Written by attorney Eugene Andre Ahtirski

Selling Structured Settlement Payments and Independent Professional Advice

It goes without saying that anyone seeking to sell structured settlement payments should only do so if there are no other financial options available to them. Because of high costs involved in every sale of a structured settlement, selling a structured settlement is essentially the same as getting a “hard money loan" except that once the payments are sold they can never be “bought back"!

But, if a person is in a “dire" financial situation and must sell a structured settlement annuity; at least the law is on the seller’s side. The question is, will a seller take advantage of all the legal protections that are afforded to them by the consumer protection legislation that has been enacted to protect their “best interests" when seeking to sell a structured settlement?

Laws that Protect Sellers of Structured settlements

48 states [1] have passed some form of legislation to protect all sellers of structured settlements. These laws are referred to as “Structured Settlement Protection Acts" and specifically require Court approval for all transfers and sales of structured settlement payments. The laws also have a very explicit purpose and intent. Very simply, to equalize the bargaining power between the seller and the buyer of a structured settlement, and to make sure that every potential sale of a structured settlement is as also fair as possible.

How to use the Structured Settlement Protection Acts to get the Highest Possible Price

The easiest way for a seller to take advantage of the multiple protections afforded by various State Structured Settlement Protection Acts is for a seller of a structured settlement to get “Independent Professional Advice" [2] regarding the sale of the structured settlement annuity. In fact, Independent Professional Advice (“IPA") is by far the most powerful tool any potential seller can use to their advantage in any transaction involving the sale of a structured settlement annuity.

The Importance of Independent Professional Advice

In each of the 48 different state structured settlement protection acts, a seller (by law) is either strongly recommended, or even required [3] to obtain Independent Professional Advice. And the judicial approval of a sale of a structured settlement often rests on the question of “whether a seller obtained the benefits of independent professional advice before entering into a sales agreement with the buyer".

An experienced Independent Professional Advisor has two primary roles. First, to establish that a particular sale of a structured settlement is in fact in the best interest of the selling party; and to attempt to assess if a seller is receiving the highest possible “ fair market value" price from a potential buyer of a structured settlement. To determine the true fair market value of a person’s structured settlement payment rights, an experienced Independent Professional Advisor will perform the same financial calculations that potential buyers use when determining value of structured settlements , and then use the results of those calculations to assess, and/or negotiate, the best possible purchase price on behalf of a seller.

Costs Associated with Obtaining Independent Professional Advice?

Most state protection acts prevent any potential buyer from referring any particular advisor to a potential seller. And, in many states, the compensation of an independent professional advisor also cannot be affected by whether a transfer occurs or not [4]. The exception is California, where state law obligates a buyer to either pay for and/or reimburse a seller up to $1,500.00 for independent professional advice in addition to and separate from any agreed upon purchase price between the parties, and whether or not a transfer occurs [5].

How to obtain Independent Professional Advice?

So, how then does a seller seek to obtain Independent Professional Advice if they cannot afford to retain an advisor? The solution is generally quite simple. Most experienced Independent professional advisors in Structured Settlement Sales understand the financial circumstances that potential sellers face. As such, they will also generally work with sellers to whatever extent possible to arrive at a compensation arrangement that is both within the ethical boundaries of the law, and in an amount that is also affordable to a seller.

An Educated Seller can get a Fair Purchase Price for their Structured Settlement

Selling a structured settlement should not be more expensive than necessary under any circumstances. By using the existing laws that are designed to protect all sellers of structured settlements, and exercising the right to obtain independent professional advice; every person seeking to sell a structured settlement can get the fairest deal possible.

By: Eugene A. Ahtirski, Esq. [6]

[1] The only 2 remaining states without state Structured Settlement Protection Acts are New Hampshire and Wisconsin.

[2] “Independent Professional Advice" is generally defined as the advice of an advice of an attorney, certified public accountant, actuary, or other licensed professional adviser to explain the legal, tax, or financial implications of a structured settlement or a transfer of structured settlement payment rights. Please see the Official Codes of any State using the phrase “Structured Settlement Protection Act" as the search term for additional reference.

[3] States where an Independent professional advisor is mandatory for a transfer of a structured settlement include: Alaska, North Carolina, Alaska, Delaware, Louisiana, Maine, Maryland, Minnesota, North Carolina and Ohio.

[4] Examples of such language are found in all 48 state structured settlement protection acts, but the most stringent language exists in the state of California. Please see Ca. Ins. Code Section 10134(f) for additional reference.

[5] Please see Ca. Ins. Code Sections 10136 and 10139.5(h) for additional reference.

[6] Mr. Ahtirski is a nationally recognized expert and independent professional advisor in the sale and transfers of structured settlement payment streams. Mr. Ahtirski has personally been involved in over transfers of future payment streams and has a Main Offices located in California and Nationwide Associates in 48 States.

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