The Structured Settlement Protection Act states that certain transactions regarding the sale of a structured settlement need the approval of a judge in your state's court before they can be completed. It is also stipulated that the responsible insurance company making the payments need to be part of the process prior to the sale.
Prior to the inception of the protection act it was not necessary that insurance companies be informed of change of ownership of a structured settlement, and quite often did not know of the change until after the fact.
So, whether you are comfortable with the payment setup of your settlement or are considering selling your annuity, it would be in your best interests to learn more about the protection act.
Requirements of the Protection Act
The act now requires that any interested parties be notified of a sale or partial sale of a structured settlement twenty days prior to any court hearing seeking approval for any changes.
Prior review by a judge is required before any sale takes place. This is done to insure that the sale is in the best interest of the person or client receiving the annuity.
This requirement exists for the protection of the client. Before the implementation of the act there were companies that unscrupulously took advantage of many people who wanted to sell their settlements by offering paltry and unfair amounts to purchase their annuities and settlements.
Many clients, either because of the lure of a large lump sum of money or lack of knowledge on the subject, fell prey to these tactics.
Benefits and Safeguards of the Protection Act
The client selling the settlement must disclose the arrangements associated with the sale along with their personal financial affidavit describing their current financial status. This usually must be submitted three days prior to any finalization of the sale or contract signing.
It is now the responsibility of the buyer of the settlement or annuity to disclose all information relative to the purchase and sale of the annuity or settlement, not the insurance company, issuer or client.
A company that is proposing or trying to buy your settlement must also advise you to seek legal advice before proceeding with sale. This also must be given in writing, and must be done before any information can be presented in court,
Once all documents have been signed, the seller or client still has three days to change their mind about the decision to sell.
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