Here it is 2013, the structured settlement protection acts have been in affect for almost 10 years. In California we have had judges try and block all the transfers by legal means because they thought the system wasn’t working. The judges were taking the best interest of the payee as far as they could. Some attorneys had started to file an affidavit of prejudice to avoid certain judges and departments, this works although it does delay the court date. Other judges are just flat out requiring a IPA, or independent professional advisor regardless.

The state of California does have a provision in the law that allows the payee to have an independent professional advisor with the cost being passed on to the buyer. Now the judges have the right to assign an IPA, but many are still reluctant to do so for fear they may become an interested party at that point. So to get around this  they will just not rule on certain cases until the seller has obtained independent professional advice.

Recently a IPA, was asked by a judge if he had shopped the deal around to other purchasers? In which case the client had said they did not want to shop the deal they hard an extreme hardship and just wanted to go ahead with the deal. Now the independent professional advisor did run the numbers and advised that the deal would not be approved at hat rate and was able to get the existing company to raise the offer by $10000. The judge though has his own internal formula for what he believes is in the best interest, and reprimanded the IPA for not doing his job, knowing that the only thing he had not done was to shop to other buyers.

So the seller is now sitting in a position where they were told they would be in by their IPA with the same financial hardships and a further delay in the approval of transfer. Now remind yourself this is a semi isolated issue and it is not generally the job f the IPA to start bidding wars on these transfer. The purchaser in this case may actually still be able to buy the payment stream, but they will have to match 2 other offers now, which means the seller will get more money. See the IPA in this case is not interested in who buys the payment stream, they are just bound by the court to get the best deal possible for the payee now.

So i know this may sound like a tragic turn of events story, but in honesty if the payee had allowed the independent professional advisor to get 2 -3 other quotes from the start, they would have ended up with more money,and be done with court. On the other side had the purchaser listened to the IPA in regards to the judge not going to approve the transfer at this rate which have left a smaller yield from the transfer, and being done with court. They are now going to end up at the same point just a few weeks later.

What am i getting at in this article? Well just this the court in California are staring to enforce the use of an IPA, in structured settlement transfers, and most of these courts have a set interest rate they find is acceptable. So no matter what the hardship, no matter what the intended yield  they are going to use the IPA to enforce what they believe to be in the best interest. Also the IPA is no longer going to be a rubber stamp process, with advice being giving ad then still do what the payee wants.  The judges don’t care what the purchaser o the payee wants, it comes down to a matter of  fair interest rate based on an individual judges belief.

should you sell your structured settlement if you want to or need to? Yes!

should you run with the same company you have always worked with? Yes!

should you find an independent professional advisor? Yes!

All you can do in these transactions is be careful, work with people you feel comfortable with, and be prepared to do what the judge says.

California IPA