Colorado Structured Settlements Law

Yes, you can trade Colorado structured settlement payments for upfront cash.

Statute and Bill #: SB 98
Enacted 4/20/2004 Effective 7/1/2004
Summary: Permits the sale or assignment of Colorado structured settlement payment rights, subject to a court's review and approval based on showing that the proposed transfer is in the consumer's "best interests," taking into account the welfare of the consumer's dependents (if any). Requires certain disclosures and other consumer protections.


Full Text Of Bill:

A BILL FOR AN ACT
CONCERNING THE ESTABLISHMENT OF A " STRUCTURED SETTLEMENT PROTECTION ACT".

DIGEST: Bill Summary
(Note: This summary applies to this bill as introduced and does not necessarily reflect any amendments that may be subsequently adopted.)
For the transfer of rights under a structured settlement agreement:
* Specifies required disclosures to the payee;
* Requires approval of the transfer by a court or responsible administrative authority;
* Specifies effects of the transfer on interested parties; and
* Establishes a procedure for approval of the transfer.

Text:
Be it enacted by the General Assembly of the State of Colorado:
SECTION 1. Title 13, Colorado Revised Statutes, is amended BY THE ADDITION OF A
NEW ARTICLE to read: ARTICLE 23 Structured Settlement Protection Act

13-23-101. Short title. THIS ARTICLE SHALL BE KNOWN AND MAY BE CITED AS THE "
STRUCTURED SETTLEMENT PROTECTION ACT".

