Structured settlement recipients should know:

  1. They do not own the annuities that fund their periodic payments even though they are typically named as annuitants and may even possess the annuity contracts as common law secured creditors. What they own instead are structured settlement payment rights.
  2. “Anti-assignment’ clauses in settlement documents are enforceable and, if enforced, could prevent structured settlement recipients from selling their payment rights.
  3. Selling structured settlement payment rights is subject to state protection statutes and requires advanced approval from a state judge or responsible administrative authority.
  4. When evaluating proposed sales, these state judges or responsible administrative authorities are required to apply a “best interest” test that takes into account the welfare and support of the sellers’ dependents.
  5. Many state judges require proposed sellers to appear in court and answer questions to determine whether proposed sales meet this “best interest” test.
  6. Most state structured settlement protection statutes require a finding that sellers either have received independent professional advice or have knowingly waived the right to receive it. At least eleven statutes require findings that sellers have in fact received independent professional advice and waivers are not permitted.

One criterion to consider when selecting a purchaser is whether that purchaser belongs to the National Association of Settlement Purchasers (NASP), a professional association that promotes best practices among its members and provides industry education about the transfer process.