Illinois Structured Settlements Law

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

Statute and Bill #: 215 ILCS 153/5 (IL H.B. 3582)
Enacted 8/11/2003 Effective 1/1/2004
Summary: Permits the sale or assignment of Illinois 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:

Be it enacted by the People of the State of Illinois, represented in the

General Assembly:

Section 1. Short title. This Act may be cited as the Structured Settlement

Protection Act.

Section 5. Definitions. For purposes of this Act:

"Annuity issuer" means an insurer that has issued a contract to fund periodic

payments under a structured settlement.

"Dependents" include a payee's spouse and minor children and all other persons

for whom the payee is legally obligated to provide support, including

maintenance.

"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.

"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 to be made from

such consideration.

"Independent professional advice" means advice of an attorney, certified public

accountant, actuary, or other licensed professional adviser.

"Interested parties" means, with respect to any structured settlement, 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 that has continuing rights

or obligations under such structured settlement.

"Net advance amount" means the gross advance amount less the aggregate amount

of the actual and estimated transfer expenses required to be disclosed under

item (5) of Section 10 of this Act.

"Payee" means an individual who is receiving tax free payments under a

structured settlement and proposes to make a transfer of payment rights

thereunder.

"Periodic payments" includes both recurring payments and scheduled future lump

sum payments.

"Qualified assignment agreement" means an agreement providing for a qualified

assignment within the meaning of Section 130 of the United States Internal

Revenue Code, United States Code Title 26, as amended from time to time.

"Responsible administrative authority" means, with respect to a structured

settlement, any government authority vested by law with exclusive jurisdiction

over the settled claim resolved by such structured settlement.

"Settled claim" means the original tort claim or workers' compensation claim

resolved by a structured settlement.

"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 or for periodic payments in settlement of a workers'

compensation claim.

"Structured settlement agreement" means the agreement, judgment, stipulation,

or release embodying the terms of a structured settlement.

"Structured settlement obligor" means, with respect to any structured

settlement, the party that has the continuing obligation to make periodic

payments to the payee under a structured settlement agreement or a qualified

assignment agreement.

"Structured settlement payment rights" means rights to receive periodic

payments under a structured settlement, whether from the structured settlement

obligor or the annuity issuer, when:

(1) the payee is domiciled in, or the domicile or principal place of business

of the structured settlement obligor or the annuity issuer is located in, this

State;

(2) the structured settlement agreement was approved by a court or responsible

administrative authority in this State; or

(3) the structured settlement agreement is expressly governed by the laws of

this State.

"Terms of the structured settlement" include, with respect to any structured

settlement, the terms of the structured settlement agreement, the annuity

contract, any qualified assignment agreement, and any order or other approval

of any court or responsible administrative authority or other government

authority that authorized or approved such structured settlement.

"Transfer" means any sale, assignment, pledge, hypothecation, or other

alienation or encumbrance of structured settlement payment rights made by a

payee for consideration; provided that the term "transfer" does not include the

creation or perfection of a security interest in structured settlement payment

rights 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.

"Transfer agreement" means the agreement providing for a transfer of structured

settlement payment rights.

"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, attorneys

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" do not include preexisting obligations of the

payee payable for the payee's account from the proceeds of a transfer.

"Transferee" means a party acquiring or proposing to acquire structured

settlement payment rights through a transfer.

Section 10. Required disclosures to payee. Not less than 3 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 14

points, setting forth 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 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;

(4) the gross advance amount;

(5) an itemized listing of all applicable transfer expenses, other than

attorneys' 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 such fees and disbursements;

(6) the net advance amount;

(7) the amount of any penalties or liquidated damages payable by the payee in

the event of any breach of the transfer agreement by the payee; and

(8) 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.

Section 15. Approval of transfers of structured settlement payment rights. No

direct or indirect transfer of structured settlement payment rights shall be

effective and no structured settlement obligor or annuity issuer shall be

required to make any payment directly or indirectly to any transferee of

structured settlement payment rights 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:

(1) the transfer is in the best interest of the payee, taking into account the

welfare and support of the payee's dependents;

(2) 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 waived such advice in writing; and

(3) the transfer does not contravene any applicable statute or the order of any

court or other government authority.

Section 20. Effects of transfer of structured settlement payment rights.

Following a transfer of structured settlement payment rights under this Act:

(1) the structured settlement obligor and the annuity issuer shall, as to all

parties except the transferee, be discharged and released from any and all

liability for the transferred payments;

(2) the transferee shall be liable to the structured settlement obligor and the

annuity issuer:

(A) if the transfer contravenes the terms of the structured settlement, for any

taxes incurred by the parties as a consequence of the transfer; and

(B) for any other liabilities or costs, including reasonable costs and

attorneys' fees, arising from compliance by the parties with the order of the

court or responsible administrative authority or arising as a consequence of

the transferee's failure to comply with this Act;

(3) neither the annuity issuer nor the structured settlement obligor may be

required to divide any periodic payment between the payee and any transferee or

assignee or between 2 or more transferees or assignees; and

(4) any further transfer of structured settlement payment rights by the payee

may be made only after compliance with all of the requirements of this Act.

Section 25. Procedure for approval of transfers.

(a) No annuity issuer or structured settlement obligor may make payments on a

structured settlement to anyone other than the payee or beneficiary of the

payee without prior approval of the circuit court or responsible administrative

authority. No payee or beneficiary of a payee of a structured settlement may

assign in any manner the structured settlement payment rights without the prior

approval of the circuit court or responsible administrative authority.

(b) An application under this Act for approval of a transfer of structured

settlement payment rights shall be made by the transferee and shall be brought

in the circuit court of the county in which an action was or could have been

maintained or before any responsible administrative authority that approved the

structured settlement agreement.

Section 30. General provisions; construction.

(a) The provisions of this Act may not be waived by any payee.

(b) Any transfer agreement entered into on or after the effective date of this

Act by a payee who resides in this State shall provide that disputes under the

transfer agreement, including any claim that the payee has breached the

agreement, shall be determined in and under the laws of this State. No such

transfer agreement shall authorize the transferee or any other party to confess

judgment or consent to entry of judgment against the payee.

(c) No transfer of structured settlement payment rights shall 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 (1) periodically confirming the payee's

survival, and (2) giving the annuity issuer and the structured settlement

obligor prompt written notice in the event of the payee's death.

(d) No payee who proposes to make a transfer of structured settlement payment

rights shall incur any penalty, forfeit any application fee or other payment,

or otherwise incur any liability to the proposed transferee or any assignee

based on any failure of the transfer to satisfy the conditions of this Act.

(e) Nothing contained in this Act shall be construed to authorize any transfer

of structured settlement payment rights in contravention of any law or to imply

that any transfer under a transfer agreement entered into prior to the

effective date of this Act is valid or invalid.

(f) Compliance with the requirements set forth in Section 10 of this Act and

fulfillment of the conditions set forth in Section 15 of this Act shall be

solely the responsibility of the transferee in any transfer of structured

settlement payment rights, and neither the structured settlement obligor nor

the annuity issuer shall bear any responsibility for, or any liability arising

from, non-compliance with those requirements or failure to fulfill those

conditions.

Section 35. Applicability. This Act shall apply to any transfer of structured

settlement payment rights under a transfer agreement entered into on or after

the 30th day after the effective date of this Act; provided, however, that

nothing contained herein shall imply that any transfer under a transfer

agreement reached prior to that date is either effective or ineffective.

(215 ILCS 5/155.34 rep.)

Section 97. The Illinois Insurance Code is amended by repealing Section 155.34.