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 the Utah structured settlement protection act below:
| S.B 163 – EFFECTIVE DATE MAY 6, 2002 |
STRUCTURED SETTLEMENT AGREEMENTS
2002 GENERAL SESSION
STATE OF UTAH
Sponsor: Lyle W. Hillyard
5 This act enacts the Structured Settlement Protection Act. It provides guidelines for
6 transferring structured settlements. It also requires notice and hearing requirements and
7 provides for agreements to be approved by a court. This act provides an effective date.
8 This act affects sections of Utah Code Annotated 1953 as follows:
9 AMENDS:
10 70A-9a-109, as enacted by Chapter 252, Laws of Utah 2000
11 ENACTS:
12 78-59-101, Utah Code Annotated 1953
13 78-59-102, Utah Code Annotated 1953
14 78-59-103, Utah Code Annotated 1953
15 78-59-104, Utah Code Annotated 1953
16 78-59-105, Utah Code Annotated 1953
17 78-59-106, Utah Code Annotated 1953
18 78-59-107, Utah Code Annotated 1953
19 78-59-108, Utah Code Annotated 1953
20 Be it enacted by the Legislature of the state of Utah:
21 Section 1. Section 70A-9a-109 is amended to read:
22 70A-9a-109. Scope.
23 (1) Except as otherwise provided in Subsections (3) and (4), this chapter applies to:
24 (a) a transaction, regardless of its form, that creates a security interest in personal property
25 or fixtures by contract;
26 (b) an agricultural lien;
27 (c) a sale of accounts, chattel paper, payment intangibles, or promissory notes;
28 (d) a consignment;
29 (e) a security interest arising under Section 70A-2-401 or 70A-2-505 or Subsection
30 70A-2-711(3) or 70A-2a-508(5), as provided in Section 70A-9a-110; and
31 (f) a security interest arising under Section 70A-4-210 or 70A-5-118.
32 (2) The application of this chapter to a security interest in a secured obligation is not
33 affected by the fact that the obligation is itself secured by a transaction or interest to which this
34 chapter does not apply.
35 (3) This chapter does not apply to the extent that:
36 (a) a statute, regulation, or treaty of the United States preempts this chapter;
37 (b) another statute of this state expressly governs the creation, perfection, priority, or
38 enforcement of a security interest created by this state or a governmental unit of this state;
39 (c) a statute of another state, a foreign country, or a governmental unit of another state or
40 a foreign country, other than a statute generally applicable to security interests, expressly governs
41 creation, perfection, priority, or enforcement of a security interest created by the state, country, or
42 governmental unit; or
43 (d) the rights of a transferee beneficiary or nominated person under a letter of credit are
44 independent and superior under Section 70A-5-114.
45 (4) This chapter does not apply to:
46 (a) a landlord’s lien, other than an agricultural lien;
47 (b) a lien, other than an agricultural lien, given by statute or other rule of law for services
48 or materials, but Section 70A-9a-333 applies with respect to priority of the lien;
49 (c) an assignment of a claim for wages, salary, or other compensation of an employee;
50 (d) a sale of accounts, chattel paper, payment intangibles, or promissory notes as part of
51 a sale of the business out of which they arose;
52 (e) an assignment of accounts, chattel paper, payment intangibles, or promissory notes
53 which is for the purpose of collection only;
54 (f) an assignment of a right to payment under a contract to an assignee that is also
55 obligated to perform under the contract;
56 (g) an assignment of a single account, payment intangible, or promissory note to an
57 assignee in full or partial satisfaction of a preexisting indebtedness;
58 (h) a transfer of an interest in or an assignment of a claim under a policy of insurance,
59 other than an assignment by or to a health-care provider of a health-care-insurance receivable and
60 any subsequent assignment of the right to payment, but Sections 70A-9a-315 and 70A-9a-322
61 apply with respect to proceeds and priorities in proceeds;
62 (i) an assignment of a right represented by a judgment, other than a judgment taken on a
63 right to payment that was collateral;