13-23-102. Definitions. AS USED IN THIS ARTICLE, UNLESS THE CONTEXT OTHERWISE
REQUIRES:
(1) "ANNUITY ISSUER" MEANS AN INSURER THAT HAS ISSUED A CONTRACT TO FUND
PERIODIC PAYMENTS UNDER A STRUCTURED SETTLEMENT.
(2) "DEPENDENT" MEANS A PAYEE'S SPOUSE, MINOR CHILD, OR ANY PERSON FOR WHOM THE
PAYEE IS LEGALLY OBLIGATED TO PROVIDE SUPPORT, INCLUDING MAINTENANCE.
(3) " DISCOUNTED PRESENT VALUE " MEANS THE PRESENT VALUE OF FUTURE PAYMENTS
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.
(4) "GROSS ADVANCE AMOUNT" MEANS THE SUM PAYABLE TO THE PAYEE OR FOR THE
PAYEE'S ACCOUNT AS CONSIDERATION FOR A TRANSFER OF STRUCTURED SETTLEMENT
PAYMENT RIGHTS BEFORE ANY REDUCTIONS FOR TRANSFER EXPENSES OR OTHER DEDUCTIONS
ARE MADE FROM SUCH CONSIDERATION.
(5) "INDEPENDENT PROFESSIONAL ADVICE" MEANS ADVICE OF AN ATTORNEY, CERTIFIED
PUBLIC ACCOUNTANT, ACTUARY, OR OTHER LICENSED PROFESSIONAL ADVISER.
(6) "INTERESTED PARTIES" MEANS THE PAYEE, ANY BENEFICIARY IRREVOCABLY
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 SUCH STRUCTURED
SETTLEMENT. IF A DELEGATE CHILD SUPPORT ENFORCEMENT UNIT IS ENFORCING A PAYEE'S
LEGAL OBLIGATION TO SUPPORT HIS OR HER DEPENDENT CHILDREN, PURSUANT TO SECTION
26-13-105, C.R.S., "INTERESTED PARTIES" SHALL ALSO INCLUDE THE DELEGATE CHILD
SUPPORT ENFORCEMENT UNIT.
(7) "NET ADVANCE AMOUNT" MEANS THE GROSS ADVANCE AMOUNT LESS THE AGGREGATE
AMOUNT OF THE ACTUAL AND ESTIMATED TRANSFER EXPENSES REQUIRED TO BE DISCLOSED
UNDER SECTION 13-23-103.
(8) "PAYEE" MEANS AN INDIVIDUAL WHO IS RECEIVING TAX-FREE PAYMENTS UNDER A
STRUCTURED SETTLEMENT AND WHO PROPOSES TO MAKE A TRANSFER OF PAYMENT RIGHTS
THEREUNDER.
(9) "PERIODIC PAYMENT" MEANS A RECURRING PAYMENT OR A SCHEDULED FUTURE LUMP SUM
PAYMENT.
(10) "QUALIFIED ASSIGNMENT AGREEMENT" MEANS AN AGREEMENT PROVIDING FOR A
QUALIFIED ASSIGNMENT WITHIN THE MEANING OF SECTION 130 OF THE FEDERAL "INTERNAL
REVENUE CODE OF 1986", AS AMENDED.
(11) "RESPONSIBLE ADMINISTRATIVE AUTHORITY" MEANS ANY GOVERNMENT AUTHORITY
VESTED BY LAW WITH EXCLUSIVE JURISDICTION OVER THE SETTLED CLAIM RESOLVED BY
SUCH STRUCTURED SETTLEMENT.
(12) " SETTLED CLAIM" MEANS THE ORIGINAL TORT CLAIM RESOLVED BY A STRUCTURED
SETTLEMENT.
(13) " STRUCTURED SETTLEMENT " MEANS AN ARRANGEMENT FOR PERIODIC PAYMENT OF
DAMAGES FOR PERSONAL INJURIES OR SICKNESS ESTABLISHED BY SETTLEMENT OR JUDGMENT
IN RESOLUTION OF A TORT CLAIM.
(14) " STRUCTURED SETTLEMENT AGREEMENT" MEANS THE AGREEMENT, JUDGMENT,
STIPULATION, OR RELEASE EMBODYING THE TERMS OF A STRUCTURED SETTLEMENT.
(15) " STRUCTURED SETTLEMENT OBLIGOR" MEANS THE PARTY WHO HAS THE CONTINUING
OBLIGATION TO MAKE PERIODIC PAYMENTS TO THE PAYEE UNDER A STRUCTURED
SETTLEMENT AGREEMENT OR A QUALIFIED ASSIGNMENT AGREEMENT.
(16) " STRUCTURED SETTLEMENT PAYMENT RIGHT" MEANS THE RIGHT TO RECEIVE PERIODIC
PAYMENTS UNDER A STRUCTURED SETTLEMENT, WHETHER FROM THE STRUCTURED
SETTLEMENT OBLIGOR OR THE ANNUITY ISSUER, WHERE:
(a) THE PAYEE IS DOMICILED IN COLORADO, OR THE DOMICILE OR PRINCIPAL PLACE OF
BUSINESS OF THE STRUCTURED SETTLEMENT OBLIGOR OR THE ANNUITY ISSUER IS
COLORADO; OR
(b) THE STRUCTURED SETTLEMENT AGREEMENT WAS APPROVED BY A COURT OR RESPONSIBLE
ADMINISTRATIVE AUTHORITY IN COLORADO; OR
(c) THE STRUCTURED SETTLEMENT AGREEMENT IS EXPRESSLY GOVERNED BY THE LAWS OF
COLORADO.
(17) "TERMS OF THE STRUCTURED SETTLEMENT " MEANS THE TERMS OF THE STRUCTURED
SETTLEMENT AGREEMENT, THE ANNUITY CONTRACT, A QUALIFIED ASSIGNMENT AGREEMENT,
AND ANY ORDER OR OTHER APPROVAL OF A COURT OR RESPONSIBLE ADMINISTRATIVE
AUTHORITY OR OTHER GOVERNMENT AUTHORITY THAT AUTHORIZED OR APPROVED SUCH
STRUCTURED SETTLEMENT.
(18) "TRANSFER" MEANS A SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION, OR OTHER
ALIENATION OR ENCUMBRANCE OF A STRUCTURED SETTLEMENT PAYMENT RIGHT MADE BY A
PAYEE FOR CONSIDERATION; EXCEPT THAT THE TERM "TRANSFER" DOES NOT INCLUDE THE
CREATION OR PERFECTION OF A SECURITY INTEREST IN A STRUCTURED SETTLEMENT
PAYMENT RIGHT UNDER A BLANKET SECURITY AGREEMENT ENTERED INTO WITH AN INSURED
DEPOSITORY INSTITUTION, IN THE ABSENCE OF ANY ACTION TO REDIRECT THE
STRUCTURED SETTLEMENT PAYMENTS TO SUCH INSURED DEPOSITORY INSTITUTION, OR AN
AGENT OR SUCCESSOR IN INTEREST THEREOF, OR OTHERWISE TO ENFORCE SUCH BLANKET
SECURITY INTEREST AGAINST THE STRUCTURED SETTLEMENT PAYMENT RIGHTS.
(19) "TRANSFER AGREEMENT" MEANS THE AGREEMENT PROVIDING FOR A TRANSFER OF A
STRUCTURED SETTLEMENT PAYMENT RIGHT.
(20) "TRANSFEREE" MEANS A PARTY ACQUIRING OR PROPOSING TO ACQUIRE A
STRUCTURED SETTLEMENT PAYMENT RIGHT THROUGH A TRANSFER.
(21) "TRANSFER EXPENSES" MEANS ALL EXPENSES OF A TRANSFER THAT ARE REQUIRED
UNDER THE TRANSFER AGREEMENT TO BE PAID BY THE PAYEE OR DEDUCTED FROM THE GROSS
ADVANCE AMOUNT, INCLUDING, WITHOUT LIMITATION, COURT FILING FEES, ATTORNEY
FEES, ESCROW FEES, LIEN RECORDATION FEES, JUDGMENT AND LIEN SEARCH FEES,
FINDERS' FEES, COMMISSIONS, AND OTHER PAYMENTS TO A BROKER OR OTHER
INTERMEDIARY. "TRANSFER EXPENSES" DOES NOT INCLUDE PREEXISTING OBLIGATIONS OF
THE PAYEE PAYABLE FOR THE PAYEE'S ACCOUNT FROM THE PROCEEDS OF A TRANSFER.

