Colonial pays cash for structured settlements!
regarding Structured Settlements.
This state statute overseeing the
sale of structured settlement payments and
the buying of annuities is basically the
Model Act with some additional" consumer
protections"and complies with Federal Law
WEST'S ANNOTATED CALIFORNIA
DIVISION 2. CLASSES OF INSURANCE
PART 2. LIFE AND DISABILITY INSURANCE
CHAPTER 1. THE CONTRACT
ARTICLE 2.3. TRANSFERS OF STRUCTURED SETTLEMENT
Current through ch. 64
of 2002 Reg.Sess. urgency
legislation & ch. 3 of 3rd Ex.Sess. & March 5, 2002
§ 10134. Definitions
For the purposes of this article, the following terms
have the following meanings:
(a) "Buyer's first right of refusal" means any provision
in the transfer agreement or related documents that
the payee to give to the buyer the first choice or option
to purchase any remaining structured settlement rights
belonging to the payee.
(b) "Dependents" include the payee's spouse and minor
children and all other family members and other persons
whom the payee is legally obligated to provide support,
(c) "Discounted present value" means the fair present
value of future payments, as determined by discounting
payments to the present using the most recently published
applicable federal rate for determining the present
of an annuity, as issued by the United States Internal
(d) "Effective equivalent interest rate," with respect
to a transfer of structured settlement payment rights,
the annualized rate of interest on the net advance amount,
calculated by treating the transferred structured
settlement payments as if they were installment payments
on a loan, with each payment applied first to accrued
unpaid interest and then to principal.
(e) "Expenses" means all broker's commissions, service
charges, application or processing fees, closing costs,
or administrative charges, legal fees, notary fees and
other commissions, fees, costs, and charges that a payee
have to pay to transfer the structured settlement payment
rights of a structured settlement agreement or that
would be deducted from the gross consideration that
would be paid to the payee in connection with the transfer
the structured settlement payment rights of a structured
(f) "Independent professional advice" means advice
of an attorney, certified public accountant, actuary,
licensed professional adviser meeting all of the following
(1) The adviser is engaged by a claimant or payee to
render advice concerning the legal, tax, or financial
implications of a structured settlement or a transfer
of structured settlement payment rights.
(2) The adviser's compensation for rendering independent
professional advice is not affected by occurrence or
of occurrence of a settlement or transfer.
(3) A particular adviser is not referred to the payee
by the transferee or its agent, except that the transferee
the payee to a lawyer referral service or agency operated
by a state or local bar association.
(g) "Interested parties" means, with respect to a structured
settlement agreement, the payee, the payee's attorney,
any beneficiary designated under the annuity contract
to receive payments following the payee's death, the
issuer, the structured settlement obligor, and any other
party who has continuing rights or obligations under
structured settlement agreement. If the designated beneficiary
is a minor, the beneficiary's parent or guardian shall
be an interested party.
(h) "Payee" means an individual who received tax-free
payments pursuant to a structured settlement agreement.
(i) "Qualified assignment agreement" means an agreement
providing for a qualified assignment within the meaning
of Section 130 of Title 26 of the United States Code,
as amended from time to time.
(j) "Structured settlement agreement" means an arrangement
for periodic payment of damages established by
settlement or judgment in resolution of a tort claim
in which the payment of the judgment or award is paid
or in part, in periodic tax-free payments rather than
a lump-sum payment. A structured settlement agreement
entered into pursuant to Section 667.7 of the Code of
Civil Procedure or Section 970.6 or 984 of the Government
Code is not subject to the provisions of this article
other than the requirements of Section 10138.
(k) "Structured settlement obligor" means the party
that has the continuing periodic payment obligation
payee under a structured settlement agreement or a qualified
(l) "Structured settlement payment rights" means rights
to receive periodic payments, including lump-sum
payments, pursuant to a structured settlement agreement,
whether from the settlement obligor or an annuity issuer.
(m) "Terms of the structured settlement" include, with
respect to a structured settlement agreement, the terms
the structured settlement agreement, annuity contract,
qualified assignment agreement, and any order or approval
of a court or responsible administrative authority or
other governmental authority authorizing or approving
(n) "Transfer" means any sale, assignment, pledge,
hypothecation, or other form of alienation or encumbrance
(o) "Transfer agreement" means the agreement providing
for the transfer, and any other document used to effectuate
the transfer, from the payee to the transferee of structured
settlement payment rights of a structured settlement
(p) "Transferee" means any person receiving structured
settlement payment rights resulting from a transfer.
§ 10135. Application of article
(a) This article is only applicable to transfers entered
into on or after January 1, 2000.
