California

California Structured Settlement Protection Act

The information below was obtained from public records to assist you in understanding the legal issues associated with selling a structured settlement in your area. However, this should not be considered specific legal advice regarding your situation. We welcome the chance to discuss your situation directly, and encourage you to seek independent legal advice if needed.

Since laws vary from state to state, Client First works with attorneys in your local area and close our transactions in local courts, to ensure the selling of your structured settlement payments goes as smooth as possible. The legal process can be very complex, but we are experts at understanding the process and getting the most cash from your settlement.

Call us at 1-888-594-1195 and we would be happy to explain how the laws in your state protect you. Unlike lawyers, we don't charge you by the hour... in fact we don't charge you anything to get started.

In the state of California the law provides that the customer lives in the state, and must be approved by local court in state. Approval granted only if the transaction is in the customers best interest. There also exists a 10 day waiting period to protect the customer.

SB 491 Structured settlements: transfers.

BILL NUMBER: SB 491 - AMENDED 07/08/99

BILL TEXT

AMENDED IN ASSEMBLY JULY 8, 1999

AMENDED IN SENATE APRIL 27, 1999

AMENDED IN SENATE APRIL 5, 1999

INTRODUCED BY Senator Johnston

FEBRUARY 18, 1999

An act to add Article 2.3 (commencing with Section 10134) to Chapter 1 of Part 2 of Division 2 of the Insurance Code, relating to structured settlements.

LEGISLATIVE COUNSEL'S DIGEST

SB 491, as amended, Johnston. Structured settlements: transfers.

Existing law permits a judgment awarded by a court for damages for personal injury in resolution of a tort claim, or an award for permanent disability for personal injuries subject to the workers' compensation law, to be paid in periodic payments rather than a lump-sum payment, which is known as a structured settlement.

This bill would require a transfer of structured settlement payment rights entered into on or after January 1, 2000, to be preceded by a specified disclosure and to include notice to all other interested parties. It would also require a transfer of structured settlement payment rights to comply with specified conditions, including {- a condition that the transfer is necessary to avoid imminent financial hardship of the payee or the payee's dependents, and -} conditions as to fairness and compliance with law. It would prohibit the inclusion of various provisions in an agreement for the transfer of structured settlement payment rights and would make an agreement void and unenforceable if a prohibited provision is included. {+ It would require the filing of transfer agreements with the Attorney General, as specified, and would authorize the Attorney General to charge a reasonable fee for filing those agreements.

It would exempt from these provisions, blanket loan agreements in which the lender takes a security interest in the borrower's assets to secure the loan. +}

Vote: majority. Appropriation: no. Fiscal committee: {- no -} {+ yes +} . State-mandated local program: no.

SECTION 1. Article 2.3 (commencing with Section 10134) is added to Chapter 1 of Part 2 of Division 2 of the Insurance Code, to read:

Article 2.3. Transfers of Structured Settlement Payment Rights

10134. For the purposes of this article, the following terms have the following meanings:

(a) "Discounted present value" means the fair present value of future payments, as determined by discounting those 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.

(b) "Expenses" means all broker's commissions, service charges, application or processing fees, closing costs, filing or administrative charges, legal fees, notary fees and other commissions, fees, costs, and charges that a payee would 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 of the structured settlement payment rights of a structured settlement agreement. {-

(c) "Independent professional advice" means advice of an attorney, certified public accountant, actuary, or other licensed professional adviser who meets all of the following criteria:

(1) He or she is engaged by a payee to render advice concerning the legal, tax, and financial implications of a transfer of structured settlement payment rights.

(2) He or she is not in any manner affiliated with, or compensated by, the transferee of the transfer.

(3) His or her compensation for rendering the advice is not affected by whether a transfer occurs or does not occur.

(d) -} {+

(c) +} "Interested parties" means, with respect to a structured settlement agreement, the payee, any beneficiary designated under the annuity contract to receive payments following the payee's death, the annuity issuer, the structured settlement obligor, and any other party who has continuing rights or obligations under the structured settlement agreement. {-

(e) -} {+

(d) +} "Payee" means an individual who received tax-free payments pursuant to a structured settlement agreement. {-

(f) -} {+

(e) +} "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 in whole, 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. +} {-

(g) -} {+

(f) +} "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. {-

(h) -} {+

(g) +} "Transfer" means any sale, assignment, pledge, hypothecation, or other form of alienation or encumbrance made for consideration. {-

(i) -} {+

(h) +} "Transfer agreement" means the agreement providing for the transfer from the payee to the transferee of structured settlement payment rights of a structured settlement agreement. {-

(j) -} {+

(i) +} "Transferee" means any person receiving structured settlement payment rights resulting from a transfer.

