Most states have certain protections in place for those selling structured settlement payments to a third party. All state laws regarding such transfers differ slightly. In general, however, all state regulations require:
You can learn more about your state’s structured settlement protection act below:
STATE OF CONNECTICUT
AMENDMENT
LCO No. 5145
General Assembly
February Session, A.D., 1998
Offered by REP. FOX, 144th DIST.
To Subst. House Bill No. 5548 File No. 456 Cal No. 338
Entitled: “AN ACT CONCERNING STRUCTURED SETTLEMENTS.”
Strike out everything after the enacting clause and
substitute the following in lieu thereof:
“Section 1. (NEW) (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, 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 of the general
statutes, 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 the effective
date of this act 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.
Sec. 2. This act shall take effect October 1, 1998, and shall
be applicable to transfer agreements executed on or after said
date.”