authority or by participating in the hearing; and

 

E. Notification of the time and place of the hearing and notification of the manner in which and the time by which written responses to the application must be filed, which may be not less than 30 days after service of the transferee’s notice, in order to be considered by the court or responsible administrative authority.

 

24-A M.R.S.A. § 2245

Prohibitions

1. Prohibition against waiver. The provisions of this chapter may not be waived.

 

2. Prohibition against penalty. A payee who proposes to make a transfer of structured settlement payment rights may not incur a penalty, forfeit an application fee or other payment or otherwise incur any liability to the proposed transferee based on the failure of that transfer to satisfy the conditions of section 2243.

 

24-A M.R.S.A. § 2246

Construction

Nothing contained in this chapter may be construed to authorize a transfer of structured settlement payment rights in contravention of applicable law or to give effect to a transfer of structured settlement payment rights that is invalid under applicable law.

 

Maryland

Maryland Structured Settlements Act

MD. CODE ANN., CTS. & JUD. PROC. § 5-1101 et seq. (West 2000)

MD Code, Courts and Judicial Proceedings, § 5-1101

Definitions

In general

(a) In this subtitle the following words have the meanings indicated.

 

Discounted present value

(b) “Discounted present value” means the fair present value of future payments, as determined by discounting payments to the present using the most recently published applicable federal rate for determining the present value of an annuity, as issued by the United States Internal Revenue Service.

 

Independent professional advice

(c) “Independent professional advice” means advice of an attorney, certified public accountant, actuary, or other licensed professional adviser:

 

 (1) Who is engaged by a payee to render advice concerning the legal, tax, and financial implications of a transfer of structured settlement payment rights;

 

 (2) Who is not affiliated with or compensated by the transferee of the transfer; and

 

 (3) Whose compensation is not affected by whether a transfer occurs.

 

Interested parties

(d) “Interested parties” means the payee, each beneficiary designated under the annuity contract to receive payments following the payee’s death, the annuity issuer, the structured settlement obligor, and any other party that has continuing rights or obligations under a structured settlement.

 

Payee

(e) “Payee” means an individual who receives damage payments that are not subject to income taxation under a structured settlement and proposes to make a transfer of payment rights.

 

Responsible administrative authority

(f) “Responsible administrative authority” means a government authority vested with exclusive jurisdiction over the settled claim resolved by a structured settlement.

 

Structured settlement

(g)(1) “Structured settlement” means an arrangement for periodic payment of damages for personal injury established by a settlement or judgment in resolution of a tort claim.

 

 (2) “Structured settlement” does not include an arrangement for periodic payment of damages for personal injury established by a judgment by confession.

 

Structured settlement agreement

(h) “Structured settlement agreement” means an agreement, judgment, stipulation, or release embodying the terms of a structured settlement.

 

Structured settlement obligor

(i) “Structured settlement obligor” means a party who has the continuing periodic payment obligation to the payee under a structured settlement agreement or a qualified assignment agreement.

 

Structured settlement payment rights

(j) “Structured settlement payment rights” means the rights to receive periodic payments, including lump-sum payments under a structured settlement, whether from the settlement obligor or the annuity issuer, if:

 

 (1) An interested party is domiciled in this State;

 

 (2) The structured settlement agreement was approved by a court or responsible administrative authority in this State; or

 

 (3) The settled claim was pending before a court of this State when the parties entered into the structured settlement agreement.

 

Terms of the structured settlement

(k) “Terms of the structured settlement” includes the terms of the structured settlement agreement, the annuity contract, a qualified assignment, and an order or approval of a court or responsible administrative authority authorizing or approving a structured settlement.

 

In general

(l) “Transfer” means a sale, assignment, pledge, hypothecation, or other form of alienation or encumbrance made by a payee for consideration.

 

Transfer agreement

(m) “Transfer agreement” means the agreement providing for the transfer of structured settlement payment rights from a payee to a transferee.

 

MD Code, Courts and Judicial Proceedings, § 5-1102

Direct or indirect transfer of structured settlement payment rights

In general

(a) A direct or indirect transfer of structured settlement payment rights to a transferee is effective as provided in this subtitle.

 

Court order required for structured settlement payments

(b) A structured settlement obligor or annuity issuer may not make any payment directly or indirectly to a transferee of structured settlement payment rights unless the transfer is authorized in an order of a court based on a finding that:

 

 (1) The transfer is necessary, reasonable, or appropriate;

 

 (2) The transfer is not expected to subject the payee, the payee’s dependents, or both, to undue or unreasonable financial hardship in the future;

 

 (3) The payee received independent professional advice regarding the legal, tax, and financial implications of the transfer; and

 

 (4) The transferee disclosed to the payee the discounted present value.

 

MD Code, Courts and Judicial Proceedings, § 5-1103

Circuit court jurisdiction

Nonexclusive jurisdiction

(a) The circuit court that has jurisdiction over an interested party or the circuit court for the county in which the original claim occurred shall have nonexclusive jurisdiction over an application for a transfer of structured settlement payment rights under § 5-1102 of this subtitle.

 

Notice of proposed transfer and application for authorization

(b) A transferee shall file with the court and serve on the interested parties at least 20 days before the hearing on the application, a notice of the proposed transfer and an application for its authorization, including:

 

 (1) A copy of the transferee’s application;

 

 (2) A copy of the transfer agreement; and

 

(3) Notification:

 

 (i) Of the time and place of the hearing; and

 

 (ii) That each interested party is entitled to support, oppose, or otherwise respond to the transferee’s application, in person or by counsel, by submitting written comments to the court or by participating in the hearing.

MD Code, Courts and Judicial Proceedings, § 5-1104

Liability for payments to transferee

If a transfer of structure settlement payment rights has been authorized under this subtitle, neither the annuity issuer nor the structured settlement obligor shall have any liability to the payee or to any other party for any payment made to the transferee in accordance with the authorization.

MD Code, Courts and Judicial Proceedings, § 5-1105

Construction of subtitle and waiver of provisions

Waiver of provisions prohibited

(a) The provisions of this subtitle may not be waived.

 

Construction of subtitle

(b) Nothing contained in this subtitle may be construed to authorize a transfer of structured settlement payment rights in contravention of applicable law or to give effect to a transfer of structured settlement payment rights that is invalid under applicable law.

Massachusetts

Massachusetts Structured Settlement Contracts Act

MASS. GEN. LAWS ANN. ch. 231C, § 1 et seq. (West 2000)

M.G.L.A. 231C § 1

Definitions

For the purposes of this chapter the following words shall have the following meanings unless the context otherwise requires:

“Annuity issuer”, an insurer that has issued an annuity contract to be used to fund periodic payments under a structured settlement.

 

 “Applicable law”, any of the following, as applicable in interpreting the terms of a structured settlement:

 

 (1) the laws of the United States;

 

 (2) the laws of the commonwealth, including principles of equity applied in the courts of the commonwealth; and

 

 (3) the laws of any other jurisdiction; (i) that is the domicile of the payee or any other interested party; (ii) under whose law a structured settlement agreement was approved by a court or responsible administrative authority; or (iii) in whose courts a settled claim was pending when the parties entered into a structured settlement agreement.

 

 “Applicable federal rate”, the most recently published applicable rate for determining the present value of an annuity, as issued by the United States Internal Revenue Service pursuant to section 7520 of the United States Internal Revenue Code.

 

 “Assignee”, a party that acquires structured settlement payment rights directly or indirectly from a transferee of such rights.

“Dependents”, a payee’s spouse and minor children and all other family members and other persons from whom the payee is legally obligated to provide support, including spousal maintenance.

 

 “Discount/finance charge”, the sum of all charges payable directly or indirectly from assigned structured settlement payments and imposed directly or indirectly by the transferee as an incident to a transfer of structured settlement payment rights, including:

 

 (1) interest charges, discounts and other compensation for the time value of money;

 

 (2) all application, origination, processing, underwriting, closing, filing and notary fees and all similar charges, however denominated; and

 

 (3) all charges for commissions or brokerage, irrespective of the identity of the party to whom such charges are paid or payable.

 

The term discount/finance charge shall not include any fee or other obligation incurred by a payee in obtaining independent professional advice concerning a transfer of structured settlement payment rights.

 

“Discounted present value”, with respect to a proposed transfer of structured settlement payment rights, the fair present value of future payments, as determined by discounting the payments to the present using the most recently published applicable federal rate as the discount rate.

 

 “Independent professional advice”, advice of an attorney, certified public accountant, actuary, or other licensed professional advisor:

 

 (1) who is engaged by a payee to render advice concerning the legal, tax and financial implications of a transfer of structured settlement payment rights;

 

 (2) who is not in any manner affiliated with or compensated by the transferee of the transfer; and

 

 (3) whose compensation for providing the advice is not affected by whether or not a transfer occurs.

 

 “Interested party”, with respect to any structured settlement, the following:

 

 (1) the payee;

(2) a beneficiary irrevocably designated under the annuity contract to receive payments following the payee’s death or, if such designated beneficiary is a minor, the designated beneficiary’s parent or guardian;

(3) the annuity issuer;

 

 (4) the structured settlement obligor; and

 

 (5) any other party that has continuing rights or obligations under the structured settlement.

 

“Payee”, an individual who is receiving tax free damage payments under a structured settlement and proposes to make a transfer of payment rights under the structured settlement.

 

 “Qualified assignment agreement”, an agreement providing for a qualified assignment as provided by the United States Internal Revenue Code, Title 26, section 130.

 

 “Responsible administrative authority”, with respect to a structured settlement, a government authority vested by law with exclusive jurisdiction over the settled claim resolved by the structured settlement.

“Settled claim”, the original tort claim or workers’ compensation claim resolved by a structured settlement.

“Structured settlement”, an arrangement for periodic payment of damages for personal injuries or sickness established by settlement or judgment in resolution of a tort claim or for periodic payments in settlement of a workers’ compensation claim.

 

 “Structured settlement agreement”, the agreement, judgment, stipulation, or release embodying the terms of a structured settlement, including the rights of the payee to receive periodic payments.

 

 “Structured settlement obligor”, the party that has the obligation to make continuing periodic payments to the payee under a structured settlement agreement or a qualified assignment agreement.

