What happens buyers of structured settlements enter an agreement with you and get court authorization to finalize the buyout and transfer of your structured settlement payments?
Here are 5 important things that are important that you know when transferring your structured payment rights, and the liabilities that are created to the annuity issuer and the company that buys the structured settlement payments from you.
In selling your structured settlement payments, you in fact agree to give up your rights forever to receive those payments that are being transferred to the buyers of structured settlement payments in exchange for the cash that you will receive from them.
You or your dependents, heirs and beneficiaries will no more be entitled to receive the periodic payments that you were due in compensation of your injuries or damage since you sell the payments to another party who will be from now on the payee and recipient of the annuity payments and hold the right to assign and transfer the payments right on further to other assignees.
By signing the structured settlement transfer contract and agreement you are legally releasing and discharging the annuity issuing insurance company and the structured settlement obligor from any further liability and obligation to keep sending out periodic payments to you, except for the rest of the payments, or portions of payments, if any, that you are not selling to the buyers of structured settlements payments in the current transaction.
1.1 The annuity is not transferred.
Although a payee may sell his or her rights to receive structured settlement payments, the ownership and control of the annuity underlying the settlement payments are not transferred on to the buyers of structured settlements and they remain the same as before.
The reason to this is because the annuitant, i.e. the plaintiff and recipient of the structured settlement payments, is now the owner of the annuity itself and only has the rights to receive the structured annuity payments.
When the payment rights of the original payee are transferred and sold, those rights to receive the payments are passed on to the factoring company, the purchaser of the payments rights.
1.2 The remaining payments continue to go to the plaintiff
When some payments or parts of payments are transferred to a structured settlement buying company, the remainder of the payments will continue to be paid to the original annuitant.
A recipient of structured settlement payments has the right to sell some payments or just parts of payments while keeping the rest as agreed in the contract, and the buying company has no rights to those non-purchased payments whatsoever.
The original payee keeps the rights to receive the payments that have not been sold, or to sell them at a later time to the same company or to different buyers of structured settlements.
Once the annuity issuer and structured settlement obligor receive the signed court approval order for the transfer of the structured settlement, the obligations are now changed to issue the specified future payments to the buying company instead of to the initial annuitant.
The issuer and obligor are thus released from liabilities to pay out the compensations to the plaintiff and his or her heirs and beneficiaries.
If partial payment or parts of payments are transferred in the transaction, then the liabilities will be to both the transferred payments to the purchaser and the remaining non-transferred payments to the original annuitant.
What if a structured settlement agreement included both steady guaranteed payments over a specific period of time, let's say for the next 10 years whether the payee will stay alive or pass away, and in addition to this life contingent payments, i.e. payments that will be paid at the end of the 10 years over another 10 years but only if the payee remains alive and in case s/he dies the payments will be stopped and not transferred on to his or her heirs?
In this case, if the payee sells the annuity payments, the same liabilities will be passed on to the new payee, the structured settlement buying company:
In accordance with structured settlement transfer laws and as stated in court verdicts approving of settlement rights assignments, the purchase is valid only if it is not in contravention to court and government orders.
Structured settlement buyouts created the following liabilities to the buying company:
4.1 paying taxes arising from a transfer contravening a court order or government statute.
When assigning rights to structured settlement payments to buyers of structured settlements, the buying company becomes liable to pay any tax obligations that result to the annuity issuer and structured settlement obligor in consequence of the sale should the transfer be found to contravene court rulings and government regulations.
4.2 paying attorney and administrative fees and expenses associated with the structured settlement sale.
The buying party is also responsible to pay to the annuity issuing insurance company and the structured settlement obligor attorney fees and expenses associated with the sale and transfer of the payment rights.
4.3 repaying payments of a life contingent structured settlement paid after the original payee's death.
Another liability of buyers of structured settlements is when they buy out life contingent structured settlement payments and the original annuitant dies.
The company will need to pay back to the annuity issuer any life contingent payments received by them after the date of the death of the original recipient of the structured settlement payments.