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 not exactly the
Model Act but complies with Federal Law
PURDON'S PENNSYLVANIA STATUTES
AND CONSOLIDATED STATUTES ANNOTATED
PURDON'S PENNSYLVANIA STATUTES ANNOTATED
TITLE 40. INSURANCE
CHAPTER 40. STRUCTURED SETTLEMENT PROTECTION ACT
Current through Act 2002-39
§ 4001. Short title
This act shall be known and may be cited as the Structured
Settlement Protection Act.
§ 4002. Definitions
The following words and phrases when used in this
act shall have the meanings given to them in this section
unless the context clearly indicates otherwise:
"Annuity issuer." An insurer, or subsidiary
or affiliate thereof, that has issued an insurance contract
used to fund periodic payments under a structured settlement.
"Applicable law." The laws of the United
States, the laws of this Commonwealth and the laws of
any other jurisdiction under whose laws a structured
settlement agreement was approved by a court or responsible
"Best interests." The standard applicable
to transfers of structured settlement payment rights
based on judicial findings regarding the payee and his
dependents, as required by section 3(a)(3), unless if
at the time the payee and the transferee enter into
the transfer agreement a different standard is contained
in the Internal Revenue Code of 1986 (Public Law 99-514,
26 U.S.C. § 1 et seq.) or in a United States Treasury
regulation adopted pursuant thereto, then such different
"Dependents." Include a payee's spouse and
minor children and all other family members and other
persons for whom the payee is legally obligated to provide
support, including alimony.
"Discounted present value." The fair present
value of future payments, as determined by discounting
such payments to the present using the most recently
published applicable Federal rate for determining the
present value of an annuity, as issued by the United
States Internal Revenue Service.
"Favorable tax determination." With respect
to a proposed transfer of structured settlement payment
rights, any of the following authorities that is binding
on the parties to such transfer and on the parties to
the structured settlement agreement and any qualified
assignment agreement and that definitively establishes
that the Federal income tax treatment of the structured
settlement for the parties to the structured settlement
agreement and any qualified assignment agreement, other
than the payee, will not be affected by such transfer:
(1) a provision of the Internal Revenue Code of
1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.)
or United States Treasury regulation;
(2) a published ruling by the United States Internal
(3) a private letter ruling by the United States
Internal Revenue Service with respect to such transfer;
(4) other controlling legal authority that is binding
on the United States Internal Revenue Service.
"Payee." A person domiciled in this Commonwealth
who is receiving tax-free payments under a structured
settlement and proposes to make a transfer of payment
"Periodic payments." Payments made pursuant
to a structured settlement agreement, including scheduled
future lump sum payments.
"Qualified assignment agreement." An agreement
providing for a qualified assignment within the meaning
of section 130 of the Internal Revenue Code of 1986
(Public Law 99-514, 26 U.S.C. § 1 et seq.).
"Settled claim." The original personal injury
or sickness claim or workers' compensation claim resolved
by a structured settlement.
"Structured settlement." An arrangement
for periodic payment of damages established by settlement,
judgment or decree in resolution of a settled claim.
"Structured settlement agreement." The agreement,
judgment, decree, stipulation or release embodying the
terms of a structured settlement, including the rights
of the payee to receive periodic payments.
"Structured settlement obligor." With respect
to any structured settlement, the party that has the
continuing obligation to provide periodic payments to
the payee under a structured settlement agreement or
a qualified assignment agreement.
"Structured settlement payment rights."
Rights to receive periodic payments under a structured
settlement, whether from the settlement obligor or the
annuity issuer, where the payee is domiciled in this
"Terms of the structured settlement." Include,
with respect to any structured settlement, the terms
of the structured settlement agreement, the annuity
contract, any qualified assignment agreement and any
order, decree or approval of any court or responsible
administrative authority authorizing or approving such
"Transfer." Any direct or indirect sale,
assignment, pledge, hypothecation or other form of alienation,
redirection or encumbrance made by a payee for consideration,
provided, however, that this shall not apply to a blanket
security agreement used to secure a loan originating
from a Federal or State chartered lending institution.
