The Selling Process Flashcards
6 cards from real Sell Structured Settlement practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 The Selling Process flashcards as text
What does 'partial sale' mean in the context of structured settlements?
Answer: Selling only some of the payments rather than the entire stream
A partial sale allows the payee to sell a portion of their future payments — for example, payments for the next five years — while retaining the remaining payments.
Which type of structured settlement payments CANNOT typically be sold or transferred?
Answer: Workers' compensation settlement payments in most states
Workers' compensation structured settlement payments are generally exempt from transfer laws and cannot be sold in most US states.
After a payee signs a purchase agreement, most Structured Settlement Protection Acts require a mandatory waiting period before the court hearing. How long is this typically?
Answer: At least 3 business days to receive disclosure, then varies by state
Most SSPAs require that the payee receive written disclosure of key terms at least 3 business days before signing, with additional waiting periods varying by state law.
What information must be disclosed to the payee under most state Structured Settlement Protection Acts before a transfer can proceed?
Answer: The discount rate, fees, net payment amount, and total value of payments being sold
SSPAs require factoring companies to disclose the discount rate, all fees and expenses, the net lump sum the payee will receive, and the total dollar amount of payments being transferred.
What happens if a factoring company fails to comply with IRC Section 5891 when purchasing structured settlement payments?
Answer: A 40% excise tax is imposed on the factoring company
IRC Section 5891 imposes a 40% excise tax on the factoring company if the transfer does not receive a qualifying court order approving it.
Which of the following best describes the role of the annuity issuer during a structured settlement transfer?
Answer: The annuity issuer is notified and redirects payments to the factoring company after court approval
After a court order is issued, the annuity issuer (or its administrator) is notified and begins redirecting the specified payments to the factoring company.