 

“Structured settlement payment rights”, rights to receive periodic payments, including lump sum payment under a structured settlement, whether from the settlement obligor or the annuity issuer, where:

(1) the payee or any other interested party is domiciled in the state;

 

 (2) the structured settlement agreement was approved by a court or responsible administrative authority in the commonwealth; or

 

 (3) the settled claim was pending before a court of the commonwealth when the parties entered into the structured settlement agreement.

 

 “Terms of the structured settlement”, the terms of the structured settlement agreement, the annuity contract, a qualified assignment agreement and an order or approval of a court, responsible administrative authority or other government authority authorizing or approving the structured settlement.

 “Transfer”, a sale, assignment, pledge, hypothecation, or other form of alienation or encumbrance made by a payee for consideration.

“Transfer agreement”, the agreement providing for transfer of structured settlement payment rights from a payee to a transferee.

“Transferee”, a person who is receiving or will receive structured settlement payment rights resulting from a transfer.

 

M.G.L.A. 231C § 2

Transfers of structured settlement payment rights

(a) No direct or indirect transfer of structured settlement payment rights shall be effective, and no structured settlement obligor or annuity issuer shall be required to make a payment directly or indirectly to a transferee of structured settlement payment rights, unless the transfer has been authorized in advance in a final order of a court of competent jurisdiction or responsible administrative authority, such as an administrative law judge, based on the court’s or responsible administrative authority’s written express findings that:

 

 (1) the transfer complies with the requirements of this chapter and will not contravene other applicable law;

 

 (2) not less than ten days before the date on which the payee first incurred an obligation with respect to the transfer, the transferee has provided to the payee a disclosure statement in bold type, no smaller than 14 points, specifying:

 

 (i) the amounts and due dates of the structures settlement payments to be transferred;

 

 (ii) the aggregate amount of the payments;

 

 (iii) the discounted present value of the payments, together with the discount rate used in determining the discounted present value;

 

(iv) the gross amount payable to the payee in exchange for the payments;

(v) an itemized listing of all brokers’ commissions, service charges, application fees, processing fees, closing costs, filing fees, referral fees, administrative fees, legal fees, notary fees, and other commissions, fees, costs, expenses and charges payable by the payee or deductible from the gross amount otherwise payable to the payee;

 

 (vi) the net amount payable to the payee after deduction of all commissions, fees, costs, expenses and charges described in clause (v);

 

 (vii) the quotient, expressed as a percentage, obtained by dividing the net payment amount by the discounted present value of the payments, which shall be disclosed in the statement as follows: “The net amount that you will receive from us in exchange for your future structured settlement payments represent ___% of the estimated current value of the payments”;

 

 (viii) the effective annual interest rate, which rate shall be disclosed in the statement as follows: “Based on the net amount that you receive from us and the amounts and timing of the structured settlement payments that you are turning over to us, you will, in effect, be paying interest to us at a rate of ___% per year”; and

 

 (ix) the amount of any penalty and the aggregate amount of any liquidated damages, including penalties payable by the payee in the event of a breach of the transfer agreement by the payee;

 

 (3) the payee has established that the transfer is in the best interests of the payee and the payee’s dependents;

 

 (4) the payee has received, or waived the right to receive independent professional advice regarding the legal, tax and financial implications of the transfer;

 

 (5) the transferee has given written notice of the transferee’s name, address, and taxpayer identification number to the annuity issuer and the structured settlement obligor and has filed a copy of the notice with the court or responsible administrative authority;

 

 (6) the transfer agreement provides that if the payee is domiciled in the commonwealth, any disputes between the parties shall be governed, interpreted, construed, and enforced in accordance with the laws of the commonwealth and that the domicile state of the payee is the proper place of venue to bring any cause of action arising out of a breach of the agreement; and

 

 (7) the court or responsible administrative agency has made a determination that the net amount payable to the payee is fair, just and reasonable under the circumstances then existing.

 

 (b) The transfer agreement shall also provide that the parties agree to the jurisdiction of any court of competent jurisdiction located in the commonwealth. If the transfer would contravene the terms of the structured settlement, upon the filing of a written objection by any interested party and after considering the objection and any response to it, the court or responsible administrative authority may grant, deny or impose conditions upon the proposed transfer as the court or responsible administrative authority deems just and proper under the facts and circumstances in accordance with established principles of law. Any order approving the transfer shall require that the transferee indemnify the annuity issuer and the structured settlement obligor for any liability including reasonable costs and attorney’s fees arising from compliance by the issuer or obligor with the order of the court or responsible administrative authority.

 

 (c) A provision in a transfer agreement giving a transferee power to confess judgment against a payee shall be unenforceable to the extent the amount of the judgment would exceed the amount paid by the transferee to the payee, less any payments received from the structured settlement obligor or the payee.

 

 (d) In negotiating a structured settlement of claims brought by or on behalf of a claimant who is domiciled in the commonwealth, the structured settlement obligor shall disclose in writing to the claimant or the claimant’s legal representative all of the following information that is not otherwise specified in the structured settlement agreement:

 

 (1) the amounts and due dates of the periodic payments to be made under the structured settlement agreement; in the case of payments that will be subject to periodic percentage increases, the amounts of future payments may be disclosed by identifying the base payment amount, the amount and timing of scheduled increases, and the manner in which increases will be compounded;

 

 (2) the amount of the premium payable to the annuity issuer;

 

 (3) the discounted present value of all periodic payments that are not life-contingent, together with the discount rate used in determining the discounted present value;

 

 (4) the nature and amount of any cost that may be deducted from any of the periodic payments;

 

 (5) where applicable, that any transfer of the periodic payments is prohibited by the terms of the structured settlement and may otherwise be prohibited or restricted under applicable law; and

 

 (6) that any transfer of the periodic payments by the claimant may subject the claimant to serious adverse tax consequences.

 

 (e) The district court shall have nonexclusive jurisdiction over an application for authorization of a transfer of structured settlement payment rights.

 

 (f) Not less than 20 days before the scheduled hearing on an application for authorization of a transfer of structured settlement payment rights, the transferee shall file with the court or responsible administrative authority, any other government authority that previously approved the structured settlement, and all interested parties a notice of the proposed transfer and the application for its authorization. The notice shall include:

 

 (1) a copy of the transferee’s application to the court or responsible administrative authority;

 

 (2) a copy of the transfer agreement;

 

 (3) a copy of the disclosure statement required under this section;

 

 (4) notification that an interested party is entitled to support, oppose, or otherwise respond to the transferee’s application, either in person or by counsel, by submitting written comments to the court or responsible administrative authority or by participating in the hearing; and

 

 (5) notification of the time and place of the hearing and notification of the manner in which and the time by which written responses to the application shall be filed, in order to be considered by the court or responsible administrative authority.

 

Written responses to the application shall be filed within 15 days after service of the transferee’s notice.

 

M.G.L.A. 231C § 3

Waiver of Secs. 2 to 4; payee penalty for failure to transfer

(a) The provisions of sections 2 to 4, inclusive, shall not be waived.

 

 (b) No payee who proposes to make a transfer of structured settlement payment rights shall incur a penalty, forfeit an application fee or other payment, or otherwise incur any liability to the proposed transferee based on the failure of the transfer to satisfy the conditions of section 2.

M.G.L.A. 231C § 4

Violations of discount/finance charge stipulation or of disclosure requirements; penalties; civil actions by attorney general

 (a) If in connection with a transfer of structured settlement payment rights, a transferee has violated the discount/finance charge stipulation, neither the transferee nor any assignee shall be entitled to collect from the transferred payment rights, or from the payee, any amount in excess of the net advance amount, and the payee shall have a right to recover from the transferee or any assignee:

 

 (1) a refund of any excess amounts previously received by the transferee or any assignee;

 

 (2) a penalty in an amount determined by the court; and

 

 (3) reasonable costs and attorney’s fees.

 

 (b) If in connection with a transfer of structured settlement payment rights, the transferee has violated the disclosure requirements in section 3, the transferee and any assignees shall be liable to the payee for:

 

 (1) a penalty in an amount determined by the court; and

 

 (2) reasonable costs and attorney’s fees.

 

 (c) A transferee or assignee shall not be liable for a penalty in any action brought under this section if the transferee or assignee establishes by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error, notwithstanding the transferee’s maintenance of procedures reasonably designed to avoid such errors.

 

 (d) No action may be brought under this section if:

 

 (1) in the case of a violation of the discount/finance charge stipulation, more than one year after the due date of the last transferred structured settlement payment; and

 

 (2) in the case of the disclosure requirements of section 2, more than one year after the due date of the first transferred structured settlement payment.

 

 (e) If the attorney general has reason to believe that any transferee has violated this chapter, the attorney general may bring a civil action for injunctive relief and such penalties and other relief as may be appropriate to secure compliance with this chapter.

 

M.G.L.A. 231C § 5

Applicability of this chapter to workers’ compensation payment rights

Nothing contained in this chapter shall be construed to authorize any transfer of workers’ compensation payment rights in contravention of applicable law or to give effect to any transfer of workers’ compensation or other payment rights that is invalid under applicable law.

Michigan

Michigan Revised Structured Settlement Protection Act

Mich. Compiled Laws Ann. § 691.1301 et seq. (West 2006)

M.C.L.A. 691.1301

Short title

Sec. 1. This act shall be known and may be cited as the “revised structured settlement protection act”.

 

M.C.L.A. 691.1302

Definitions

Sec. 2. As used in this act:

 

(a) “Annuity issuer” means an insurer that has issued a contract to fund periodic payments under a structured settlement.

 

(b) “Dependent” means a payee’s spouse, minor child, or any other person for whom the payee is legally obligated to provide support, including alimony.

 

(c) “Discounted present value” means the present value of future payments determined by discounting the payments to the present using the most recently published applicable federal rate for determining the present value of an annuity, as issued by the internal revenue service.

 

(d) “Gross advance amount” means the sum payable to the payee or for the payee’s account as consideration for a transfer of structured settlement payment rights before reduction in that sum for transfer expenses or other deductions.

 

(e) “Imminent financial hardship” means the inability of the payee, because of a change in the payee’s circumstances after the execution of the initial structured settlement agreement, to purchase or pay for 1 or more of the following without the transfer:

 

(i) Medical care or a medical device for the payee or the payee’s dependents.

 

(ii) Living quarters for the payee.

 

(iii) A motor vehicle necessary for the payee’s transportation if the payee has no other suitable transportation options.

 

(iv) Education or job training expenses.