64 (j) a right of recoupment or set-off, but:
65 (i) Section 70A-9a-340 applies with respect to the effectiveness of rights of recoupment
66 or set-off against deposit accounts; and
67 (ii) Section 70A-9a-404 applies with respect to defenses or claims of an account debtor;
68 (k) the creation or transfer of an interest in or lien on real property, including a lease or
69 rents thereunder, except to the extent that provision is made for:
70 (i) liens on real property in Sections 70A-9a-203 and 70A-9a-308;
71 (ii) fixtures in Section 70A-9a-334;
72 (iii) fixture filings in Sections 70A-9a-501, 70A-9a-502, 70A-9a-512, 70A-9a-516, and
73 70A-9a-519; and
74 (iv) security agreements covering personal and real property in Section 70A-9a-604;
75 (l) an assignment of a claim arising in tort, other than a commercial tort claim, but Sections
76 70A-9a-315 and 70A-9a-322 apply with respect to proceeds and priorities in proceeds; [or]
77 (m) an assignment of a deposit account in a consumer transaction, but Sections
78 70A-9a-315 and 70A-9a-322 apply with respect to proceeds and priorities in proceeds[.];
79 (n) an assignment of a claim or right to receive compensation for injuries or sickness as
80 described in 26 U.S.C. 104(a)(1) or (2); or
81 (o) an assignment of a claim or right to receive benefits under a special needs trust as
82 described in 42 U.S.C. 1396p(d)(4).
82a S (5) NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS SECTION, SUBSECTIONS (4)(n)
82b AND (o) SHALL ONLY BE EFFECTIVE TO SECURITY INTERESTS CREATED ON OR AFTER MAY 6,
82c 2002. s
83 Section 2. Section 78-59-101 is enacted to read:
84 CHAPTER 59. STRUCTURED SETTLEMENT PROTECTION ACT
85 78-59-101. Title.
86 This chapter is known as the “Structured Settlement Protection Act.”
87 Section 3. Section 78-59-102 is enacted to read:
88 78-59-102. Definitions.
89 For purposes of this chapter:
90 (1) “Annuity issuer” means an insurer that has issued a contract to fund periodic payments
91 under a structured settlement.
92 (2) “Dependents” include a payee’s spouse and minor children and all other persons for
93 whom the payee is legally obligated to provide support, including alimony.
94 (3) “Discounted present value” means the present value of future payments determined by
95 discounting the payments to the present using the most recently published Applicable Federal Rate
96 for determining the present value of an annuity, as issued by the United States Internal Revenue
97 Service.
98 (4) “Gross advance amount” means the sum payable to the payee or for the payee’s account
99 as consideration for a transfer of structured settlement payment rights before any reductions for
100 transfer expenses or other deductions to be made from the consideration.
101 (5) “Independent professional advice” means advice of an attorney, certified public
102 accountant, actuary, or other licensed professional adviser.
103 (6) “Interested parties” means, with respect to any structured settlement, the payee, any
104 beneficiary irrevocably designated under the annuity contract to receive payments following the
105 payee’s death, the annuity issuer, the structured settlement obligor, and any other party that has
106 continuing rights or obligations under the structured settlement.
107 (7) “Net advance amount” means the gross advance amount less the aggregate amount of
108 the actual and estimated transfer expenses required to be disclosed under Subsection 78-59-103(5).
109 (8) “Payee” means an individual who is receiving tax free payments under a structured
110 settlement and proposes to make a transfer of payment rights under the settlement.
111 (9) “Periodic payments” includes both recurring payments and scheduled future lump sum
112 payments.
113 (10) “Qualified assignment agreement” means an agreement providing for a qualified
114 assignment within the meaning of Section 130 of the United States Internal Revenue Code.
115 (11) “Responsible administrative authority” means, with respect to a structured settlement,
116 any government authority vested by law with exclusive jurisdiction over the settled claim resolved
117 by the structured settlement.