10135. This article is only applicable to transfers entered into on or after January 1, 2000.

10136. No transfer of structured settlement payment rights, either directly or indirectly, shall be effective by a payee 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 in this state, and no structured settlement obligor or annuity issuer shall be required to make any payment directly or indirectly to a transferee, unless all of the following subdivisions are satisfied:

(a) Ten or more days prior to the date on which the payee enters into a transfer agreement, the transferee provides the payee with a written disclosure statement disclosing all of the following:

(1) The amounts and due dates of the structured settlement payments to be transferred.

(2) The aggregate amount of the payments.

(3) The gross amount of all expenses.

(4) The amount payable to the payee, net of all expenses, in exchange for the payments.

(5) The discounted present value of all structured settlement payments to be transferred and the discount rate used in determining that discounted present value.

(6) The quotient (expressed as a percentage) obtained by dividing the net payment amount by the discounted present value of the payments.

(7) A statement that the payee may be subject to adverse federal and state income tax consequences as a result of the proposed transfer. {+

(8) A statement that "THE PROVISIONS OF THIS CONTRACT ARE GOVERNED BY CALIFORNIA'S UNFAIR PRACTICES ACT, BUSINESS AND PROFESSIONS CODE SECTION 17200. IF YOU BELIEVE YOU WERE TREATED UNFAIRLY OR WERE MISLED AS TO THE NATURE OF THE OBLIGATIONS YOU ASSUMED UPON ENTERING INTO THIS AGREEMENT, YOU MAY CALL YOUR LOCAL DISTRICT ATTORNEY OR THE OFFICE OF THE ATTORNEY GENERAL FOR ASSISTANCE.

No contract for the transfer of structured settlement payment rights shall be valid unless the seller has separately acknowledged that he or she has read the language required by this subdivision. +}

(b) The transferee provides notice of the proposed transfer to all other interested parties 10 or more days prior to the date on which the payee enters into a transfer agreement.

(c) The contract for transferring the structured settlement payment rights does not violate the provisions of Section 10138.

10137. A transfer of structured settlement payment rights is void unless all of the following conditions are met: {-

(a) The transfer is necessary to enable the payee, the payee' s dependents, or both, to avoid imminent financial hardship, and the transfer would not subject the payee, the payee's dependents, or both, to undue financial hardship in the future.

(b) -} {+

(a) +} The transfer of the structured settlement payment rights is fair and reasonable and in the best interest of the payee. {-

(c) The payee has received independent professional advice regarding the legal, tax, and financial implications of the transfer.

(d) -} {+

(b) +} The transfer complies with the requirements of this chapter and will not contravene other applicable law. {-

(e) -} {+

(c) +} The transferee provides notice of the proposed transfer to all other interested parties no later than 15 days prior to the effective date of the transfer, unless earlier notice was given in compliance with subdivision (b) of Section 10136.

10138. (a) A contract for the transfer of structured settlement payment rights shall not include any provision described in the paragraphs below, where the seller is a California resident. Any inclusion of a prohibited provision shall make the contract void and unenforceable.

(1) Any provision that waives the seller's right to sue under any law, or in which the seller agrees not to sue, or which waives jurisdiction or standing to sue under the contract.

(2) Any provision that requires the seller to indemnify and hold harmless the buyer, or to pay the buyer's costs of defense, in any claim or action brought by the seller or on the seller's behalf contesting the sale for any reason.

(3) Any provision that waives benefits or rights conferred by law with respect to garnishment of wages.

(4) Any provision providing that the contract is confidential or proprietary, belonging to the buyer.

(5) Any provision in which the seller stipulates to a confession of judgment.

(6) Any provision requiring the seller to pay the buyer's attorney's fees and costs if the purchase agreement is not completed.

(7) Any provision requiring the seller to pay any tax liability arising under the federal tax laws, other than the seller's own tax liability, if any, that results from the transfer.

(8) Any provision providing for brokerage fees incurred in the contract to be included in the purchase price.

(9) Any forum selection provision providing for jurisdiction to be in a court outside of California for any action arising under the contract.

(10) Any choice-of-law provision that provides for controlling law to be other than California law in any action arising under the contract.

(b) This section may not be waived by agreement of the parties. {+

10139. (a) At the time notice is provided to interested parties pursuant to subdivision (b) of Section 10136, or subdivision (c) of Section 10137, the transferee shall file with the Attorney General the transfer agreement, proof of notice to the interested parties, and a verified statement from the payee stating that all of the conditions set forth in Section 10137 have been met. The Attorney General may review any transfer agreement filed pursuant to this section in order to ensure that it meets the requirements of this article.

(b) The Attorney General may charge a reasonable fee for the filing of the transfer agreement as provided in this section. The fee shall be paid by the transferee.

10140. Nothing in this article applies to blanket loan agreements in which the lender takes a security interest in the borrower's assets to secure the loan. +}

Specifics on the laws of California are available at http://www.sen.ca.gov/

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