Any transfer made or agreed to under this act shall
beconsidered to be a consumer transaction.
"Transfer agreement." The agreement providing
for transfer of structured settlement payment rights
from a payee to a transferee.
"Transferee." The party acquiring or proposing
to acquire structured settlement payment rights through
§ 4003. Conditions to transfers of structured
settlement payment rights
(a) Petition.--No transfer of structured settlement
payment rights shall be effective and no structured
settlement obligor or annuity issuer shall be required
to make any payment to any transferee of structured
settlement payment rights unless the payee has filed
a petition requesting such transfer and the petition
has been granted by final order or decree of a court
of competent jurisdiction based on such court's express
written findings that:
(1) The transfer complies with the requirements of
this act and will not contravene other applicable Federal
or State statutes or regulations or any applicable law
limiting the transfer of workers' compensation claims.
(2) Not less than ten days prior to the date on which
the payee first incurred any obligation with respect
to the transfer, the transferee has provided to the
payee a disclosure statement setting forth all of the
(i) The amounts and due dates of the structured
settlement payments to be transferred.
(ii) The aggregate amount of such payments.
(iii) The discounted present value of such payments,
together with the discount rate or rates used in determining
such discounted present value.
(iv) The gross amount payable to the payee in exchange
for such payments .
(v) An itemized listing of all brokers' commissions,
service charges, application or processing fees, closing
costs, filing or administrative charges, legal fees,
notary fees and other commissions, fees, costs, expenses
and charges payable by the payee or deductible from
the gross amount otherwise payable to the payee.
(vi) The net amount payable to the payee after deduction
of all commissions, fees, costs, expenses and charges
described in subparagraph (v) .
(vii) The quotient, expressed as a percentage, obtained
by dividing the net payment amount by the discounted
present value of the payments.
(viii) The amount of any penalty and the aggregate
amount of any liquidated damages, inclusive of penalties,
payable by the payee in the event of any breach of
the transfer agreement by the payee.
(3) The payee has established that the transfer is
in the best interests of the payee or his dependents.
(4) The payee has received or expressly waived in
a separate written acknowledgment signed by the payee,
independent legal advice regarding the implications
of the transfer, including consideration of the tax
ramifications of the transfer.
(5) If the transfer would contravene the terms of
the structured settlement:
(i) the transfer has been expressly approved in
(A) the payee, the structured settlement obligor
and the annuity issuer, provided, however, that such
approval may not be unreasonably withheld and further
provided that the structured settlement obligor and
the annuity issuer shall be required to consent to
the transfer if the transferee has agreed to indemnify
the structured settlement obligor and annuity issuer
from all liabilities arising from the factoring transaction
and compliance or noncompliance with this act and
further provided that if at the time the payee and
the transferee propose to enter into the transfer
agreement a favorable tax result is in effect, then
the approval of the annuity issuer and the structured
settlement obligor shall not be required; and
(B) any court or responsible administrative authority
that previously approved the structured settlement;
(ii) signed originals of all approvals required
under subparagraph (i) have been filed with the court
from which the authorization of the transfer is being
sought and originals or copies have been furnished
to the payee, the structured settlement obligor and
the annuity issuer.
(6) The payee has given written notice of the transferee's
name, address and taxpayer identification number to
the annuity issuer and the structured settlement obligor
and has filed a copy of such notice with the court.
(b) Notice.--Prior to entering into any agreement
to make a transfer under this act, the payee shall be
provided with a written notice on a separate sheet that
contains the following, in bold print and at least 12-point
IMPORTANT NOTICE: You are strongly urged to consult
with an attorney who can advise you of the potential
tax consequences of this transaction.
(c) Bonds.--If the indemnity in subsection (a)(5)(i)(A)
is offered, the court shall require that the transferee
obtain a surety bond or an irrevocable standby letter
of credit to secure the indemnity obligation. In considering
the necessity and amount of any bond, the court shall
consider the size of the underlying transaction and
the potential liabilities of the structured settlement
obligor and annuity issuer.
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