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KENTUCKY REVISED STATUTES ANNOTATED

TITLE XLII.  MISCELLANEOUS PRACTICE PROVISIONS 

CHAPTER 454.  MISCELLANEOUS CIVIL PRACTICE PROVISIONS 

TRANSFER OF STRUCTURED SETTLEMENT PAYMENT RIGHTS

KRS §  454.430  (2002)

§  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.

§  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.

§  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.

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Model State Structured Settlement Protection Act

In 2000, the National Structured Settlements Trade Association and National Association of Settlement Purchasers agreed on language that was designed to protect the consumer when selling their structured settlement payments for cash. This language is referred to as the “Model State Structured Settlement Protection Act” and 46 states now have adopted laws that are closely aligned with the model act.

MODEL STATE STRUCTURED SETTLEMENT PROTECTION ACT

SECTION 1. TITLE. This Act shall be known and referred to as the “Structured Settlement Protection Act.”

SECTION 2. 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 Section 3(e) of this Act;

(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 section 130 of the United States Internal Revenue Code, United States Code Title 26, as amended from time to time;

(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; or

(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” 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;

(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 thecreation 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 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;

SECTION 3. 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 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 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; 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.

SECTION 4. APPROVAL OF 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 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 —

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

(ii) 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

(iii) the transfer does not contravene any applicable statute or the order of any court or other government authority;

SECTION 5. EFFECTS OF TRANSFER OF STRUCTURED SETTLEMENT PAYMENT RIGHTS. Following a transfer of structured settlementpayment rights under this Act:

(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 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; 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 Act.

SECTION 6. PROCEDURE FOR APPROVAL OF TRANSFERS.

(a) An application under this Act 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 twenty (20) days prior to the scheduled hearing on any application for approval of a transfer of structured settlement payment rights under Section 4 of this Act, 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:

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

(ii) a copy of the transfer agreement;

(iii) a copy of the disclosure statement required under Section 3 of this Act;

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

(v) 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

(vi) 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.

SECTION 7. 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 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 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.

(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) Nothing contained in this Act 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 Act is valid or invalid.

(f) Compliance with the requirements set forth in Section 3 of this Act and fulfillment of the conditions set forth in Section 4 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.

EFFECTIVE DATE. This Act shall apply to any transfer of structured settlement payment rights under a transfer agreement entered into on or after the [thirtieth (30th)] day after the date of enactment of this Act; 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.

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CODE OF IOWA 2003

TITLE XV.  JUDICIAL BRANCH AND JUDICIAL PROCEDURES 

SUBTITLE 5.  SPECIAL ACTIONS 

CHAPTER 682.  STRUCTURED SETTLEMENT PROTECTION

IowaCode §  682.1 (2003)

682.1  Short title.

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

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.

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.

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.

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.

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.

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 afterJuly 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 toJuly 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.

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BURNS INDIANA STATUTES ANNOTATED

TITLE 34.  CIVIL LAW AND PROCEDURE 

ARTICLE 50.  SETTLEMENT OF CLAIMS 

CHAPTER 2.  ANNUITY STRUCTURED SETTLEMENTS

BurnsInd.Code Ann. §  34-50-2-1  (2004)

§  34-50-2-1. “Interested party” defined

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.

§  34-50-2-2. “Structured settlement” defined

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.

§  34-50-2-3. “Transfer” defined

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.

§  34-50-2-4. “Transferee” defined

As used in this chapter, “transferee” means a party acquiring or proposing to acquire structured settlement payment rights through a transfer agreement.

§  34-50-2-5. Transfer of structured settlement rights not enforceable without court approval

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 [IC 34-50-2-7 and IC 34-50-2-8] of this chapter.

§  34-50-2-6. Disclosure statement provided to payee by transferee

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.

§  34-50-2-7. Approval of transfer of structured settlement payment rights — Findings of court

AnIndianacourt 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 [IC 34-50-2-6] of this chapter.

§  34-50-2-8. Filing of application for approval of transfer

(a) An application under this chapter for approval of a transfer of structured settlement payment rights must be filed in:

(1) theIndianacourt in which the underlying tort action was pending; or

(2) the court of general jurisdiction in theIndianacounty 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 [IC 34-50-2-6] 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 [IC 34-50-2-7] 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.

§  34-50-2-9. No cost to payee for proposal — No waiver of provisions — No contradiction of other law

(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 [IC 34-50-2-7] 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.

§  34-50-2-10. Immunity of obligor and annuity issuer from obligation to payee

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.

§  34-50-2-11. Failure to timely provide true and complete disclosure statement

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.

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ILLINOIS COMPILED STATUTES ANNOTATED

CHAPTER 215.  INSURANCE 

STRUCTURED SETTLEMENT PROTECTION ACT

215 ILCS 153/1  (2004)

§  215 ILCS 153/1.  Short title

Sec. 1. Short title.  This Act may be cited as the Structured Settlement Protection Act.

§  215 ILCS 153/5.  Definitions

Sec. 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 that has continuing rights or obligations 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 [215 ILCS 153/10].

“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.

“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.

“Settled claim” means the original tort claim or workers’ compensation 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 or for periodic payments in settlement of a workers’ compensation 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 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 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

Sec. 10. Required disclosures to payee.  Not less than 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 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; 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.

§  215 ILCS 153/15.  Approval of transfers of structured settlement payment rights

Sec. 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 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.

§  215 ILCS 153/20.  Effects of transfer of structured settlement payment rights

Sec. 20. Effects of transfer of structured settlement payment rights.  Following a transfer of structured settlement payment rights under this Act:

(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 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 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;

(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

Sec. 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 or responsible administrative authority. 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 or responsible administrative authority.

(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 an action was or could have been maintained or before any responsible administrative authority that approved the structured settlement agreement.

§  215 ILCS 153/30.  General provisions; construction

Sec. 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 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 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 or to imply that any transfer under a transfer agreement entered into prior to the effective date of this Act is valid or invalid.

(f) Compliance with the requirements set forth in Section 10 of this Act [215 ILCS 153/10] and fulfillment of the conditions set forth in Section 15 of this Act [215 ILCS 153/15] 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.

§  215 ILCS 153/35.  Applicability

Sec. 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; provided, however, that nothing contained herein shall imply that any transfer under a transfer agreement reached prior to that date is either effective or ineffective.