Litigation

What is A Qualified Assignment?

By John Darer

An assignment of obligation to make future periodic payments which satisfies the requirements of Internal Revenue Code (IRC) § 130. In a structured settlement agreement the original obligor (the defendant, insurance carrier for the defendant, or the trustee of a qualified settlement fund, assigns its obligation to make the future periodic payments called for in the settlement agreement to a "qualified assignee". Generally a qualified assignment company is a special purpose company, which does little more than hold an annuity as a qualified funding asset to back up the obligations it assumes from Defendants, Insurers or qualified settlement fund trustees. A qualified assignment company may actually be an insurance company itself. The qualified assignment company is usually related to the life insurance company issuing the structured settlement annuity. The qualified assignment company typically purchases an annuity from the related life insurance company as a qualified funding asset pursuant to IRC 130(d). A qualified assignment requires the plaintiff's consent.

Plaintiffs and their attorneys who engage settlement consultants who hold themselves out as plaintiff specialists or settlement planners have a reasonable expectation that those settlement consultants deliver accurate and reliable information.

The answer to the question "what is a qualified assignment" should be fundamental knowledge to ALL competent structured settlement consultants. It is therefore quite a pity that there is misinformation posted on the website of a veteran plaintiff focused NSSTA member which states incorrectly (see below) that the qualified assignment is "to a financially secure insurance company", or "an assignment to the life company".

"From the plaintiff?s perspective, an assignment to a financially secure insurance company gives them the assurance that future payments will be made as promised. For many plaintiffs, this assignment to the life company alleviates the stress of future contact with the defendant, their insurer, or any party responsible for the injury".

Of the companies offering structured settlements only the qualified assignees of New York Life (New York Life Insurance and Annuity Corporation) and American International Life Assurance Company of New York (American Home Assurance Company or National Union Fire Insurance Company of Pittsburgh, PA) are insurance companies. The qualified assignees of Pacific Life and Annuity Company, Allstate Life Insurance Company, Allstate Life Insurance Company of New York, Metropolitan Life Insurance Company, John Hancock Life Insurance Company, Liberty Life Assurance Company of Boston, Hartford Life Insurance Company, The Prudential Insurance Company of America, Symetra Life Insurance and American General Life Insurance Company (i.e. the majority) ARE NOT life insurance companies or even insurance companies for that matter.

NSSTA members among our readers should take extra care to be sure that their web sites contain accurate information, particularly on such fundamental stuff as a qualified assignment.

Full post as published by Structured Settlements 4Real on March 23, 2009 (boomark / email).