Sell Structured Settlement Legal Requirements and Court Approval 3

Question 1

What is a 'qualified assignment' in the context of structured settlements?

Accepted Answer

A tax-free mechanism where the defendant assigns the payment obligation to a third-party assignee company

Answer

A qualified assignment under IRC Section 130 allows the defendant to transfer the periodic payment obligation to a third-party assignee (typically an insurance subsidiary) on a tax-free basis.

Question 2

After a court issues an order approving a structured settlement transfer, what is typically the next procedural step?

Accepted Answer

The order is served on the annuity issuer and obligor, who then redirect payments

Answer

Once the court order is entered, certified copies are sent to the annuity issuer and obligor directing them to redirect the sold payments to the factoring company.

Question 3

Which of the following would most likely cause a judge to deny a structured settlement transfer petition?

Accepted Answer

The payee has no stated reason for needing the funds and the discount rate is 20% or higher

Answer

An extremely high discount rate combined with no compelling reason for the funds signals an exploitative transaction that does not meet the best interest standard.

Question 4

What role does the payee's attorney typically play in a structured settlement transfer proceeding?

Accepted Answer

The payee's attorney independently advises the payee about the transaction's terms and implications

Answer

An independent attorney for the payee reviews the transfer terms, explains the consequences, and advises the payee on whether the deal is in their best interest — separate from the factoring company's legal team.

Question 5

Which US state was among the first to enact a Structured Settlement Protection Act?

Accepted Answer

Texas

Answer

Texas enacted one of the early SSPAs in the late 1990s, and its model influenced many other states' structured settlement transfer laws.

Sell Structured Settlement Practice Test

Sell Structured Settlement Practice Test

Sell Structured Settlement Legal Requirements and Court Approval 3