118 (12) “Settled claim” means the original tort claim or workers’ compensation claim resolved
119 by a structured settlement.
120 (13) “Structured settlement” means an arrangement for periodic payment of damages for
121 personal injuries or sickness established by settlement or judgment in resolution of a tort claim or
122 for periodic payments in settlement of a workers’ compensation claim.
123 (14) “Structured settlement agreement” means the agreement, judgment, stipulation, or
124 release embodying the terms of a structured settlement.
125 (15) “Structured settlement obligor” means, with respect to any structured settlement, the
126 party that has the continuing obligation to make periodic payments to the payee under a structured
127 settlement agreement or a qualified assignment agreement.
128 (16) “Structured settlement payment rights” means rights to receive periodic payments
129 under a structured settlement, whether from the structured settlement obligor or the annuity issuer,
130 where:
131 (a) the payee is domiciled in, or the domicile or principal place of business of the
132 structured settlement obligor or the annuity issuer is located in this state;
133 (b) the structured settlement agreement was approved by a court in this state; or
134 (c) the structured settlement agreement is expressly governed by the laws of this state.
135 (17) “Terms of the structured settlement” include, with respect to any structured
136 settlement, the terms of the structured settlement agreement, the annuity contract, any qualified
137 assignment agreement and any order or other approval of any court or other government authority
138 that authorized or approved the structured settlement.
139 (18) “Transfer” means any sale, assignment, pledge, hypothecation, or other alienation or
140 encumbrance of structured settlement payment rights made by a payee for consideration; provided
141 that the term “transfer” does not include the creation or perfection of a security interest in
142 structured settlement payment rights under a blanket security agreement entered into with an
143 insured depository institution, in the absence of any action to redirect the structured settlement
144 payments to the insured depository institution, or an agent or successor in interest thereof, or
145 otherwise to enforce a blanket security interest against the structured settlement payment rights.
146 (19) “Transfer agreement” means the agreement providing for a transfer of structured
147 settlement payment rights.
148 (20) “Transfer expenses” means all expenses of a transfer that are required under the
149 transfer agreement to be paid by the payee or deducted from the gross advance amount, including,
150 without limitation, court filing fees, attorneys’ fees, escrow fees, lien recordation fees, judgment
151 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.
(21) “Transferee” means a party acquiring or proposing to acquire structured settlement
payment rights through a transfer.
Section 4. Section 78-59-103 is enacted to read:
78-59-103. 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
14 point, 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 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;
(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.
Section 5. Section 78-59-104 is enacted to read:
78-59-104. Approval of transfers of structured settlement payment rights.
179 Direct or indirect transfer of structured settlement payment rights may not be effective and
180 a structured settlement obligor or annuity issuer may not be required to make any payment directly
181 or indirectly to any transferee of structured settlement payment rights unless the transfer has been
182 approved in advance in a final court order based on express findings by the court that:
183 (1) the transfer is in the best interest of the payee, taking into account the welfare and
184 support of the payee’s dependents;
185 (2) the payee has been advised in writing by the transferee to seek independent
186 professional advice regarding the transfer and has either received such advice or knowingly waived
187 such advice in writing; and
188 (3) the transfer does not contravene any applicable statute or the order of any court or other
189 government authority.
190 Section 6. Section 78-59-105 is enacted to read:
191 78-59-105. Effects of transfer of structured settlement payment rights.
192 Following a transfer of structured settlement payment rights under this chapter:
193 (1) The structured settlement obligor and the annuity issuer shall, as to all parties except
194 the transferee, be discharged and released from any and all liability for the transferred payments.
195 (2) The transferee shall be liable to the structured settlement obligor and the annuity issuer:
196 (a) if the transfer contravenes the terms of the structured settlement, for any taxes incurred
197 by the parties as a consequence of the transfer; and
198 (b) for any other liabilities or costs, including reasonable costs and attorneys’ fees, arising
199 from compliance by the parties with the order of the court or arising as a consequence of the
200 transferee’s failure to comply with this chapter.