 

(v) Debts of the payee resulting from child support, alimony, a tax lien, funeral expenses, or a judgment.

 

(f) “Independent professional advice” means advice of an attorney, certified public accountant, actuary, or other licensed professional adviser.

 

(g) “Interested party” means, with respect to a structured settlement, the payee, a beneficiary irrevocably designated under an annuity contract to receive payments following the payee’s death, an annuity issuer, a structured settlement obligor, or any other person that has continuing rights or obligations under the structured settlement.

 

(h) “Net advance amount” means the gross advance amount less the aggregate amount of the actual and estimated transfer expenses required to be disclosed under section 3(e).1

 

(i) “Payee” means an individual who receives tax free payments under a structured settlement and who proposes to make a transfer of payment rights under the structured settlement.

 

(j) “Periodic payments” means both recurring payments and scheduled future lump sum payments.

 

(k) “Qualified assignment agreement” means an agreement providing for a qualified assignment as defined in section 130 of the internal revenue code, 26 USC 130.

 

(l) “Settled claim” means the original tort claim resolved by a structured settlement.

 

(m) “Structured settlement” means an arrangement for periodic payment of damages for personal injuries or sickness established by settlement or judgment to resolve a tort claim. Structured settlement does not include an arrangement for periodic payments to settle a worker’s compensation claim.

 

 (n) “Structured settlement agreement” means an agreement, judgment, stipulation, or release embodying the terms of a structured settlement.

 

 (o) “Structured settlement obligor” means, with respect to a structured settlement, a person that has a continuing obligation to make periodic payments to a payee under the structured settlement agreement or a qualified assignment agreement.

 

 (p) “Structured settlement payment rights” means rights to receive periodic payments under a structured settlement, whether from the structured settlement obligor or the annuity issuer, if 1 or more of the following conditions exist:

 

 (i) The payee is domiciled in, or the domicile or principal place of business of the structured settlement obligor or the annuity issuer is located in, this state.

 

 (ii) The structured settlement agreement was approved by a court in this state.

 

 (iii) The structured settlement agreement is expressly governed by the laws of this state.

 

 (q) “Terms of the structured settlement” means, with respect to a structured settlement, the terms of the structured settlement agreement, an annuity contract, a qualified assignment agreement, or an order or other approval of a court that authorized or approved the structured settlement.

 

(r) “Transfer” means a sale, assignment, pledge, hypothecation, or other alienation or encumbrance of structured settlement payment rights a payee makes for consideration; except that “transfer” does not include the creation or perfection of a security interest in structured settlement payment rights under a blanket security agreement entered into with an insured depository institution, unless action has been taken to redirect the structured settlement payments to the insured depository institution or to an agent or successor in interest of the depository institution, or action has been taken to otherwise enforce the blanket security interest against the structured settlement payment rights.

 

 (s) “Transfer agreement” means an agreement providing for a transfer of structured settlement payment rights.

 

 (t) “Transfer expenses” means all expenses of a transfer that the transfer agreement requires the payee to pay or have deducted from the gross advance amount, including, but not limited to, court filing fees, attorney fees, escrow fees, lien recordation fees, judgment and lien search fees, finders’ fees, commissions, and other payments to a broker or other intermediary. Transfer expenses do not include preexisting obligations of the payee that are payable for the payee’s account from the proceeds of a transfer.

 

 (u) “Transferee” means a person acquiring or proposing to acquire structured settlement payment rights through a transfer.

M.C.L.A. 691.1303

Separate disclosure statement provided by transferee; time; type size; contents

Sec. 3. Not less than 3 days before the date on which a payee signs a transfer agreement, the transferee shall provide to the payee a separate disclosure statement in bold type no smaller than 14 points setting forth all of the following:

 

(a) The amounts and due dates of the structured settlement payments to be transferred.

 

(b) The aggregate amount of the payments.

 

(c) The discounted present value of the payments to be transferred, which shall be identified as the calculation of current value of the transferred structured settlement payments under federal standards for valuing annuities, and the amount of the applicable federal rate used in calculating the discounted present value.

 

 (d) The gross advance amount.

 

 (e) An itemized listing of all applicable transfer expenses, other than attorney fees and related disbursements payable in connection with the transferee’s application for approval of the transfer, and the transferee’s best estimate of the amount of the fees and disbursements.

 

 (f) The net advance amount.

 

 (g) The amount of penalties or liquidated damages payable by the payee if the payee breaches the transfer agreement.

(h) A statement that the payee has the right to cancel the transfer agreement without penalty or further obligation not later than the third business day after the date that the payee signs the agreement.

M.C.L.A. 691.1304

Transfer of structured settlement payment rights; ineffective unless approved in final court order; findings

Sec. 4. A direct or indirect transfer of structured settlement payment rights is not effective and a structured settlement obligor or annuity issuer is not required to make a payment directly or indirectly to a transferee of structured settlement payment rights unless the transfer has been approved in a final court order and the order is based on express findings of all of the following:

 

 (a) The transfer is in the best interest of the payee, taking into account the welfare and support of the payee’s dependents.

 

 (b) The transferee has advised the payee, in writing, to seek independent professional advice regarding the transfer, and the payee has either received independent professional advice or knowingly waived in writing the opportunity to seek advice.

 

 (c) The transfer does not contravene an applicable statute or order of the court or other government authority.

 

 (d) The discount rate or rates used in determining the discounted present value of the structured settlement payments to be transferred do not exceed 25% per year.

 

 (e) If the transfer is inconsistent with a restriction against assignment in the structured settlement agreement and if the structured settlement obligor objects to the transfer based on the restriction against assignment before the hearing on the application for approval of the transfer, all of the following:

 

 (i) The payee will suffer imminent financial hardship if the transfer is not approved.

 

 (ii) The transfer will not render the payee unable to pay current or future normal living expenses.

 

 (iii) The transfer order will restrict payment of the gross advance amount to direct payment to the provider of the goods or services that are the subject of the imminent financial hardship. If the total cost of the goods or services cannot be readily determined at the time of or within a reasonable time after the transfer, the court may exercise reasonable discretion in ordering such direct payments.

M.C.L.A. 691.1305

Transfers of structured settlement payment rights; effects

Sec. 5. A transfer of structured settlement payment rights under this act has all of the following effects:

 

(a) The structured settlement obligor and the annuity issuer are discharged and released from all liability for the transferred payments as to any person except the transferee.

 

 (b) The transferee is liable to the structured settlement obligor and the annuity issuer for both of the following:

 

 (i) If the transfer contravenes the terms of the structured settlement, the taxes incurred by the structured settlement obligor and the annuity issuer as a consequence of the transfer.

 

 (ii) Other liabilities or costs, including reasonable costs and attorney fees, arising from the structured settlement obligor’s and the annuity issuer’s compliance with the order of the court or from the transferee’s failure to comply with this act.

(c) An annuity issuer or a structured settlement obligor is not required to divide a periodic payment between the payee and a transferee or assignee or between 2 or more transferees or assignees.

 

 (d) A payee may make a further transfer of structured settlement payment rights only after complying with all of the requirements of this act.

 

M.C.L.A. 691.1306

Transfers of structured settlement payment rights; application for court approval; jurisdiction of court; notice of proposed transfer and application for its authorization, filing with court and service on interested parties, inclusions

Sec. 6. (1) The transferee may apply for approval of a transfer of structured settlement payment rights with the court in the county in which the payee resides, in the county in which the structured settlement obligor or the annuity issuer maintains its principal place of business, or with the court that approved the structured settlement agreement.

 

 (2) Not less than 20 days before the scheduled hearing on an application for approval of a transfer of structured settlement payment rights under section 4,1 the transferee shall file with the court and serve on all interested parties a notice of the proposed transfer and the application for its authorization, and shall include with the notice all of the following:

(a) A copy of the transferee’s application.

(b) A copy of the transfer agreement.

 

 (c) A copy of the disclosure statement required under section 3.2

(d) A listing of each of the payee’s dependents and each dependent’s age.

 

(e) Notice that any interested party is entitled to support, oppose, or otherwise respond to the transferee’s application, either in person or by counsel, by submitting written comments to the court or by participating in the hearing.

 

 (f) Notice of the time and place of the hearing and of the manner in which and the time by which written responses to the application must be filed to be considered by the court. The time for filing written responses shall be not less than 15 days after service of the transferee’s notice.

M.C.L.A. 691.1307

Waiver of act provisions prohibited; determination of disputes; life-contingent transfers; effects of failure of proposed transfer; transfers in contravention of law and agreements entered into before effective date of act; responsibilities of transferee

Sec. 7. (1) A payee shall not waive a provision of this act.

 

 (2) A transfer agreement entered into on or after the effective date of this act by a payee who resides in this state shall provide that disputes under the transfer agreement, including a claim that the payee has breached the agreement, shall be determined in and under the laws of this state. A transfer agreement shall not authorize the transferee or any other person to confess judgment or consent to entry of judgment against the payee.

 

 (3) A transfer of structured settlement payment rights that are life-contingent is not effective unless, before the date on which the payee signs the transfer agreement, the transferee has established and has agreed to maintain procedures reasonably satisfactory to the annuity issuer and the structured settlement obligor for both of the following:

 

 (a) Periodically confirming the payee’s survival.

 

 (b) Giving the annuity issuer and the structured settlement obligor prompt written notice in the event of the payee’s death.

 

 (4) A payee who proposes to make a transfer of structured settlement payment rights shall not incur a penalty, forfeit an application fee or other payment, or otherwise incur liability to the proposed transferee or assignee based on the failure of the transfer to satisfy the conditions of this act.

 

 (5) This act does not authorize a transfer of structured settlement payment rights in contravention of law or validate or invalidate a transfer under a transfer agreement entered into before the effective date of this act.

 

 (6) The transferee has sole responsibility for complying with the requirements in section 31 and fulfilling the conditions in section 42 in a transfer of structured settlement payment rights. A structured settlement obligor or annuity issuer shall not bear any responsibility or liability arising from a transferee’s failure to comply with those requirements or to fulfill those conditions.

M.C.L.A. 691.1308

Application of act

Sec. 8. This act applies to a transfer of structured settlement payment rights under any transfer agreement entered into on or after the thirtieth day after the effective date of this act.

M.C.L.A. 691.1309

Repealer

Sec. 9. The structured settlement protection act, 2000 PA 330, MCL 691.1191 to 691.1197, is repealed effective 30 days after the effective date of this act.

