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:
Cited as 2001 NEB 25-3101 – 25-3107
LB55 LB 55
LEGISLATIVE BILL 55
Approved by the Governor April 4, 2001
Introduced by Landis, 46
AN ACT relating to financial arrangements; to amend section 9-109, Uniform
Commercial Code; to adopt the Structured Settlements Transfers
Protection Act; to harmonize provisions; to provide an operative
date; to repeal the original section; and to declare an emergency.
Be it enacted by the people of the State of Nebraska,
Section 1. Sections 1 to 7 of this act shall be known and may be ________________________________________________________
cited as the Structured Settlements Transfers Protection Act. _____________________________________________________________
Sec. 2. 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. _________
Sec. 3. 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 ____________________________________________________________________
-1-
LB55 LB 55
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. _______________________________________________________________
Sec. 4. (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 ______________________________________________________________________________
-2-
LB55 LB 55
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. _____________________
Sec. 5. (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 4 of this act 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 4 of this act, 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 4 of ____________________________________________________________________
this act; 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. ___________________________
Sec. 6. The provisions of sections 3 to 5 of this act 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 4 of this ______________________________________________________________________________
act. ____
Sec. 7. 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. ___________________________________________________
Sec. 8. Section 9-109, Uniform Commercial Code, is amended to read:
9-109. Scope.
(a) Except as otherwise provided in subsections (c) and (d), this
article 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 2-401, 2-505,
2-711(3), or 2A-508(5), as provided in section 9-110; and
(6) a security interest arising under section 4-210 or 5-118.
(b) The application of this article 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 article does not apply.
(c) This article does not apply to the extent that:
(1) a statute, regulation, or treaty of the United States preempts
this article;
(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-
LB55 LB 55
(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 5-114.
(d) This article 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 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 obliged 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 9-315 and 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 9-340 applies with respect to the effectiveness of
rights of recoupment or set-off against deposit accounts; and
(B) section 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 9-203 and 9-308;
(B) fixtures in section 9-334;
(C) fixture filings in sections 9-501, 9-502, 9-512, 9-516, and
9-519; and
(D) security agreements covering personal and real property in
section 9-604;
(12) an assignment of a claim arising in tort, other than a
commercial tort claim, but sections 9-315 and 9-322 apply with respect to
proceeds and priorities in proceeds; or ——
(13) an assignment of a deposit account in a consumer transaction,
but sections 9-315 and 9-322 apply with respect to proceeds and priorities in
proceeds; or ____
(14)(A) an assignment or transfer of a claim or right to receive ____________________________________________________________________
compensation for personal injuries or sickness under any workers’ ______________________________________________________________________________
compensation, industrial accident, or similar law or (B) a transfer of ______________________________________________________________________________
structured settlement payment rights entered into on or after January 1, 2002, ______________________________________________________________________________
and subject to the Structured Settlements Transfers Protection Act unless the ______________________________________________________________________________
transfer has been authorized in advance in a final order of a court of ______________________________________________________________________________
competent jurisdiction pursuant to the act. ___________________________________________
Sec. 9. This act becomes operative on July 1, 2001.
Sec. 10. Original section 9-109, Uniform Commercial Code, is
repealed.
Sec. 11. Since an emergency exists, this act takes effect when
passed and approved according to law.