Sell Structured Settlement Consumer Protections and Rights 3

Question 1

What is the most common reason courts deny structured settlement transfer petitions?

Accepted Answer

The transfer is not in the best interest of the payee

Answer

Courts deny transfer petitions when they cannot affirmatively find that the transaction serves the payee's best interest, which is the central legal standard under most SSPAs.

Question 2

Which of the following is generally NOT required to be disclosed to a seller under state SSPAs?

Accepted Answer

The factoring company's internal profit margin on the transaction

Answer

SSPAs require disclosure of the advance amount, discount rate, and seller-facing fees, but do not typically require companies to disclose their own internal profit margin.

Question 3

A payee in a state with an SSPA completes a structured settlement transfer without obtaining court approval. What is the most likely legal outcome?

Accepted Answer

The transfer may be void or voidable and the factoring company faces the 40% excise tax under IRC Section 5891

Answer

Transfers completed without required court approval may be void or voidable under state law, and the factoring company would also face the 40% federal excise tax under IRC Section 5891.

Question 4

What is a 'qualified order' as defined under IRC Section 5891?

Accepted Answer

A final court order or judgment approving the transfer of structured settlement payment rights that meets federal requirements

Answer

A qualified order under IRC Section 5891 is a final court order approving the structured settlement payment rights transfer that satisfies the federal requirements, thereby exempting the deal from the excise tax.

Question 5

How must the transfer agreement be written under most SSPAs to protect the seller?

Accepted Answer

In plain language that clearly explains all terms and the seller's rights

Answer

Most SSPAs require transfer agreements to be written in plain language so sellers can readily understand the terms, their rights, and the full implications of what they are agreeing to.

Sell Structured Settlement Practice Test

Sell Structured Settlement Practice Test

Sell Structured Settlement Consumer Protections and Rights 3