201 (3) Neither the annuity issuer nor the structured settlement obligor may be required to
202 divide any periodic payment between the payee and any transferee or assignee or between two or
203 more transferees or assignees.
204 (4) Any further transfer of structured settlement payment rights by the payee may be made
205 only after compliance with all of the requirements of this chapter.
206 Section 7. Section 78-59-106 is enacted to read:
207 78-59-106. Procedure for approval of transfers.
208 (1) An application under this chapter for approval of a transfer of structured settlement
209 payment rights shall be made by the transferee and may be brought in the county in which the
210 payee resides, in the county in which the structured settlement obligor or the annuity issuer
211 maintains its principal place of business, or in any court which approved the structured settlement
212 agreement.
213 (2) Not less than 20 days prior to the scheduled hearing on any application for approval
214 of a transfer of structured settlement payment rights under Section 78-59-104, the transferee shall
215 file with the court and serve on all interested parties a notice of the proposed transfer and the
216 application for its authorization, including with the notice:
217 (a) a copy of the transferee’s application;
218 (b) a copy of the transfer agreement;
219 (c) a copy of the disclosure statement required under Section 78-59-103;
220 (d) a listing of each of the payee’s dependents, together with each dependent’s age;
221 (e) notification that any interested party is entitled to support, oppose, or otherwise respond
222 to the transferee’s application, either in person or by counsel, by submitting written comments to
223 the court or responsible administrative authority or by participating in the hearing; and
224 (f) notification of the time and place of the hearing and notification of the manner in which
225 and the time by which written responses to the application must be filed, which shall be not less
226 than 15 days after service of the transferee’s notice, in order to be considered by the court or
227 responsible administrative authority.
228 Section 8. Section 78-59-107 is enacted to read:
229 78-59-107. General provisions — Construction.
230 (1) The provisions of this chapter may not be waived by any payee.
231 (2) Any transfer agreement entered into on or after May 6, 2002 by a payee who resides
232 in this state shall provide that disputes under the transfer agreement, including any claim that the
233 payee has breached the agreement, shall be determined in and under the laws of this state. A
234 transfer agreement may not authorize the transferee or any other party to confess judgment or
235 consent to entry of judgment against the payee.
236 (3) The transfer of structured settlement payment rights may not extend to any payments
237 that are life-contingent unless, prior to the date on which the payee signs the transfer agreement,
238 the transferee has established and has agreed to maintain procedures reasonably satisfactory to the
239 annuity issuer and the structured settlement obligor for:
240 (a) periodically confirming the payee’s survival; and
241 (b) giving the annuity issuer and the structured settlement obligor prompt written notice
242 in the event of the payee’s death.
243 (4) A payee who proposes to make a transfer of structured settlement payment rights may
244 not incur any penalty, forfeit any application fee or other payment, or otherwise incur any liability
245 to the proposed transferee or any assignee based on any failure of the transfer to satisfy the
246 requirements of this chapter.
247 (5) Nothing contained in this chapter shall be construed to authorize any transfer of
248 structured settlement payment rights in contravention of any law or to imply that any transfer under
249 a transfer agreement entered into prior to May 6, 2002 is valid or invalid.
250 (6) Compliance with the requirements set forth in Section 78-59-103 and fulfillment of
251 the conditions set forth in Section 78-59-104 shall be solely the responsibility of the transferee in
252 any transfer of structured settlement payment rights, and neither the structured settlement obligor
253 nor the annuity issuer shall bear any responsibility for, or any liability arising from, noncompliance
254 with the requirements or failure to fulfill the conditions.
255 Section 9. Section 78-59-108 is enacted to read:
256 78-59-108. Effective date.
257 This act shall apply to any transfer of structured settlement payment rights under a transfer
258 agreement entered into on or after May 6, 2002; provided, however, that nothing contained in this
259 chapter shall imply that any transfer under a transfer agreement reached prior to that date is either
260 effective or ineffective.