Sell Structured Settlement Consumer Protections and Rights 2

Question 1

Under most state SSPAs, which parties must be notified when a structured settlement transfer petition is filed with the court?

Accepted Answer

The annuity issuer, the original defendant or liability insurer, and other interested parties

Answer

Most SSPAs require notice to all interested parties — including the annuity issuer, the original defendant or insurer, and any government benefit agencies — to give them opportunity to object.

Question 2

If a structured settlement transfer receives a qualified court order, how does IRC Section 5891 treat the transaction?

Accepted Answer

The 40% excise tax does not apply to the transfer

Answer

IRC Section 5891 exempts transfers that receive a qualified court order from the 40% excise tax, directly incentivizing factoring companies to seek proper court approval.

Question 3

What does 'independent professional advice' mean under most SSPAs?

Accepted Answer

Guidance from a licensed attorney or financial advisor with no connection to the transaction

Answer

Independent professional advice must come from a qualified professional who has no financial interest in or connection to the transfer, ensuring the seller receives truly unbiased guidance.

Question 4

A seller signs a structured settlement transfer agreement but then changes their mind within the statutory period. What right do most SSPAs give the seller?

Accepted Answer

The right to rescind the agreement within a specified cooling-off period

Answer

Most SSPAs include a mandatory rescission period allowing sellers to cancel the agreement within a set number of days after signing without facing any penalty.

Question 5

What is the typical role of the annuity issuer during a structured settlement transfer process?

Accepted Answer

The annuity issuer must be notified and may provide acknowledgment of the transfer

Answer

Annuity issuers do not approve or deny transfers, but they must be notified of the pending transfer and typically provide an acknowledgment for administrative purposes.

Sell Structured Settlement Practice Test

Sell Structured Settlement Practice Test

Sell Structured Settlement Consumer Protections and Rights 2