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:
51-12-70 G
*** CODE SECTION *** 12/03/01
51-12-70.
As used in this article, the term:
(1) “Administrator” means the administrator of the “Fair Business
Practices Act of 1975″ appointed pursuant to subsection (a) of
Code Section 10-1-395 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.
51-12-71 G
*** CODE SECTION *** 12/03/01
51-12-71.
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:
(1) The transfer complies with the requirements of this article
and will not contravene other applicable law;
(2) 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;
(3) Written notice at least two business days prior to the
effective execution of the transfer agreement has been provided by
the transferee to the annuity issuer and the structured settlement
obligor by certified mail or statutory overnight delivery, postage
prepaid; 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.
51-12-72 G
*** CODE SECTION *** 12/03/01
51-12-72.
(a) Any transfer agreement of structured settlement payment rights
must, in addition to the other requirements of this article, be
executed in writing. The transfer agreement shall not be so
executed until after the expiration of the ten-day period provided
for in paragraph (2) 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.
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.
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:
_______________________.”
51-12-76 G
*** CODE SECTION *** 12/03/01
51-12-76.
(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.
51-12-77 G
*** CODE SECTION *** 12/03/01
51-12-77.
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.