(b) Notwithstanding subdivision (a), the changes to
this article made by the act amending this section in
02 Regular Session shall only be applicable to transfers
entered into on or after January 1, 2002. [FN1]
§ 10136. Required disclosures; notice of proposed transfer
No transfer of structured settlement payment rights,
either directly or indirectly, shall be effective by
domiciled in this state, or by a payee entitled to receive
payments under a structured settlement funded by an
insurance contract issued by an insurer domiciled in
this state or owned by an insurer or corporation domiciled
this state, and no structured settlement obligor or
annuity issuer shall be required to make any payment
indirectly to a transferee, unless all of the following
subdivisions are satisfied:
(a) Ten or more days prior to the effective date of
a transfer agreement, the transferee provides the payee
separate written disclosure statement, in at least 14-point
boldface type, disclosing all of the following:
(1) The effective date of the transfer.
(2) The amounts and due dates of the structured settlement
payments to be transferred.
(3) The aggregate amount of the structured settlement
payments to be transferred.
(4) The gross amount of all expenses, if any, to be
deducted from the amount to be paid to the payee in
for the payments to be transferred.
(5) The amount payable to the payee, net of all expenses,
in exchange for the payments to be transferred.
(6) The discounted present value of all structured
settlement payments to be transferred and the discount
in determining that discounted present value.
(7) The effective equivalent interest rate, which shall
be disclosed in the following statement:
"YOU WILL BE PAYING THE EQUIVALENT TO AN INTEREST RATE
OF __________ % PER YEAR.
Based on the net amount that you will receive from
us and the amounts and timing of the structured settlement
payments that you are transferring to us, if the transferred
structured settlement payments were installment
payments on a loan, with each payment applied first
to accrued unpaid interest and then to principal, it
would be as
if you were paying interest to us of __________ % per
year, assuming funding on the effective date of transfer.
(8) The quotient (expressed as a percentage) obtained
by dividing the net payment amount by the discounted
present value of the payments.
(9) A statement that the payee should obtain independent
professional advice regarding any federal and state
income tax consequences arising from the proposed transfer,
and that the transferee may not refer the payee to any
specific adviser for that purpose.
(10) A statement of the payee's irrevocable and nonwaivable
right of rescission pursuant to paragraph (2) of
(11) The following statement in capital letters: "IF
YOU BELIEVE YOU WERE TREATEDUNFAIRLY OR
WERE MISLED AS TO THE NATURE OF THE OBLIGATIONS YOU
ASSUMED UPON ENTERING INTO
THIS AGREEMENT, YOU SHOULD REPORT THOSE CIRCUMSTANCES
TO YOUR LOCAL DISTRICT
ATTORNEY OR THE OFFICE OF THE ATTORNEY GENERAL."
(12) If court approval of the transfer agreement is
required, all of the following shall apply:
(A) The effective date of the transfer agreement shall
be deemed to be the date that the agreement was signed
(B) The payee shall be advised that payment to the
payee pursuant to the transfer agreement is contingent
court approval of the transfer agreement.
(C) The payee shall be advised that payment to the
payee pursuant to the transfer agreement will be delayed
30 days or more in order for the court to review and
approve the transfer agreement.
No contract for the transfer of structured settlement
payment rights shall be valid unless the seller has
acknowledged that he or she has read all of the disclosures
required by this subdivision.
(b)(1) The transferee provides written notice of the
proposed transfer to all other interested parties 10
or more days
prior to the date specified in the transfer agreement
as the date on which the transfer agreement first becomes
binding upon the payee and 60 or more days prior to
the date on which the first payment is due under a schedule
established by the structured settlement agreement.
Notice shall not be required by this paragraph if court
approval of the transfer is required and notice is given
pursuant to paragraph (6) of subdivision (c) of Section
(2) At any time prior to the date on which the transfer
agreement first becomes binding upon the payee, the
may cancel the transfer agreement without cost or further
obligation, by providing written notice of cancellation
(3) The notice to interested parties shall include
the effective date of the transfer and identify the
settlement payment rights being transferred and the
due dates of those payments.
(4) Any notice required by this subdivision shall be
deemed to have been given if addressed to the recipient's
known address and deposited, first-class postage prepaid,
in the United States mail not less than five calendar
prior to the date on which the notice is required to
(c) The contract for transferring the structured settlement
payment rights does not violate the provisions of
§ 10137. Required conditions
A transfer of structured settlement payment rights
is void unless all of the following conditions are met:
(a) The transfer of the structured settlement payment
rights is fair and reasonable and in the best interest
payee, taking into account the welfare and support of
his or her dependents.
(b) The transfer complies with the requirements of
this article and will not contravene other applicable
(c) Notice is given in compliance with subdivision
(b) of Section 10136 or, when applicable, court approval
transfer is required and notice is given pursuant to
paragraph (6) of subdivision (c) of Section 10139.5.
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