If you are considering selling your future structured settlement payments for an immediate lump sum in Pennsylvania, 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 Pennsylvania, the law surrounding the transfer of rights to future structured settlement payments is the Structured Settlement Protection Act.
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 following:
(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 writing by:
(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; andClick here to read the full Pennsylvania law.
(B) any court or responsible administrative authority that previously approved the structured settlement; and
(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.
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 firstname.lastname@example.org, or get started with a structured settlement quote.