Transfer of Structured Settlement Payment Rights
Transferring the payment rights from a structured settlement depends on the laws provided by the state where the settlement is being purchased. When a case has been opened to transfer the rights to a structured settlement, it usually means that the recipient has decided to opt for a lump sum payment in return for the remaining value of their settlement.
In order to accomplish this, they will be required by law to seek the advice of the court in order to ensure the transfer of rights is "fair and reasonable," and in their "best interests" as owner of the original settlement. This is what has become known as the Structured Settlement Protection Act, which has been adopted by various states in the US, and continues to be amended as the courts require different levels of proof as to the necessity of transferring the remaining payments of a structured settlement.
It is important to note that each circumstance will be considered on a case-by-case basis, and involve the opinions of different judges. What this means is that one similar case found to be fair in California, may not be fair in Utah, and vice-versa. A few of the most important determinants as to whether a settlement will be considered fair by a judge, are the annual discount rates, fees, and reason for selling. While not every reason is accepted as viable for selling a settlement, some of the more common requests that are often permitted include a down payment for a home, home repairs, tuition for university, starting a business, unexpected medical expenses, a need for a new car, and similar options.
In general, many states may consider the annual discount rate of fifteen to seventeen percent as unreasonable. However, under some circumstances, 11 percent has been rejected by the court. The court will also look at the fees involved in the transfer, taking in consideration the filing fees, administrative fees, legal fees, and how these fees were calculated.
Finally, the court will ask what the lump sum payment will be used for, such as for the down payment on a new home, to purchase a vehicle, pay off a debt, or attend classes towards a degree. They will not only consider the value of such a purchase, but also if the lump sum payment will be sufficient enough to cover the cost, and present a significant degree of relief.
If the purpose of how the lump sum will be used is questioned by the court, it will be up to the owner of the settlement to prove they have exhausted all financial alternatives to receiving the necessary funds. After all these determinants have been considered, the court will either accept or decline the request to transfer the structured settlement rights. If accepted, a lump sum payment will be given to the original settlement holder soon after the transfer has been completed by the issuing insurance company.