SB298: Bill Text

1. The person purchasing the structured settlement payments provided the injured party with a disclosure statement in large, bold print, at least ten days before the transfer of his or her rights to the periodic payments. The disclosure statement must list all of the following:

a. The amounts and due dates of the structured settlement payments to be transferred.

b. The total amount of the payments transferred.

c. The discounted present value of those payments.

d. The discount rate used to determine that discounted present value.

e. The gross amount payable to the injured party in exchange for those transferred payments.

f. A listing of all the charges, commissions and other expenses deductible from the gross amount payable.

g. The resulting net amount payable.

h. The percentage obtained by dividing the net amount payable by the discounted present value.

i. Any penalties for breaching the agreement to transfer the payments.

2. The extraordinary, unanticipated and imminent needs of the injured party or his or her dependents make the transfer of the payments appropriate.

3. The injured party has received independent professional advice regarding the legal, tax and financial implications of the transfer of the payments.

4. If the transfer would contravene the terms of the structured settlement, the transfer has been approved in writing by each interested party and by any other court or administrative agency that previously approved the structured settlement and copies of those approvals are filed with the approving court or administrative agency.

The bill also requires the person purchasing the structured settlement payments, not less than 20 days before the hearing on an application to approve the transfer of the structured settlement payments, to file a notice of the proposed transfer and application for approval with the appropriate court or administrative agency and to serve a copy of that notice on any other governmental unit that previously approved the structured settlement and on all interested parties. The notice, under the bill, must include a copy of the application for approval of the transfer, the proposed transfer agreement and the disclosure statement and a statement of the time and place of the hearing and that any interested party may submit written comments to the court or administrative agency regarding the proposed transfer.

For further information see the state and local fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

SB298, s. 1 Section 1. Chapter 787 of the statutes is created to read:

SB298,2,3 Chapter 787 Structured settlements

SB298,3,1 787.01 Definitions. In this chapter:

SB298,3,3 (1) "Annuity issuer" means an insurer that has issued an insurance contract used to fund periodic payments under a structured settlement.

SB298,3,5 (2) "Applicable law" means the law of the United States, the law of this state and the law of any jurisdictions other than this state:

SB298,3,6 (a) Where the payee or any other interested party is domiciled.

SB298,3,8 (b) Under which a structured settlement agreement was approved by a court or a responsible administrative authority.

SB298,3,11 (3) "Dependent" means the spouse and minor children of a payee and all other persons for whom the payee is legally obligated to provide support, maintenance or alimony.

SB298,3,16 (4) "Discounted present value" means the fair present value of future payments as determined by discounting the payments to the present time using the most recently published applicable federal rate for determining the present value of an annuity, as issued by the U.S. internal revenue service under section 7520 of the Internal Revenue Code.

SB298,3,21 (5) "Favorable tax determination" means a decision by a tax authority definitively establishing that the federal income tax treatment of a structured settlement and of any qualified assignment agreement for the interested parties to that settlement and agreement, other than the payee, will not be affected by a transfer of the structured settlement payment right.

SB298,3,24 (6) "Governmental unit" means the United States; the state; any county, city, village or town; or any political subdivision, department, division, board or agency of the United States, the state or any county, city, village or town.

SB298,4,3 (7) "Independent professional advice" means advice provided by an appropriate licensed professional adviser if the person providing the advice meets all of the following criteria:

SB298,4,5 (a) Is requested by the payee to render advice concerning the legal, tax and financial implications of a transfer of the structured settlement payment right.

SB298,4,7 (b) Is not affiliated with or compensated by the transferee of the structured settlement payment right.

SB298,4,10 (c) Receives compensation for rendering advice concerning the legal, tax and financial implications of a transfer of the structured settlement payment right that is not affected by the transfer occurring or not occurring.

SB298,4,14 (8) "Interested party" means the payee, any beneficiary designated under the annuity contract to receive payments following the payee's death, the annuity issuer, the structured settlement obligor and any other person who has continuing rights or obligations under the structured settlement.

SB298,4,15 (9) "Internal Revenue Code" has the meaning given in s. 71.01 (6).

SB298,4,17 (10) "Payee" means the individual who is receiving tax-free payments for injuries under a structured settlement.