13-23-103. Required disclosures to payee. (1) NOT FEWER THAN THREE DAYS PRIOR
TO THE DATE ON WHICH A PAYEE SIGNS A TRANSFER AGREEMENT, THE TRANSFEREE SHALL
PROVIDE TO THE PAYEE A SEPARATE 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 SUCH 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 SUCH
DISCOUNTED PRESENT VALUE;
(d) THE GROSS ADVANCE AMOUNT;
(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 ANY ATTORNEY FEES AND RELATED DISBURSEMENTS;
(f) THE NET ADVANCE AMOUNT;
(g) THE AMOUNT OF ANY PENALTIES OR LIQUIDATED DAMAGES PAYABLE BY THE PAYEE IN
THE EVENT OF A BREACH OF THE TRANSFER AGREEMENT BY THE PAYEE; AND
(h) 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.

13-23-104. Approval of transfers of structured settlement payment rights.
(1) A DIRECT OR INDIRECT TRANSFER OF A STRUCTURED SETTLEMENT PAYMENT RIGHT SHALL NOT
BE EFFECTIVE AND A STRUCTURED SETTLEMENT OBLIGOR OR ANNUITY ISSUER SHALL NOT
BE REQUIRED TO MAKE A PAYMENT DIRECTLY OR INDIRECTLY TO A TRANSFEREE OF A
STRUCTURED SETTLEMENT PAYMENT RIGHT UNLESS THE TRANSFER HAS BEEN APPROVED IN
ADVANCE IN A FINAL COURT ORDER OR ORDER OF A RESPONSIBLE ADMINISTRATIVE
AUTHORITY BASED ON EXPRESS FINDINGS BY SUCH COURT OR RESPONSIBLE ADMINISTRATIVE
AUTHORITY THAT:
(a) THE TRANSFER IS IN THE BEST INTERESTS OF THE PAYEE, TAKING INTO ACCOUNT THE
WELFARE AND SUPPORT OF THE PAYEE'S DEPENDENTS;
(b) THE PAYEE HAS BEEN ADVISED IN WRITING BY THE TRANSFEREE TO SEEK INDEPENDENT
PROFESSIONAL ADVICE REGARDING THE TRANSFER AND HAS EITHER RECEIVED SUCH ADVICE
OR KNOWINGLY AND WILLINGLY WAIVED SUCH ADVICE IN WRITING; AND
(c) THE TRANSFER DOES NOT CONTRAVENE ANY APPLICABLE STATUTE OR THE ORDER OF ANY
COURT OR OTHER GOVERNMENT AUTHORITY.