 

M.C.L.A. 691.1310

Effective date

Sec. 10. This act takes effect September 1, 2006.

Minnesota

Minnesota Structured Settlements Act

MINN. STAT. Ann. § 549.30 et seq. (West 1999; amended in 2014)

M.S.A. § 549.30

Definitions

Subdivision 1. Application. For purposes of sections 549.30 to 549.34, the terms defined in this section have the meanings given them.

 

Subd. 2. Annuity issuer. “Annuity issuer” means an insurer that has issued an annuity contract to be used to fund periodic payments under a structured settlement.

 

Subd. 3. Applicable law. “Applicable law” means: (1) the laws of the United States; (2) the laws of this state, including principles of equity applied in the courts of this state; and (3) the laws of any other jurisdiction: (i) which is the domicile of the payee or any other interested party; (ii) under whose laws a structured settlement agreement was approved by a court or responsible administrative authority; or (iii) in whose courts a settled claim was pending when the parties entered into a structured settlement agreement.

 

Subd. 4. Dependents. “Dependents” means a payee’s spouse and minor children and all other family members and other persons for whom the payee is legally obligated to provide support, including spousal maintenance.

 

Subd. 5. Discounted present value. “Discounted present value” means, with respect to a proposed transfer of structured settlement payment rights, the fair present value of future payments, as determined by discounting the payments to the present using the most recently published applicable federal rate for determining the present value of an annuity, as issued by the United States Internal Revenue Service.

 

Subd. 6. Independent professional advice. “Independent professional advice” means advice of an attorney, certified public accountant, actuary, or other professional adviser: (1) who is engaged by a payee to render advice concerning the legal, tax, and financial implications of a transfer of structured settlement payment rights; (2) who is not in any manner affiliated with or compensated by the transferee of the transfer; and (3) whose compensation for providing the advice is not affected by whether a transfer occurs or does not occur.

 

Subd. 7. Interested parties. “Interested parties” means the payee, a beneficiary designated under the annuity contract to receive payments following the payee’s death or, if the designated beneficiary is a minor, the designated beneficiary’s parent or guardian, the annuity issuer, the structured settlement obligor, and any other party that has continuing rights or obligations under the structured settlement.

 

Subd. 8. Payee. “Payee” means an individual who is receiving tax-free damage payments under a structured settlement and proposes to make a transfer of payment rights under the structured settlement.

 

Subd. 9. Qualified assignment agreement. “Qualified assignment agreement” means an agreement providing for a qualified assignment as provided by the United States Internal Revenue Code, title 26, section 130, as amended through December 31, 1998.1

 

Subd. 10. Responsible administrative authority. “Responsible administrative authority” means a government authority vested by law with exclusive jurisdiction over the settled claim resolved by the structured settlement.

 

Subd. 11. Settled claim. “Settled claim” means the original tort claim or workers’ compensation claim resolved by a structured settlement.

 

Subd. 12. Structured settlement. “Structured settlement” means an arrangement for periodic payment of damages for personal injuries established by settlement or judgment in resolution of a tort claim or for periodic payments in settlement of a workers’ compensation claim.

 

Subd. 13. Structured settlement agreement. “Structured settlement agreement” means the agreement, judgment, stipulation, or release embodying the terms of a structured settlement, including the rights of the payee to receive periodic payments.

 

Subd. 14. Structured settlement obligor. “Structured settlement obligor” means the party that has the continuing periodic payment obligation to the payee under a structured settlement agreement or a qualified assignment agreement.

 

Subd. 15. Structured settlement payment rights. “Structured settlement payment rights” means rights to receive periodic payments, including lump-sum payments, under a structured settlement, whether from the settlement obligor or the annuity issuer, where: (1) the payee or any other interested party is domiciled in the state; (2) the structured settlement agreement was approved by a court or responsible administrative authority in the state; or (3) the settled claim was pending before the courts of this state when the parties entered into the structured settlement agreement.

 

Subd. 16. Terms of the structured settlement. “Terms of the structured settlement” means the terms of the structured settlement agreement, the annuity contract, a qualified assignment agreement, and an order or approval of a court, responsible administrative authority, or other government authority authorizing or approving the structured settlement.

Subd. 17. Transfer. “Transfer” means a sale, assignment, pledge, hypothecation, or other form of alienation or encumbrance made by a payee for consideration.

 

Subd. 18. Transfer agreement. “Transfer agreement” means the agreement providing for transfer of structured settlement payment rights from a payee to a transferee.

 

Subd. 19. Transferee. “Transferee” means a person who is receiving or will receive structured settlement payment rights resulting from a transfer.

 

M.S.A. § 549.31

Conditions to transfers of structured settlement payment rights and structured settlement agreements

Subdivision 1. Generally. No direct or indirect transfer of structured settlement payment rights is effective and no structured settlement obligor or annuity issuer is required to make a payment directly or indirectly to a transferee of structured settlement payment rights unless the transfer has been authorized in advance in a final order of a court of competent jurisdiction or responsible administrative authority, based on the court’s or responsible administrative authority’s written express findings that:

 

(a) the transfer complies with the requirements of sections 549.31 to 549.34 and will not contravene other applicable law;

 

 (b) not less than ten days before the date on which the payee first incurred an obligation with respect to the transfer, the transferee has provided to the payee a disclosure statement in bold type, no smaller than 14 points, specifying:

 

 (1) the amounts and due dates of the structured settlement payments to be transferred;

 

 (2) the aggregate amount of the payments;

 

 (3) the discounted present value of the payments, together with the discount rate used in determining the discounted present value;

 

 (4) the gross amount payable to the payee in exchange for the payments;

 

 (5) an itemized listing of all brokers’ commissions, service charges, application fees, processing fees, closing costs, filing fees, referral fees, administrative fees, legal fees, notary fees, and other commissions, fees, costs, expenses, and charges payable by the payee or deductible from the gross amount otherwise payable to the payee;

 

 (6) the net amount payable to the payee after deduction of all commissions, fees, costs, expenses, and charges described in clause (5);

 

 (7) the quotient, expressed as a percentage, obtained by dividing the net payment amount by the discounted present value of the payments; and

 

 (8) the amount of any penalty and the aggregate amount of any liquidated damages, including penalties, payable by the payee in the event of a breach of the transfer agreement by the payee;

 

 (c) the payee has established that the transfer is in the best interests of the payee and the payee’s dependents;

 

 (d) the payee has received independent professional advice regarding the legal, tax, and financial implications of the transfer;

 

 (e) the transferee has given written notice of the transferee’s name, address, and taxpayer identification number to the annuity issuer and the structured settlement obligor and has filed a copy of the notice with the court or responsible administrative authority; and

 

 (f) that the transfer agreement provides that any disputes between the parties will be governed, interpreted, construed, and enforced in accordance with the laws of this state and that the domicile state of the payee is the proper place of venue to bring any cause of action arising out of a breach of the agreement. The transfer agreement must also provide that the parties agree to the jurisdiction of any court of competent jurisdiction located in this state.

 

If the transfer would contravene the terms of the structured settlement, upon the filing of a written objection by any interested party and after considering the objection and any response to it, the court or responsible administrative authority may grant, deny, or impose conditions upon the proposed transfer as the court or responsible administrative authority deems just and proper under the facts and circumstances in accordance with established principles of law. Any order approving a transfer must require that the transferee indemnify the annuity issuer and the structured settlement obligor for any liability including reasonable costs and attorney fees arising from compliance by the issuer or obligor with the order of the court or responsible administrative authority.

 

Subd. 2. Unenforceable confessions of judgment. A provision in a transfer agreement giving a transferee power to confess judgment against a payee is unenforceable to the extent the amount of the judgment would exceed the amount paid by the transferee to the payee, less any payments received from the structured settlement obligor or the payee.

 

Subd. 3. Initial disclosure of structured settlement terms. In negotiating a structured settlement of claims brought by or on behalf of a claimant who is domiciled in this state, the structured settlement obligor shall disclose in writing to the claimant or the claimant’s legal representative all of the following information that is not otherwise specified in the structured settlement agreement:

 

 (1) the amounts and due dates of the periodic payments to be made under the structured settlement agreement. In the case of payments that will be subject to periodic percentage increases, the amounts of future payments may be disclosed by identifying the base payment amount, the amount and timing of scheduled increases, and the manner in which increases will be compounded;

 

 (2) the amount of the premium payable to the annuity issuer;

 

 (3) the discounted present value of all periodic payments that are not life-contingent, together with the discount rate used in determining the discounted present value;

 

 (4) the nature and amount of any cost that may be deducted from any of the periodic payments;

 

 (5) where applicable, that any transfer of the periodic payments is prohibited by the terms of the structured settlement and may otherwise be prohibited or restricted under applicable law; and

 

 (6) that any transfer of the periodic payments by the claimant may subject the claimant to serious adverse tax consequences.

 

M.S.A. § 549.32

Jurisdiction; procedure for approval of transfers

Effective: August 1, 2014

Subdivision 1. Jurisdiction. The district court has nonexclusive jurisdiction over an application for authorization under section 549.31 of a transfer of structured settlement payment rights.

 

Subd. 2. Notice. Not less than 20 days before the scheduled hearing on an application for authorization of a transfer of structured settlement payment rights under section 549.31, the transferee shall file with the court or responsible administrative authority and serve on: any other government authority that previously approved the structured settlement; and all interested parties, a notice of the proposed transfer and the application for its authorization. The notice must include:

 

 (1) a copy of the transferee’s application to the court or responsible administrative authority;

 

 (2) a copy of the transfer agreement;

 

 (3) a copy of the disclosure statement required under section 549.31, subdivision 1, paragraph (b);

 

 (4) notification that an interested party is entitled to support, oppose, or otherwise respond to the transferee’s application, either in person or by counsel, by submitting written comments to the court or responsible administrative authority or by participating in the hearing;

 

 (5) notification of the time and place of the hearing and notification of the manner in which and the time by which written responses to the application must be filed, in order to be considered by the court or responsible administrative authority. Written responses to the application must be filed within 15 days after service of the transferee’s notice; and

 

 (6) notification of the date and judicial district of any prior application for transfer filed by the transferee relating to a prior proposed transfer with the payee, including whether the prior application was granted or denied. If any prior application was granted, the notice shall provide the amount and due dates of any structured settlement payments that were transferred, the aggregate amount of the payments, the discounted present value of the payments, and the gross amount that was payable to the payee in exchange for the payments.

