Understanding the “Qualified Assignment” During the Purchase of Structured Settlement Payment Rights

If You Can’t Understand This, it’s Time for an Independent Professional Adviser

In simple terms, the qualified assignment is the document that takes the defendants obligation to make periodic payments to the plaintiff, and officially assigns that obligation to a third party.  The third party then purchases an annuity with the promise to pay money to the plaintiff in the future.

 

This way the plaintiff and the defendant no longer have to communicate with each other ever again.

 

This document names:  the plaintiff / claimant, the original insurance company of the defendant (assignor), the third party insurance company for the defendants insurance company (assignee) and the annuity issuer-usually a branch of the third party insurance company.  All of these parties will sign off at the end of this document.

 

For this document to have standing in court, so your structured settlement transfer can be approved, certain technical requirements must be met, and literally written IN the document.

 

Under 26 U.S. Code Sec. 130 Certain personal injury liability assignments, a “qualified assignment” is any assignment of a liability to make periodic payments as damages on account of physical injury of sickness, if all of the following requirements are met:

1. The assignee assumes the liability from a person who was a party to the suit or agreement;
2. The periodic payments are fixed and determinable as to amount and time of payment;
3. The periodic payments cannot be accelerated, deferred, increased or decreased by the recipient of the payments;
4. The assignee’s obligation on account of the personal injuries or sickness is no greater than the obligation of the person who assigned the liability;
5. The periodic payments are excludible from the recipient’s gross income under Sec. 104(a)(2); and
6. The amount received by the assignee for assuming a periodic payment obligation must be used to purchase a “qualified funding asset.”

 

We’re not done.  Now we need to define “qualified funding asset”.  It gets technical as you can see.  This is why judges want to see an independent professional adviser by your side.  We can do our best to inform you through articles, but only you can pick up that phone and initiate a conversation and start asking questions with an independent professional adviser.

 

Don’t get taken advantage of through all of the legal mumbo jumbo. You’re signing off on this document.  Do you know what you are doing? Then it’s Time for an Independent Professional Adviser.

 

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