SB298,4,18 (11) "Periodic payments" include scheduled future lump-sum payments.

SB298,4,21 (12) "Qualified assignment agreement" means an agreement providing for a qualified assignment within the meaning of section 130 of the Internal Revenue Code.

SB298,4,24 (13) "Responsible administrative authority" means any governmental unit vested by law with exclusive jurisdiction over the original tort claim or worker's compensation claim that was resolved by a structured settlement.

SB298,5,4 (14) "Structured settlement" means an arrangement for the periodic payments of damages for personal injuries that was established by a settlement or a court judgment that resolved a tort claim or for periodic payments in settlement of a worker's compensation claim.

SB298,5,6 (15) "Structured settlement agreement" means the agreement, judgment, stipulation or release that includes the terms of a structured settlement.

SB298,5,9 (16) "Structured settlement obligor" means the person who has the continuing obligation to make periodic payments to the payee under a structured settlement agreement or under a qualified assignment agreement.

SB298,5,12 (17) "Structured settlement payment right" means a right to receive periodic payments under a structured settlement, either from the structured settlement obligor or from the annuity issuer.

SB298,5,13 (18) "Tax authority" means each of the following:

SB298,5,15 (a) A provision of the Internal Revenue Code or a regulation adopted under that code.

SB298,5,17 (b) A revenue ruling or revenue procedure issued by the internal revenue service.

SB298,5,18 (c) A private letter ruling issued by the internal revenue service.

SB298,5,20 (d) A decision of the U.S. supreme court or a decision of a lower federal court in which the internal revenue service has acquiesced.

SB298,5,24 (19) "Terms of a structured settlement" includes the terms of the structured settlement agreement, the annuity contract, any qualified assignment agreement and any order or approval of a court, a responsible administrative authority or other governmental unit authorizing or approving the structured settlement.

SB298,6,2 (20) "Transfer" means the sale, assignment, pledge or other form of alienation or encumbrance of a right for consideration.

SB298,6,4 (21) "Transfer agreement" means the agreement providing for the transfer of a structured settlement payment right from a payee to a transferee.

SB298,6,6 (22) "Transferee" means a party acquiring or proposing to acquire a structured settlement payment right through a transfer of that right.

SB298,6,16 787.02 Conditions necessary to transfer the structured settlement payment right. (1) If the payee, the structured settlement obligor or the annuity issuer under a structured settlement is domiciled in this state, or if the structured settlement agreement was approved by a court or a responsible administrative authority in this state, then no direct or indirect transfer of a structured settlement payment right under the settlement shall be effective and neither the structured settlement obligor nor the annuity issuer shall be required to make any payments directly or indirectly to any transferee of that right unless the transfer has been approved in advance by a final order of a court of competent jurisdiction or a responsible administrative authority.

SB298,6,19 (2) A court or responsible administrative authority may approve a transfer of a structured settlement payment right only if the court or authority makes express findings that all of the conditions in subs. (3) to (9) are met.

SB298,6,21 (3) The transfer complies with the requirements under this chapter and does not contravene other applicable law.

SB298,6,25 (4) Not less than ten days before the date on which the payee first incurs any obligation with respect to the transfer, the transferee provides the payee with a disclosure statement written in bold print, in a type size that is no smaller than 14 point.

SB298,7,1 (5) The disclosure statement under sub. (4) includes all of the following:

SB298,7,3 (a) The amounts and due dates of the structured settlement payments to be transferred.

SB298,7,5 (b) The aggregate amount of the structured settlement payments to be transferred.

SB298,7,7 (c) The discounted present value of the structured settlement payments to be transferred.

SB298,7,9 (d) The discount rate used in determining the discounted present value of the structured settlement payments to be transferred.

SB298,7,11 (e) The gross amount payable to the payee in exchange for the structured settlement payments to be transferred.

SB298,7,14 (f) An itemized listing of all charges, commissions, costs, expenses and fees payable by the payee or deductible from the gross amount otherwise payable to the payee in exchange for the structured settlement payments being transferred.

SB298,7,16 (g) The net amount payable to the payee after the deduction of all of the amounts described under par. (f).