 

M.S.A. § 549.33

No waiver; no penalties

Subdivision 1. No waiver. The provisions of sections 549.30 to 549.34 may not be waived.

 

Subd. 2. No penalty. No payee who proposes to make a transfer of structured settlement payment rights shall incur a penalty, forfeit an application fee or other payment, or otherwise incur any liability to the proposed transferee based on the failure of the transfer to satisfy the conditions of section 549.31.

 

M.S.A. § 549.34

Construction

Nothing contained in sections 549.30 to 549.34 may be construed to authorize the transfer of workers’ compensation payment rights in contravention of applicable law or to give effect to the transfer of workers’ compensation payment rights that is invalid under applicable law.

Mississippi

Mississippi Structured Settlements Act

MISS. CODE ANN. § 11-57-1 et seq. (West 2002)

Miss. Code Ann. § 11-57-1

Short title

This chapter shall be known and may be cited as the “Structured Settlement Protection Act.”

Miss. Code Ann. § 11-57-3

Definitions

The following words and phrases shall have the meanings ascribed herein, unless the context clearly indicates otherwise:

 

 (a) “Annuity issuer” means an insurer that has issued a contract to fund periodic payments under a structured settlement.

 

 (b) “Dependents” include a payee’s spouse and minor children and all other persons for whom the payee is legally obligated to provide support, including alimony.

(c) “Discounted present value” means the present value of future payments determined by discounting such payments to the present using the most recently published Applicable Federal Rate for determining the present value of an annuity, as issued by the United States Internal Revenue Service.

 

 (d) “Gross advance amount” means the sum payable to the payee or for the payee’s account as consideration for a transfer of structured settlement payment rights before any reductions for transfer expenses or other deductions to be made from such consideration.

 

 (e) “Independent professional advice” means advice of an attorney, certified public accountant, actuary or other licensed professional adviser.

 

 (f) “Interested parties” means, with respect to any structured settlement, the payee, any beneficiary irrevocably designated under the annuity contract to receive payments following the payee’s death, the annuity issuer, the structured settlement obligor, and any other party that has continuing rights or obligations under such structured settlement.

 

 (g) “Net advance amount” means the gross advance amount less the aggregate amount of the actual and estimated transfer expenses required to be disclosed under Section 11-57-5(e).

 

(h) “Payee” means an individual who is receiving tax-free payments under a structured settlement and proposes to make a transfer of payment rights thereunder.

 

 (i) “Periodic payments” includes both recurring payments and scheduled future lump-sum payments.

 

 (j) “Qualified assignment agreement” means an agreement providing for a qualified assignment within the meaning of 26 USCS 130.

 

 (k) “Responsible administrative authority” means, with respect to a structured settlement, any government authority vested by law with exclusive jurisdiction over the settled claim resolved by such structured settlement.

 

 (l) “Settled claim” means the original tort claim or workers’ compensation claim resolved by a structured settlement.

 

 (m) “Structured settlement” means an arrangement for periodic payment of damages for personal injuries or sickness established by settlement or judgment in resolution of a tort claim or for periodic payments in settlement of a workers’ compensation claim.

 

 (n) “Structured settlement agreement” means the agreement, judgment, stipulation or release embodying the terms of a structured settlement.

 

 (o) “Structured settlement obligor” means, with respect to any structured settlement, the party that has the continuing obligation to make periodic payments to the payee under a structured settlement agreement or a qualified assignment agreement.

 

 (p) “Structured settlement payment rights” means rights to receive periodic payments under a structured settlement, whether from the structured settlement obligor or the annuity issuer, where:

 

 (i) The payee is domiciled in, or the domicile or principal place of business of the structured settlement obligor or the annuity issuer is located in, this state;

(ii) The structured settlement agreement was approved by a court or responsible administrative authority in this state; or

 

 (iii) The structured settlement agreement is expressly governed by the laws of this state.

 

(q) “Terms of the structured settlement” includes, with respect to any structured settlement, the terms of the structured settlement agreement, the annuity contract, any qualified assignment agreement and any order or other approval of any court or responsible administrative authority or other government authority that authorized or approved such structured settlement.

 

 (r) “Transfer” means any sale, assignment, pledge, hypothecation or other alienation or encumbrance of structured settlement payment rights made by a payee for consideration; provided that the term “transfer” does not include the creation or perfection of a security interest in structured settlement payment rights under a blanket security agreement entered into with an insured depository institution, in the absence of any action to redirect the structured settlement payments to such insured depository institution, or an agent or successor in interest thereof, or otherwise to enforce such blanket security interest against the structured settlement payment rights.

 

 (s) “Transfer agreement” means the agreement providing for a transfer of structured settlement payment rights.

 

 (t) “Transfer expenses” means all expenses of a transfer that are required under the transfer agreement to be paid by the payee or deducted from the gross advance amount, including, without limitation, court filing fees, attorney’s fees, escrow fees, lien recordation fees, judgment and lien search fees, finder’s fees, commissions, and other payments to a broker or other intermediary; “transfer expenses” do not include preexisting obligations of the payee payable for the payee’s account from the proceeds of a transfer.

 

(u) “Transferee” means a party acquiring or proposing to acquire structured settlement payment rights through a transfer.

 

Miss. Code Ann. § 11-57-5

Disclosure statement

Not less than three (3) days before the date on which a payee signs a transfer agreement, the transferee shall provide to the payee a separate disclosure statement, in bold type no smaller than fourteen (14) points, setting forth:

 

 (a) The amounts and due dates of the structured settlement payments to be transferred;

 

 (b) The aggregate amount of such payments;

 

 (c) The discounted present value of the payments to be transferred, which shall be identified as the “calculation of current value of the transferred structured settlement payments under federal standards for valuing annuities,” and the amount of the Applicable Federal Rate used in calculating such discounted present value;

 

 (d) The gross advance amount;

 

 (e) An itemized listing of all applicable transfer expenses, other than attorney’s fees and related disbursement payable in connection with the transferee’s application for approval of the transfer, and the transferee’s best estimate of the amount of any such fees and disbursements;

 

 (f) The net advance amount;

 

 (g) The amount of any penalties or liquidated damages payable by the payee in the event of any breach of the transfer agreement by the payee; and

 

 (h) A statement that the payee has the right to cancel the transfer agreement, without penalty or further obligation, not later than the third business day after the date the agreement is signed by the payee.

Miss. Code Ann. § 11-57-7

Transfer of payment rights; conditions

No direct or indirect transfer of structured settlement payment rights shall be effective and no structured settlement obligor or annuity issuer shall be required to make any payment directly or indirectly to any transferee of structured settlement payment rights unless the transfer has been approved in advance in a final court order or order of a responsible administrative authority based on express findings by such court or responsible administrative authority that:

 

 (a) The transfer is in the best interest of the payee, taking into account the welfare and support of the payee’s dependents;

 

 (b) The payee has been advised in writing by the transferee to seek independent professional advice regarding the transfer and has either received such advice or knowingly waived such advice in writing; and

(c) The transfer does not contravene any applicable statute or the order of any court or other government authority.

 

Miss. Code Ann. § 11-57-9

Effect of transfer

Following a transfer of structured settlement payment rights under this chapter:

 

 (a) The structured settlement obligor and the annuity issuer shall, as to all parties except the transferee, be discharged and released from any and all liability for the transferred payments;

 

 (b) The transferee shall be liable to the structured settlement obligor and the annuity issuer:

 

 (i) If the transfer contravenes the terms of the structured settlement, for any taxes incurred by such parties as a consequence of the transfer; and

 

 (ii) For any other liabilities or costs, including reasonable costs and attorney’s fees, arising from compliance by such parties with the order of the court or responsible administrative authority or arising as a consequence of the transferee’s failure to comply with this chapter;

 

 (c) Neither the annuity issuer nor the structured settlement obligor may be required to divide any periodic payment between the payee and any transferee or assignee or between two (2) or more transferees or assignees; and

 

 (d) Any further transfer of structured settlement payment rights by the payee may be made only after compliance with all of the requirements of this chapter.

Miss. Code Ann. § 11-57-11

Transfer approval procedure

(1) An application under this chapter for approval of a transfer of structured settlement payment rights shall be made by the transferee and may be brought in the county in which the payee resides, in the county in which the structured settlement obligor or the annuity issuer maintains its principal place of business, or in any court or before any responsible administrative authority which approved the structured settlement agreement.

(2) Not less than twenty (20) days prior to the scheduled hearing on any application for approval of a transfer of structured settlement payment rights under Section 11-57-7, the transferee shall file with the court or responsible administrative authority and serve on all interested parties a notice of the proposed transfer and the application for its authorization, including with such notice:

 

 (a) A copy of the transferee’s application;

 

 (b) A copy of the transfer agreement;

 

 (c) A copy of the disclosure statement required under Section 11-57-5;

 

 (d) A listing of each of the payee’s dependents, together with each dependent’s age;

 

 (e) Notification that any interested party is entitled to support, oppose or otherwise respond to the transferee’s application, either in person or by counsel, by submitting written comments to the court or responsible administrative authority or by participating in the hearing; and

 

 (f) Notification of the time and place of the hearing and notification of the manner in which and the time by which written responses to the application must be filed which shall be not less than fifteen (15) days after service of the transferee’s notice in order to be considered by the court or responsible administrative authority.

Miss. Code Ann. § 11-57-13

Law governing; life-contingencies; construction; liabilities

 (1) The provisions of this chapter may not be waived by any payee.

 

 (2) Any transfer agreement entered into on or after July 1, 2002, by a payee who resides in this state shall provide that disputes under such transfer agreement, including any claim that the payee has breached the agreement, shall be determined in and under the laws of this state. No such transfer agreement shall authorize the transferee or any other party to confess judgment or consent to entry of judgment against the payee.

 

 (3) No transfer of structured settlement payment rights shall extend to any payments that are life-contingent unless, prior to the date on which the payee signs the transfer agreement, the transferee has established and has agreed to maintain procedures reasonably satisfactory to the annuity issuer and the structured settlement obligor for (a) periodically confirming the payee’s survival, and (b) giving the annuity issuer and the structured settlement obligor prompt written notice in the event of the payee’s death.