13-23-105. Effect of transfer of structured settlement payment right.
(1) FOLLOWING A TRANSFER OF A STRUCTURED SETTLEMENT PAYMENT RIGHT PURSUANT TO THIS ARTICLE:
(a) THE STRUCTURED SETTLEMENT OBLIGOR AND THE ANNUITY ISSUER SHALL, AS TO ALL
PARTIES EXCEPT THE TRANSFEREE, BE DISCHARGED AND RELEASED FROM ALL LIABILITY
FOR THE TRANSFERRED PAYMENTS;
(b) THE TRANSFEREE SHALL BE LIABLE TO THE STRUCTURED SETTLEMENT OBLIGOR AND THE
ANNUITY ISSUER:
(I) IF THE TRANSFER CONTRAVENES THE TERMS OF THE STRUCTURED SETTLEMENT, FOR
ANY TAXES INCURRED BY SUCH PARTIES AS A CONSEQUENCE OF THE TRANSFER; AND
(II) FOR ANY OTHER LIABILITIES OR COSTS, INCLUDING REASONABLE COSTS AND
ATTORNEY FEES, ARISING FROM COMPLIANCE BY SUCH PARTIES WITH THE ORDER OF THE
COURT OR RESPONSIBLE ADMINISTRATIVE AUTHORITY OR ARISING AS A CONSEQUENCE OF
THE TRANSFEREE'S FAILURE TO COMPLY WITH THE PROVISIONS OF THIS ARTICLE;
(c) NEITHER THE ANNUITY ISSUER NOR THE STRUCTURED SETTLEMENT OBLIGOR MAY BE
REQUIRED TO DIVIDE ANY PERIODIC PAYMENT BETWEEN THE PAYEE AND A TRANSFEREE OR
ASSIGNEE OR BETWEEN TWO OR MORE TRANSFEREES OR ASSIGNEES; AND
(d) ANY FURTHER TRANSFER OF STRUCTURED SETTLEMENT PAYMENT RIGHTS BY THE PAYEE
MAY BE MADE ONLY AFTER COMPLIANCE WITH ALL OF THE REQUIREMENTS OF THIS ARTICLE.

13-23-106. Procedure for approval of transfer.
(1) AN APPLICATION UNDER THIS
ARTICLE FOR APPROVAL OF A TRANSFER OF A STRUCTURED SETTLEMENT PAYMENT RIGHT
SHALL BE MADE BY THE TRANSFEREE AND MAY BE BROUGHT:
(a) IN THE DISTRICT COURT FOR THE COUNTY IN WHICH THE PAYEE RESIDES;
(b) IN THE DISTRICT COURT FOR THE COUNTY IN WHICH THE STRUCTURED SETTLEMENT
OBLIGOR OR THE ANNUITY ISSUER MAINTAINS ITS PRINCIPAL PLACE OF BUSINESS; OR
(c) IN ANY COURT OR BEFORE ANY RESPONSIBLE ADMINISTRATIVE AUTHORITY THAT
APPROVED THE STRUCTURED SETTLEMENT AGREEMENT.
(2) NOT FEWER THAN TWENTY DAYS PRIOR TO THE SCHEDULED HEARING ON AN APPLICATION
FOR APPROVAL OF A TRANSFER OF STRUCTURED SETTLEMENT PAYMENT RIGHTS UNDER
SECTION 13-23-104, THE TRANSFEREE SHALL FILE WITH THE COURT OR RESPONSIBLE
ADMINISTRATIVE AUTHORITY AND SERVE ON ALL INTERESTED PARTIES A NOTICE OF THE
PROPOSED TRANSFER AND THE APPLICATION FOR ITS AUTHORIZATION. THE TRANSFEREE
SHALL FILE AND SERVE:
(a) A COPY OF THE TRANSFEREE'S APPLICATION;
(b) A COPY OF THE TRANSFER AGREEMENT;
(c) A COPY OF THE DISCLOSURE STATEMENT REQUIRED PURSUANT TO SECTION 13-23-103;
(d) A LISTING OF EACH OF THE PAYEE'S DEPENDENTS, TOGETHER WITH EACH DEPENDENT'S
AGE;
(e) A NOTIFICATION THAT ANY INTERESTED PARTY IS ENTITLED TO SUPPORT, OPPOSE, OR
OTHERWISE RESPOND TO THE TRANSFEREE'S APPLICATION, EITHER IN PERSON OR BY
COUNSEL, BY SUBMITTING WRITTEN COMMENTS TO THE COURT OR RESPONSIBLE
ADMINISTRATIVE AUTHORITY OR BY PARTICIPATING IN THE HEARING; AND
(f) A NOTIFICATION OF THE TIME AND PLACE OF THE HEARING AND NOTIFICATION OF THE
MANNER IN WHICH AND THE TIME BY WHICH WRITTEN RESPONSES TO THE APPLICATION MUST
BE FILED, WHICH SHALL BE NOT FEWER THAN FIFTEEN DAYS AFTER SERVICE OF THE
TRANSFEREE'S NOTICE, IN ORDER TO BE CONSIDERED BY THE COURT OR RESPONSIBLE
ADMINISTRATIVE AUTHORITY.

