If you are considering selling your future structured settlement payments for an immediate lump sum in Arizona, it's important to understand the laws surrounding this type of transfer. In addition to federal law, 49 states have their own laws that govern the process of transferring the rights of a structured settlement annuity.
In Arizona, the law surrounding the transfer of rights to future structured settlement payments is Chapter 20 Structured Settlements: 12-2902. Payment rights; transfer conditions.
B. Before issuing a final order pursuant to subsection A, the court or responsible administrative authority shall expressly find that:
1. The transfer complies with the requirements of this chapter and will not contravene any other applicable law.
2. Not less than three days before the date on which the payee signed the transfer agreement, the transferee provided to the payee a disclosure statement in bold type, no smaller than fourteen points, setting forth:
(a) The amounts and due dates of the structured settlement payments to be transferred.
(b) The aggregate amount of the payments.
(c) The discounted present value of the payments to be transferred, which shall be identified as the calculation of current value of the transferred structured settlement payments under federal standards for valuing annuities, and the amount of the applicable federal rate used in calculating the discounted present value.
(d) The gross advance amount that is payable to the payee in exchange for the payments.
(e) An itemized listing of all applicable transfer expenses, other than attorney fees and related disbursements payable in connection with the transferee’s application for approval of the transfer, and the transferee’s best estimate of the amount of attorney fees and related disbursements.
(f) The net advance amount that is payable to the payee after deduction of all commissions, fees, costs, expenses and charges listed in subdivision (e) of this paragraph.
(g) A statement that the payee has the right to cancel the transfer agreement, without penalty or further obligation, not later than the third business day after the date the agreement is signed by the payee.
(h) The amount of any penalty and the aggregate amount of any liquidated damages inclusive of penalties that are payable by the payee in the event of any breach of the transfer agreement by the payee.
3. The transfer is in the best interest of the payee, taking into account the welfare and support of the payee’s dependents.
4. The payee has been advised in writing by the transferee to seek independent professional advice regarding the transfer and has either received the advice or knowingly waived the advice in writing.
5. If the transfer would contravene any applicable statute or the order of any court or other government authority.
Click here to read the full Arizona law.
To sell your future structured settlement payments, you'll need to comply with both state and federal law. These laws are in place to protect you.
In 2001, Congress enacted the Victims of Terrorism Relief Act, which includes a provision relating to structured settlement factoring transactions (26 U.S. Code § 5891). This provision imposes a high excise tax on structured settlement factoring transactions unless the transactions are “approved in advance in a qualified order.” The Act defines a qualified order, and it requires that the order be issued “under the authority of an applicable State statute by an applicable State Court.” Since then, 49 states and the District of Columbia have enacted state statutes setting for the procedures for court approval of structured settlement factoring transactions.
Qualified order. --For purposes of this section, the term “qualified order” means a final order, judgment, or decree which--
(A) finds that the transfer described in paragraph (1)--
(i) does not contravene any Federal or State statute or the order of any court or responsible administrative authority, and
(ii) is in the best interest of the payee, taking into account the welfare and support of the payee's dependents, and
(B) is issued--
(i) under the authority of an applicable State statute by an applicable State court, or
(ii) by the responsible administrative authority (if any) which has exclusive jurisdiction over the underlying action or proceeding which was resolved by means of the structured settlement.
26 U.S. Code § 5891 also offers some helpful definitions and other rules for selling structured settlement rights. Read the full law here.
We have a few articles that might be helpful if you are considering selling your structured settlement payments:
Transferring the rights to your future payments is permanent, and it's not the best choice for everyone. We encourage you to speak with a financial expert about your asset and to weigh all your options if you are in need of immediate cash.
CrowFly is committed to creating a positive experience that is built on trust, accessibility, and transparency for people who have structured settlements. For more information, contact CrowFly at 833-CROWFLY, email email@example.com, or get started with a structured settlement quote.