(4) No payee who proposes to make a transfer of structured settlement payment rights shall incur any penalty, forfeit any application fee or other payment, or otherwise incur any liability to be proposed transferee or any assignee based on any failure of such transfer to satisfy the conditions of this chapter.

 

 (5) Nothing contained in this chapter shall be construed to authorize any transfer of structured settlement payment rights in contravention of any law or to imply that any transfer under a transfer agreement entered into before July 1, 2002, is valid or invalid.

 

 (6) Compliance with the requirements set forth in § 11-57-5 and fulfillment of the conditions set forth in § 11-57-7 shall be solely the responsibility of the transferee in any transfer of structured settlement payment rights, and neither the structured settlement obligor nor the annuity issuer shall bear any responsibility for, or any liability arising from, noncompliance with such requirements or failure to fulfill such conditions.

 

Miss. Code Ann. § 11-57-15

Application of Chapter

This chapter shall apply to any transfer of structured settlement payment rights under a transfer agreement entered into on or after August 1, 2002; provided, however, that nothing contained herein shall imply that any transfer under a transfer agreement reached before such date is either effective or ineffective.

Missouri

Missouri Structured Settlement Act

MO. Ann. STAT. §§ 407.1060-1068 (West 1999)

V.A.M.S. 407.1060.

Definitions

As used in sections 407.1060 to 407.1068, the following terms mean:

 

(1) “Annuity issuer”, an insurer that has issued an annuity contract to be used to fund periodic payments pursuant to a structured settlement;

 

(2) “Code”, the United States Internal Revenue Code, United States Code Title 26, as amended from time to time;

 

(3) “Discounted present value”, the fair present value of future payments, as determined by discounting such payments to the present using the most recently published applicable federal rate for determining the present value of an annuity, as issued by the United States Internal Revenue Service;

 

(4) “Disinterested counsel”, legal counsel that has no business relationship with any transferee of structured settlement payment rights, will not receive any compensation directly or indirectly from any such transferee in connection with representing the payee, and whose compensation for representing the payee will not be affected by whether the transfer occurs or does not occur;

 

(5) “Interested parties”, with respect to any structured settlement, the payee, any named beneficiary designated in the annuity contract or structured settlement to receive payments following the payee’s death, or, if the named beneficiary is a minor, the named beneficiary’s parent or guardian, the annuity issuer, and the structured settlement obligor;

 

(6) “Payee”, an individual who is receiving tax-free damage payments pursuant to a structured settlement and who wants to make a transfer of payment rights pursuant to the structured settlement agreement;

 

(7) “Qualified assignment agreement”, an agreement providing for a qualified assignment within the meaning of Section 130 of the Internal Revenue Code, 26 U.S.C. Sec. 130, as amended from time to time;

 

(8) “Settled claim”, the original tort claim resolved by a structured settlement;

 

(9) “Structured settlement”, an arrangement established by:

 

(a) a. Judgment or agreement in resolution of a tort claim providing for the periodic payment of damages excludable from the gross income of the recipient pursuant to Section 104(a)(2) of the Code; or

 

b. Agreement for the periodic payment of compensation pursuant to any workers’ compensation act that is excludable from the gross income of the recipient pursuant to Section 104(a)(1) of the Code and which may be assigned pursuant to state law; and

 

(b) Where the periodic payments are:

 

a. Of the character described in subparagraphs (A) and (B) of Section 130(c)(2) of the Code; and

 

b. Payable by a person who is a party to the suit or agreement or to the workers’ compensation claim or by a person who has assumed the liability for such periodic payments pursuant to a qualified assignment in accordance with Section 130 of the Code;

 

 (10) “Structured settlement obligor”, with respect to any structured settlement, the party that has the continuing periodic payment obligation to the payee pursuant to a structured settlement agreement or a qualified assignment agreement;

 

 (11) “Structured settlement payment rights”, rights to receive periodic payments, including lump sum payments pursuant to a structured settlement, whether from the settlement obligor or the annuity issuer, where:

 

 (a) The payee is domiciled in this state; or

 

 (b) The structured settlement was approved by a court of this state;

 

 (12) “Transfer”, any sale, assignment, pledge, hypothecation, or other form of alienation or encumbrance made for consideration;

 

 (13) “Transfer agreement”, the agreement providing for transfer of structured settlement payment rights from a payee to a transferee;

 

 (14) “Transferee”, a party acquiring or proposing to acquire structured settlement payment rights through a transfer from a payee.

 

V.A.M.S. 407.1062.

Structured settlement payment transfers, requirements

No transfer of structured settlement payment rights shall be effective and no structured settlement obligor or annuity issuer shall be required to make any payment directly or indirectly to any transferee of any transfer of structured settlement payment rights unless the transfer has been approved in advance in an order of a court of competent jurisdiction, based on the court’s express findings that:

 

(1) The transfer complies with the requirements of sections 407.1060 to 407.1068 and does not contravene other applicable law;

 

(2) Not less than ten days prior to the date on which the payee entered into the transfer agreement, the transferee has provided to the payee a disclosure statement in bold type, no smaller than fourteen point, setting forth:

 

(a) The amounts and due dates of the structured settlement payments to be transferred;

 

(b) The aggregate amount of the payments;

 

(c) The discounted present value of the payments, together with the discount rate or rates used in determining the discounted present value;

 

(d) The gross amount payable to the payee in exchange for the payments; and

 

(e) An itemized listing of all brokers’ commissions, service charges, application or processing fees, closing costs, filing or administrative charges, legal fees, notary fees and other commissions, fees, costs, expenses and charges payable by the payee or deductible from the gross amount otherwise payable to the payee;

 

(3) The transfer is in the best interest of the payee and the payee’s dependents;

 

(4) The transferee has given written notice of the transferee’s name, address and taxpayer identification number to all interested parties and has filed a copy of the notice with the court;

 

(5) The payee has consented in writing to the transfer;

 

(6) The payee has been represented by disinterested counsel in connection with the transfer or the payee understands the nature of the transaction and the economic consequences of the transaction; and

 

(7) The payment to be made to the payee by the transferee is equal to the fair market value of the structured settlement rights being transferred.

 

V.A.M.S. 407.1064.

Application by court, notice

1. An application pursuant to sections 407.1060 to 407.1068 for approval of a transfer of structured settlement payment rights may be brought in the circuit court in the county in which the payee is domiciled, or in any court which approved the structured settlement agreement.

 

2. Not less than twenty days prior to the scheduled hearing on any application for court approval of a transfer of structured settlement payment rights pursuant to section 407.1062, the transferee shall file with the court and serve on all interested parties a notice of the proposed transfer and the application for its approval, including in the notice:

 

 (1) A copy of the transferee’s application to the court;

 

 (2) A copy of the disclosure statement required pursuant to subdivision (2) of section 407.1062; and

 

 (3) Notification of the time and place of the hearing and notification of the manner in which and the time by which written responses to the application may be filed by interested parties, which shall be not less than ten days after service of the transferee’s notice, in order to be considered by the court.

 

3. The provisions of sections 407.1060 to 407.1068 may not be waived.

V.A.M.S. 407.1066.

Right to rescind--limitation on liability--limitation of jurisdiction

1. A payee who enters into a transfer agreement shall have an absolute, irrevocable right to rescind and cancel such transfer agreement, with no penalty or other obligation, by giving written notice of rescission to the transferee at any time during the five days following the signing of the transfer agreement.

 

2. Any provision in a transfer agreement to pay liquidated damages, penalties, fees, actual or punitive damages, attorneys’ fees or costs of any kind or nature to any person, firm, corporation or other entity which will be a party or third-party beneficiary to the transfer or transfer agreement shall be unenforceable.

 

3. Nothing contained in sections 407.1060 to 407.1068 shall be construed to authorize any transfer of structured settlement payment rights or other rights arising under a tort claim or a workers’ compensation claim in contravention of applicable law or to give effect to any transfer of such rights that is invalid under applicable law.

 

4. Any provision in a transfer agreement that consents to jurisdiction in the courts of another state, requires appointment of an agent for service of process, confesses judgment, or selects a forum for resolution of disputes arising out of a transfer agreement shall be unenforceable.

V.A.M.S. 407.1068.

Application of law

The provisions of sections 407.1060 to 407.1068 shall apply to any transfer of structured settlement payment rights pursuant to a transfer agreement reached on or after August 28, 1999.

Montana

Montana Structured Settlement Protection Act

MONT. CODE ANN. § 33-20-1401 et seq. (West 2005)

MCA 33-20-1401

Short title

This part may be cited as the “Structured Settlement Protection Act”.

 

MCA 33-20-1402

Definitions

As used in this part, unless the context requires otherwise, the following definitions apply:

 

(1) “Annuity issuer” means an insurer that has issued a contract to fund periodic payments under a structured settlement.

 

(2) “Consideration” has the meaning provided in 28-2-801.

 

(3) “Dependent” means a payee’s spouse, a minor child of the payee, or any person for whom the payee is legally obligated to provide support, including spousal maintenance.

 

(4) “Discounted present value” means the present value of future payments determined by discounting the future payments to the present using the most recently published applicable federal rate for determining the present value of an annuity, as issued by the United States internal revenue service.

 

(5) “Gross advance amount” means the sum payable to the payee or to the payee’s account as consideration for a transfer of a structured settlement payment right before any reduction for a transfer expense or any other deduction is made from the sum.

 

(6) “Independent professional advice” means advice of an attorney, a certified public accountant, an actuary, or any licensed professional adviser.

 

(7) “Interested party” means, with respect to a structured settlement, the payee, any beneficiary irrevocably designated under the annuity contract to receive a payment after the payee’s death, the annuity issuer, the structured settlement obligor, or any other party that has a continuing right or obligation under the structured settlement.

 

(8) “Net advance amount” means the gross advance amount minus the aggregate amount of the actual and estimated transfer expenses required to be disclosed under 33-20-1403(5).

 

(9) “Payee” means an individual who is receiving tax-free payments under a structured settlement and proposes to make a transfer of the payment rights.

 

(10) “Periodic payment” includes both a recurring payment and any scheduled future lump-sum payments.

 

(11) “Qualified assignment agreement” means an agreement providing for a qualified assignment, as defined for federal tax purposes, of the liability to make periodic payments under a structured settlement.

 

(12) “Responsible administrative authority” means, with respect to a structured settlement, any government authority vested by law with exclusive jurisdiction over the settled claim resolved by the structured settlement.