SB298,7,19 (h) The number, expressed as a percentage, obtained by dividing the net payment amount under par. (g) by the discounted present value of the structured settlement payments to be transferred under par. (c).

SB298,7,22 (i) The amount of any penalty and the maximum amount of any liquidated damages that the payee could be required to pay in the event of the payee's breach of the transfer agreement.

SB298,7,24 (6) The extraordinary, unanticipated and imminent needs of the payee or his or her dependents make the transfer appropriate.

SB298,8,2 (7) The payee has received independent professional advice regarding the legal, tax and financial implications of the transfer.

SB298,8,4 (8) If the transfer would contravene the terms of the structured settlement, all of the following conditions are met:

SB298,8,11 (a) The transfer has been expressly approved in writing by each interested party, except that if at the time that the payee and the transferee entered into the transfer agreement, a favorable tax determination was in effect, then the approval of the annuity issuer and the structured settlement obligor is not required under this paragraph if all of the other interested parties approve the transfer and waive any rights to require that the transferred payments be made to the payee in accordance with the terms of the structured settlement.

SB298,8,15 (b) The transfer has been expressly approved in writing by any court or governmental unit that previously approved the structured settlement, other than the court or responsible administrative authority from which approval of the transfer is sought under this section.

SB298,8,19 (c) Signed originals of all approvals required under pars. (a) and (b) have been filed with the court or responsible administrative authority from which approval of the transfer is sought under this section and copies of those approvals have been provided to all the interested parties.

SB298,8,23 (9) The transferee has given written notice of the transferee's name, address and taxpayer identification number to the annuity issuer and the structured settlement obligor and has filed a copy of that notice with the court or responsible administrative authority that has been asked to approve the transfer.

SB298,9,3 787.03 Procedure for approving the transfer of the structured settlement payment right. (1) The circuit court shall have nonexclusive jurisdiction over any application for the approval of a transfer under s. 787.02 (2).

SB298,9,8 (2) Not less than 20 days before a scheduled hearing before a court or responsible administrative authority on any application for approval of a transfer of a structured settlement payment right, the transferee shall file a notice of the proposed transfer and an application for approval of the transfer with the court or responsible administrative authority.

SB298,9,14 (3) Not less than 20 days before a scheduled hearing before a court or responsible administrative authority on any application for approval of a transfer of a structured settlement payment right, the transferee shall serve notice of the proposed transfer and an application for approval of the transfer on any other governmental unit that previously approved the structured settlement and on all interested parties.

SB298,9,15 (4) The notice under sub. (3) shall include all of the following:

SB298,9,16 (a) A copy of the transferee's application.

SB298,9,17 (b) A copy of the proposed transfer agreement.

SB298,9,18 (c) A copy of the disclosure statement required under s. 787.02 (4).

SB298,9,22 (d) A statement that any interested party may support, oppose or otherwise respond to the transferee's application, either personally or by counsel, by submitting written comments to the court or responsible administrative authority or by participating at the hearing.

SB298,9,25 (e) A statement of the time and place of the hearing and of the manner in which and time by which written responses to the transferee's application shall be filed in order to be considered by the court or responsible administrative authority.

SB298,10,3 (5) Interested parties may file written responses to the transferee's application with the court or responsible administrative authority within 15 days after receipt of the notice under sub. (3).

SB298,10,5 787.04 Waiver. The rights and responsibilities created under this chapter may not be waived.

SB298,10,11 787.05 Exemption from penalties and fees. A payee who proposes to make a transfer of a structured settlement payment right shall not be required to pay the proposed transferee any penalty, forfeit any application fee or other payment made to the proposed transferee or incur any liability to the proposed transferee as the result of the failure of the proposed transfer agreement to meet the conditions under s. 787.02.

SB298,10,15 787.06 Construction of chapter. This chapter shall not be construed to authorize any transfer of a structured settlement payment right in contravention of any applicable law or to give effect to any transfer of a structured settlement payment right that is invalid under any applicable law.

SB298, s. 2 Section 2. Initial applicability.

SB298,10,18 (1) This act first applies to the transfer of a structured settlement payment right under a transfer agreement entered into on the effective date of this subsection.

SB298, s. 3 Section 3. Effective date.