13-23-107. General provisions - construction.
(1) THE PROVISIONS OF THIS
ARTICLE MAY NOT BE WAIVED BY ANY PAYEE.
(2) ANY TRANSFER AGREEMENT ENTERED INTO ON OR AFTER JULY 1, 2004, BY A PAYEE
WHO RESIDES IN COLORADO SHALL PROVIDE THAT DISPUTES UNDER SUCH TRANSFER
AGREEMENT, INCLUDING ANY CLAIM THAT THE PAYEE HAS BREACHED THE AGREEMENT, SHALL
BE DETERMINED IN AND UNDER THE LAWS OF COLORADO. NO SUCH TRANSFER AGREEMENT
SHALL AUTHORIZE THE TRANSFEREE OR ANY OTHER PARTY TO CONFESS JUDGMENT OR
CONSENT TO ENTRY OF JUDGMENT AGAINST THE PAYEE.
(3) A TRANSFER OF STRUCTURED SETTLEMENT PAYMENT RIGHTS SHALL NOT EXTEND TO ANY
PAYMENTS THAT ARE LIFE-CONTINGENT UNLESS, PRIOR TO THE DATE ON WHICH THE PAYEE
SIGNS THE TRANSFER AGREEMENT, THE TRANSFEREE HAS ESTABLISHED AND HAS AGREED TO
MAINTAIN PROCEDURES REASONABLY SATISFACTORY TO THE ANNUITY ISSUER AND THE
STRUCTURED SETTLEMENT OBLIGOR FOR PERIODICALLY CONFIRMING THE PAYEE'S SURVIVAL
AND GIVING THE ANNUITY ISSUER AND THE STRUCTURED SETTLEMENT OBLIGOR PROMPT
WRITTEN NOTICE IN THE EVENT OF THE PAYEE'S DEATH.
(4) A PAYEE WHO PROPOSES TO MAKE A TRANSFER OF A STRUCTURED SETTLEMENT PAYMENT
RIGHT SHALL NOT INCUR ANY PENALTY, FORFEIT ANY APPLICATION FEE OR OTHER
PAYMENT, OR OTHERWISE INCUR ANY LIABILITY TO THE PROPOSED TRANSFEREE OR ANY
ASSIGNEE BASED ON A FAILURE OF SUCH TRANSFER TO SATISFY THE CONDITIONS OF THIS
ARTICLE.
(5) NOTHING CONTAINED IN THIS ARTICLE SHALL BE CONSTRUED TO AUTHORIZE A
TRANSFER OF A STRUCTURED SETTLEMENT PAYMENT RIGHT IN CONTRAVENTION OF ANY LAW
OR TO IMPLY THAT A TRANSFER UNDER A TRANSFER AGREEMENT ENTERED INTO PRIOR TO
JULY 1, 2004, IS VALID OR INVALID.
(6) COMPLIANCE WITH THE REQUIREMENTS SET FORTH IN SECTION 13-23-103 AND
FULFILLMENT OF THE CONDITIONS SET FORTH IN SECTION 13-23-104 SHALL BE SOLELY
THE RESPONSIBILITY OF THE TRANSFEREE IN A TRANSFER OF STRUCTURED SETTLEMENT
PAYMENT RIGHTS, AND NEITHER THE STRUCTURED SETTLEMENT OBLIGOR NOR THE ANNUITY
ISSUER SHALL BEAR RESPONSIBILITY FOR, OR ANY LIABILITY ARISING FROM,
NON-COMPLIANCE WITH SUCH REQUIREMENTS OR FAILURE TO FULFILL SUCH CONDITIONS.

13-23-108. Exceptions - judgment for periodic payment against a health care
professional or institution - assignment of workers' compensation benefits.
NOTHING IN THIS ARTICLE SHALL APPLY TO A JUDGMENT ENTERED PURSUANT TO THE
PROVISIONS OF PART 2 OF ARTICLE 64 OF THIS TITLE OR TO COMPENSATION OR BENEFITS
DUE UNDER ARTICLES 40 TO 47 OF TITLE 8, C.R.S.
SECTION 2. Effective date - applicability. This act shall take effect July 1,
2004, and shall apply to agreements to transfer a structured settlement
payment right executed on or after said date.
SECTION 3. Safety clause. The general assembly hereby finds, determines, and
declares that this act is necessary for the immediate preservation of the
public peace, health, and safety.