 

(13) “Settled claim” means the original tort claim.

 

(14) “Structured settlement” means an arrangement for periodic payment of damages for personal injuries or sickness established by settlement or judgment in resolution of a tort claim.

 

(15) “Structured settlement agreement” means the written agreement, judgment, stipulation, or release embodying the terms of a structured settlement.

 

(16) “Structured settlement obligor” means, with respect to a structured settlement, the party that has the continuing obligation to make periodic payments to the payee under a structured settlement agreement or a qualified assignment agreement.

 

(17) “Structured settlement payment right” means the right to receive periodic payments under a structured settlement, whether from the structured settlement obligor or the annuity issuer, when:

(a)(i) the payee is domiciled in this state; or

 

(ii) the domicile or principal place of business of the structured settlement obligor or the annuity issuer is located in this state;

 

(b) a court or responsible administrative authority in this state approved the structured settlement agreement; or

 

(c) the structured settlement agreement is expressly governed by the laws of this state.

 

(18) “Terms of the structured settlement” means, with respect to a structured settlement, the terms of the structured settlement agreement, the annuity contract, a qualified assignment agreement, or any order or other approval of a court or responsible administrative authority or other government authority that authorized or approved the structured settlement.

(19)(a) “Transfer” means a sale, assignment, pledge, hypothecation, or other alienation or encumbrance of a structured settlement payment right made by a payee for consideration.

 

(b) The term does not include the creation or perfection of a security interest in a structured settlement payment right under a blanket security agreement entered into with an insured depository institution in the absence of any action:

 

(i) to redirect the structured settlement payment to the insured depository institution or its agent or successor in interest; or

 

(ii) to otherwise enforce the blanket security interest against the structured settlement payment right.

 

(20) “Transfer agreement” means the agreement providing for a transfer of a structured settlement payment right.

 

 (21)(a) “Transfer expenses” means all expenses of a transfer that are:

 

 (i) required under the transfer agreement to be paid by the payee; or

 

 (ii) deducted from the gross advance amount, including without limitation any court filing fee, attorney fee, escrow fee, lien recordation fee, judgment and lien search fee, finder’s fee, commission, and other payments to a broker or other intermediary.

 

 (b) Transfer expenses do not include a payee’s preexisting obligations that are payable on the payee’s account from the proceeds of a transfer.

 

 (22) “Transferee” means a party acquiring or proposing to acquire a structured settlement payment right through a transfer.

 

MCA 33-20-1403

Disclosure to payee

No less than 3 days prior to the date on which a payee signs a transfer agreement, the transferee shall provide to the payee a written disclosure statement separate from the transfer agreement that sets forth in bold type no smaller than 14 points:

 

 (1) the amounts and the due dates of the structured settlement payment to be transferred;

 

 (2) the aggregate amount of the amounts in subsection (1);

 

 (3) the discounted present value of the payments to be transferred, which must be identified as:

 

 (a) the calculation of the present value of the transferred structured settlement payment under federal standards for valuing annuities; and

 

 (b) the amount of the applicable federal rate used in calculating the discounted present value;

 

(4) the gross advance amount;

 

 (5) an itemized list of all applicable transfer expenses, other than attorney fees and related disbursements, based on the transferee’s best estimate of the amount of fees and disbursements payable in connection with the transferee’s application for approval of the transfer;

 

 (6) the net advance amount;

 

 (7) the amount of any penalty or liquidated damages payable by the payee in the event of a breach of the transfer agreement by the payee; and

 

 (8) a statement that the payee has the right to cancel the transfer agreement without penalty or further obligation no later than the third business day after the date on which the payee signs the agreement.

 

MCA 33-20-1404

Transfer of structured settlement payment right--conditions

A direct or indirect transfer of a structured settlement payment right is not effective and a structured settlement obligor or annuity issuer is not required to make a payment directly or indirectly to a transferee of a structured settlement payment right unless a final court order or order of a responsible administrative authority has approved the transfer in advance based on written findings by the court or responsible administrative authority that:

 

 (1) the transfer is in the best interest of the payee, taking into account the welfare and support of the payee’s dependents, if any;

 

 (2) the payee has been advised in writing by the transferee to seek independent professional advice regarding the transfer and either has received independent professional advice or knowingly waived independent professional advice in writing; and

 

 (3) the transfer does not contravene any applicable statute or the order of any court or other government authority.

 

MCA 33-20-1405

Obligations after transfer

After the transfer of a structured settlement payment right pursuant to this part:

 

 (1) the structured settlement obligor and the annuity issuer are discharged and released from liability for the transferred payments to all parties except to the transferee;

 

 (2) the transferee is liable to the structured settlement obligor and the annuity issuer:

 

 (a) if the transfer contravenes the terms of the structured settlement for any tax incurred by the structured settlement obligor or annuity issuer as a consequence of the transfer; and

 

 (b) for any other liability or cost, including reasonable costs and attorney fees, arising:

 

 (i) from compliance by the structured settlement obligor and annuity issuer with the order of the court or responsible administrative authority; or

 

 (ii) as a consequence of the transferee’s failure to comply with this part; and

 

 (3) neither the structured settlement obligor nor the annuity issuer may be required to divide a periodic payment between a payee and a transferee or assignee or between two or more transferees or assignees.

MCA 33-20-1406

Additional transfers

After the transfer of a structured settlement payment right pursuant to this part, any further transfer by the payee is subject to all of the requirements of this part.

MCA 33-20-1407

Jurisdiction--notice

(1) A transferee may apply under this part for approval of a transfer of a structured settlement payment right:

 

 (a) in the county in which the payee resides;

 

 (b) in the county in which the structured settlement obligor or the annuity issuer maintains a principal place of business; or

 

 (c) in any court or before any responsible administrative authority that approved the structured settlement agreement.

 

 (2) Not less than 20 days prior to a scheduled hearing on an application for approval of a transfer of a structured settlement payment right under 33-20-1404, the transferee shall file with the court or responsible administrative authority and serve on all interested parties a notice of the proposed transfer and the application for an authorized transfer. The notice must include the following:

 

 (a) a copy of the transferee’s application;

 

 (b) a copy of the transfer agreement;

 

(c) a copy of the disclosure statement required under 33-20-1403;

 

 (d) a listing of each of the payee’s dependents, if any, together with the age of each dependent;

 

 (e) notification that any interested party is entitled to support, oppose, or otherwise respond to the transferee’s application either in person or by counsel by submitting written comments to the court or responsible administrative authority or by participating in the hearing; and

 

 (f) notification of the time and the place of the hearing and notification of the manner in which and the time by which written responses to the application must be filed. The filing deadline may not be less than 15 days after the transferee’s notice has been served.

 

MCA 33-20-1408

Waiver not allowed

A payee may not waive the provisions of this part.

MCA 33-20-1409

Disputes--entry of judgment

 (1) A transfer agreement entered into on or after October 1, 2005, by a payee who resides in this state must provide that disputes under the transfer agreement, including a claim that the payee has breached the agreement, must be determined in this state under the laws of this state.

 

 (2) A transfer agreement may not authorize the transferee or any other party to confess judgment or consent to entry of judgment against the payee.

MCA 33-20-1410

Contingent payment conditions

A transfer of a structured settlement payment right may not extend to a payment that is contingent upon the life of a payee unless prior to the date on which the payee signs the transfer agreement the transferee has established and agreed to maintain procedures reasonably satisfactory to the annuity issuer and the structured settlement obligor for:

 

 (1) periodically confirming the payee’s survival; and

 

 (2) giving the annuity issuer and the structured settlement obligor prompt written notice upon the payee’s death.

MCA 33-20-1411

Responsibility for compliance--liability

(1) Compliance with the requirements in 33-20-1403 and fulfillment of the conditions in 33-20-1404 are the sole responsibility of the transferee in any transfer of a structured settlement payment right. Neither the structured settlement obligor nor the annuity issuer bears responsibility for or liability arising from noncompliance with 33-20-1403 or failure to fulfill the conditions of 33-20-1404.

 

 (2) A payee who proposes to make a transfer of a structured settlement payment right may not incur a penalty, forfeit an application fee or other payment, or otherwise incur any liability to the proposed transferee or any assignee based on a failure of a transfer agreement to satisfy the conditions of this part.

MCA 33-20-1412

Construction

This part may not be construed to authorize a transfer of a structured settlement payment right in contravention of any law or to imply that any transfer under a transfer agreement entered into prior to October 1, 2005, is valid or invalid.

Nebraska

Nebraska Structured Settlements Transfers Protection Act

 NEB. REV. STAT. Ann. § 25-3104 et seq. (West 2001)

Neb.Rev.St. § 25-3101

Act, how cited

Sections 25-3101 to 25-3107 shall be known and may be cited as the Structured Settlements Transfers Protection Act.

Neb.Rev.St. § 25-3102

Act; purpose; applicability

The purpose of the Structured Settlements Transfers Protection Act is to protect structured settlement recipients involved in the process of transferring structured settlement payment rights. The act does not apply to structured settlements of claims for workers’ compensation benefits.

 

Neb.Rev.St. § 25-3103

Terms, defined

For purposes of the Structured Settlements Transfers Protection Act:

 

 (1) Annuity issuer means an insurer that has issued a contract to be used to fund periodic payments under a structured settlement;

 

 (2) Applicable federal rate means the most recently published applicable rate used to determine the present value of an annuity, as issued by the Internal Revenue Service pursuant to section 7520 of the Internal Revenue Code as defined in section 49-801.01;

 

 (3) Dependent means a payee’s spouse and minor children and any other family member and other person for whom the payee is legally obligated to provide support, including spousal maintenance;

 

 (4) Discount or finance charge means the sum of all charges payable directly or indirectly from assigned structured settlement payments and imposed directly or indirectly by the transferee as an incident to a transfer of structured settlement payment rights. Discount or finance charge includes interest charges, discounts, and other compensation for the time value of money, all application, origination, processing, underwriting, closing, filing, and notary fees and all similar charges, and all charges for commissions or brokerage services. Discount or finance charge does not include any fee or other obligation incurred by a payee to obtain independent professional advice concerning a transfer of structured settlement payment rights or any charges, commissions, costs, brokerage fees, or other fees which the payee has agreed to pay to a nonaffiliated third party in connection with the transfer;

 

 (5) Discounted present value means, with respect to a proposed transfer of structured settlement payment rights, the fair present value of future payments, as determined by discounting the payments to the present using the most recently published applicable federal rate used to determine the present value of an annuity as the discount rate;

 

(6) Interested parties means, with respect to any structured settlement:

 

(a) The payee;

 

(b) Any beneficiary irrevocably designated under the annuity contract to receive payments following the payee’s death or, if such designated beneficiary is a minor, the designated beneficiary’s parent or guardian;

 

 (c) The annuity issuer;

 

 (d) The structured settlement obligor; and

 

 (e) Any other party that has continuing rights or obligations under the structured settlement;

 

 (7) Payee means a Nebraska resident who is receiving tax-free payments under a structured settlement and proposes to make a transfer of payment rights under the structured settlement. Payee does not include a Nebraska resident who is receiving payments under a structured settlement of a workers’ compensation claim;

 

 (8) Qualified assignment agreement means an agreement providing for a qualified assignment within the meaning of section 130 of the Internal Revenue Code as defined in section 49-801.01;

 

 (9) Structured settlement means an arrangement for periodic payment of damages for personal injuries or sickness established by a settlement, agreement, or judgment in resolution of a tort claim;

 

 (10) Structured settlement obligor means the party that has the obligation to make continuing periodic payments to the payee under a structured settlement agreement or a qualified assignment agreement;

 

 (11) Structured settlement payment rights means rights to receive periodic payments, including lump-sum payments under a structured settlement, whether from the settlement obligor or the annuity issuer if the payee is a resident in the state;

 

 (12) Transfer means a sale, assignment, pledge, hypothecation, or other form of alienation or encumbrance made by a payee for consideration;

 

 (13) Transfer agreement means the agreement providing for transfer of structured settlement payment rights from a payee to a transferee; and

 

 (14) Transferee means a person who is receiving or will receive structured settlement payment rights resulting from a transfer.

 

Neb.Rev.St. § 25-3104

Transfer of payment rights; court order; requirements

(1) No direct or indirect transfer of structured settlement payment rights is effective, and no structured settlement obligor or annuity issuer is required to make a payment directly or indirectly to a transferee of structured settlement payment rights, unless the transfer has been authorized in advance in a final order of a court of competent jurisdiction based on the court’s written express findings that:

 

 (a) The transfer complies with the requirements of the Structured Settlements Transfers Protection Act;

 

 (b) The transferee has provided to the payee a disclosure statement in no smaller than fourteen-point type specifying:

 

 (i) The amounts and due dates of the structured settlement payments to be transferred;

 

 (ii) The aggregate amount of the payments;

 

 (iii) The discounted present value of the payments, together with the discount rate used in determining the discounted present value;

 

 (iv) The gross amount payable to the payee in exchange for the payments;

 

 (v) An itemized listing of all brokers’ commissions, service charges, application fees, processing fees, closing costs, filing fees, referral fees, administrative fees, legal fees, notary fees, and other commissions, fees, costs, expenses, and charges payable by the payee or deductible from the gross amount otherwise payable to the payee;

 

 (vi) The net amount payable to the payee after deduction of all commissions, fees, costs, expenses, and charges described in subdivision (1)(b)(v) of this section;

 

 (vii) The quotient, expressed as a percentage, obtained by dividing the net payment amount by the discounted present value of the payments. Such quotient shall be disclosed in the following statement “The net amount that you will receive from us in exchange for your future structured settlement payments represents .... % of the estimated current value of the payments.”;

 

 (viii) The effective annual interest rate. Such rate shall be disclosed in the following statement “Based on the amount that you will receive from us and the amounts and timing of the structured settlement payments that you are turning over to us, you will, in effect, be paying interest to us at a rate of ....% per year.”; and

 

 (ix) The amount of any penalty and the aggregate amount of any liquidated damages, including penalties, payable by the payee in the event of a breach of the transfer agreement by the payee;

 

 (c) The transfer is in the best interests of the payee, taking into account the welfare and support of the payee’s dependents, and the net amount payable to the payee is not unfair, unjust, or unreasonable under existing circumstances;

 

 (d) The payee has received, or waived his or her right to receive, independent professional advice regarding the legal, tax, and financial implications of the transfer;

(e) The transferee has given written notice of the transferee’s name, address, and taxpayer identification number to the annuity issuer and the structured settlement obligor and has filed a copy of the notice with the court;

 

 (f) The transfer agreement provides that any disputes between the parties will be governed by the laws of Nebraska and that Nebraska is the proper place of venue to bring any cause of action arising out of a breach of the agreement; and

 

 (g) The transfer does not contravene any applicable statute or order of any court or other government authority.

 

 (2) The court may not authorize a transfer if the court makes an express written finding that the transfer contravenes the public policy of this state.

 

 (3) The transfer agreement shall also provide that the parties agree to the jurisdiction of any Nebraska court of competent jurisdiction. If the transfer would contravene the terms of the structured settlement or the standards set forth in subsection (1) or (2) of this section, the court may grant, deny, or impose conditions upon the proposed transfer as the court deems just and proper under the facts and circumstances, upon the filing of a written objection by any interested party and after considering the objection and any response to it. Any order approving a transfer must require that the transferee indemnify the annuity issuer and the structured settlement obligor for any liability including reasonable costs and attorney’s fees arising from compliance by the issuer or obligor with the order of the court.

(4) A provision in a transfer agreement giving a transferee power to confess judgment against a payee is unenforceable to the extent the amount of the judgment would exceed the amount paid by the transferee to the payee, less any payments received from the structured settlement obligor or the payee.

 

 (5) With respect to a transfer of structured settlement payment rights a transferee may not contract for or receive a discount or finance charge that would result in an effective annual rate in excess of the maximum interest rate per year applicable in Nebraska to a consumer loan as set forth in section 45-101.03.

Neb.Rev.St. § 25-3105

Jurisdiction; hearing; notice

 (1) The Nebraska court that approved the structured settlement agreement has jurisdiction over an application for authorization of a transfer of structured settlement payment rights. If a Nebraska court did not approve the structured settlement agreement, a person shall file an application under section 25-3104 in the district court for the county in which the payee resides.

 

 (2) Not less than twenty days before the scheduled hearing on an application for authorization of a transfer of structured settlement payment rights under section 25-3104, the transferee shall file with the court and all interested parties a notice of the proposed transfer and the application for its authorization. The notice shall include:

 

 (a) A copy of the transferee’s application to the court;

(b) A copy of the transfer agreement;

 

 (c) A copy of the disclosure statement required under section 25-3104; and

 

 (d) Notice that an interested party is entitled to support, oppose, or otherwise respond to the transferee’s application, either in person or by counsel, by submitting written comments to the court or by participating in the hearing, and notification of the time and place of the hearing and notification of the manner in which and the time by which written responses to the application must be filed in order to be considered by the court. Written responses to the application shall be filed within fifteen days after service of the transferee’s notice.

 

Neb.Rev.St. § 25-3106

Waiver prohibited; failure to meet conditions; effect

The provisions of sections 25-3103 to 25-3105 may not be waived. No payee who proposes to make a transfer of structured settlement payment rights shall incur a penalty, forfeit an application fee or other payment, or otherwise incur any liability to the proposed transferee based on the failure of the transfer to satisfy the conditions of section 25-3104.

Neb.Rev.St. § 25-3107

Act; applicability

The Structured Settlements Transfers Protection Act applies to any transfer of structured settlement payment rights under a transfer agreement entered into on or after January 1, 2002.

Nevada

Nevada Structured Settlements Act

NEV. REV. STAT. Ann. § 42.030 (West 2003)

N.R.S. 42.030

42.030. Court approval of agreement to transfer structured settlement required

1. An agreement to transfer the right to receive payments pursuant to a structured settlement to a transferee is valid and enforceable only if the transfer is approved by a district court. The transferee must petition the district court for such approval and the court shall approve the transfer if it determines that:

(a) The transfer is in the best interest of the payee, considering the totality of the circumstances, including, without limitation, the welfare and support of the dependents of the payee;

(b) The payee has been advised in writing by the transferee to seek independent professional advice regarding the transfer and has received such independent professional advice or has knowingly waived such advice in writing; and

(c) The transfer does not violate any applicable law or the order of any court.

2. An action pursuant to subsection 1 must be commenced in the district court:

(a) Located where the original claim which gave rise to the structured settlement was filed; or

(b) Within the county in which the payee resides.

3. Not later than 7 days before a hearing on a petition pursuant to subsection 1, the transferee must file with the district court and serve on all interested parties and any attorney who represented the payee in the action which resulted in the settled claim a notice of the proposed agreement and the petition for authorization of the proposed agreement. The notice must include, without limitation:

(a) A copy of the petition of the transferee;

(b) A copy of the proposed agreement;

(c) A copy of the disclosure required pursuant to subsection 4;

(d) A list which includes the name and age of each dependent of the payee;

(e) A statement that any interested party may support, oppose or otherwise respond to the petition of the transferee by appearing in person or by counsel during the hearing on the petition or by submitting written comments to the court; and

(f) Notice of the time and place of the hearing, the manner in which a written response to the application must be filed and the date by which a written response to the petition must be filed for consideration by the court.

4. A transferee who commences an action pursuant to subsection 1 must provide to the court with the proposed agreement a disclosure setting forth:

(a) The amounts and due dates of the payments under the structured settlement proposed to be transferred;

(b) The aggregate amount of the proposed payments to be transferred;

(c) The amount to be paid to the payee for the transfer before deducting any expenses;

(d) An itemized list of all expenses that the payee will be required to pay other than attorney's fees and which will be deducted from the amount paid to the payee for the transfer, including, without limitation, any commission owed to a broker, service charges, application or processing fees, costs of closing on the agreement, filing or administrative charges and fees paid to a notary public;

(e) The amount to be paid to the payee for the transfer after deducting the expenses;

(f) The amount of any liquidated damages which the payee is required to pay if the payee breaches the transfer agreement;

(g) The discounted present value of the payments under the structured settlement that are proposed to be transferred and the discount rate used to determine that value; and

(h) If adverse tax consequences exist, a statement which informs the payee that such a transfer may subject the payee to adverse tax consequences with regard to the payment of federal income tax.

5. Compliance with the requirements set forth in this section may not be waived.

6. As used in this section:

(a) “Annuity issuer&rdqu