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| Home > Statutes > Usa Arizona |
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USA Statutes : arizona
Title : Courts and Civil Proceedings
Chapter : STRUCTURED SETTLEMENTS
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12-2901 Definitions
In this chapter, unless the context otherwise requires:
1. "Annuity issuer" means an insurer that has issued a contract that is used to
fund periodic payments under a structured settlement.
2. "Dependents" includes a payee's spouse and minor children and all other family
members and other persons for whom the payee is legally obligated to provide support,
including alimony.
3. "Discounted present value" means the present value of future payments, as
determined by discounting the 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 to be made from the
consideration.
5. "Independent professional advice" means the advice of an attorney, certified
public accountant, actuary or other licensed professional adviser.
6. "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 the
structured settlement.
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 this chapter.
8. "Payee" means an individual who receives tax-free damage payments under a
structured settlement and who proposes to make a transfer of payment rights under the
structured settlement.
9. "Periodic payments" includes both recurring payments and scheduled future lump
sum payments.
10. "Qualified assignment agreement" means an agreement that provides for a
qualified assignment within the meaning of section 130 of the internal revenue code as
defined by section 42-1001.
11. "Responsible administrative authority" means, with respect to a structured
settlement, any government authority that is vested by law with exclusive jurisdiction
over the settled claim that is resolved by the structured settlement.
12. "Settled claim" means the original tort claim or workers' compensation claim
that is resolved by a structured settlement.
13. "Structured settlement" means an arrangement for periodic payment of damages for
personal injuries or sickness that is established by settlement or judgment in resolution
of a tort claim or for periodic payments in settlement of a workers' compensation claim.
14. "Structured settlement agreement" means the agreement, judgment, stipulation or
release that embodies the terms of a structured settlement.
15. "Structured settlement obligor" means, with respect to any structured
settlement, the party that has the continuing periodic payment obligation to the payee
under a structured settlement agreement or a qualified assignment agreement.
16. "Structured settlement payment rights" means the right to receive periodic
payments under a structured settlement, whether from the settlement obligor or the
annuity issuer, if any of the following apply:
(a) The payee, the structured settlement obligor, the annuity issuer or any other
interested party is domiciled in this state.
(b) The structured settlement agreement was approved by a court or responsible
administrative authority in this state.
(c) The laws of this state expressly govern the structured settlement agreement.
17. "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 the structured settlement.
18. "Transfer" means any sale, assignment, pledge, hypothecation or other form of
alienation or encumbrance of structured settlement payment rights. 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 the blanket security interest against the structured settlement
payment rights.
19. "Transfer agreement" means the agreement that provides for transfer of
structured settlement payment rights from a payee to a transferee.
20. "Transfer expenses" means all expenses of a transfer required under the transfer
agreement to be paid by the payee or deducted from the gross advance amount, including
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.
21. "Transferee" means a party acquiring or proposing to acquire structured
settlement payment rights through a transfer.
12-2902 Payment rights; transfer conditions
A. Direct or indirect transfer of structured settlement payment rights shall not be
effective and a structured settlement obligor or annuity issuer shall not be required to
make any payment directly or indirectly to any transferee of structured settlement
payment rights unless the transfer has been authorized in advance in a final order of a
court of competent jurisdiction or responsible administrative authority.
B. Before issuing a final order pursuant to subsection A, the court or responsible
administrative authority shall expressly find that:
1. The transfer complies with the requirements of this chapter and will not
contravene any other applicable law.
2. Not less than three days before the date on which the payee signed the transfer
agreement, the transferee provided to the payee a 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 the 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 the discounted present value.
(d) The gross advance amount that is payable to the payee in exchange for the
payments.
(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
attorney fees and related disbursements.
(f) The net advance amount that is payable to the payee after deduction of all
commissions, fees, costs, expenses and charges listed in subdivision (e) of this
paragraph.
(g) 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.
(h) The amount of any penalty and the aggregate amount of any liquidated damages
inclusive of penalties that are payable by the payee in the event of any breach of the
transfer agreement by the payee.
3. The transfer is in the best interest of the payee, taking into account the
welfare and support of the payee's dependents.
4. The payee has been advised in writing by the transferee to seek independent
professional advice regarding the transfer and has either received the advice or
knowingly waived the advice in writing.
5. If the transfer would contravene any applicable statute or the order of any
court or other government authority.
C. Following a transfer of structured settlement payment rights under this chapter:
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 such parties as a consequence of the transfer.
(b) 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 this act. 12-2903 Jurisdiction: transfer approval
A. The superior court has jurisdiction over any application for authorization to
transfer structured settlement payment rights pursuant to section 12-2902.
B. Not less than twenty days before the scheduled hearing on any application for
authorization to transfer structured settlement payment rights, the transferee shall file
with the court a notice of the proposed transfer and the application for its
authorization and shall serve a copy of the notice on any other government authority that
previously approved the structured settlement, on all interested parties. The notice
shall include:
1. A copy of the transferee's application.
2. A copy of the transfer agreement.
3. A copy of the disclosure statement required under section 12-2902.
4. A listing of each of the payee's dependents, together with each dependent's age.
5. A statement 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 other responsible administrative authority or
by participating in the hearing.
6. The time and place of the hearing and the manner in which and the time by which
written responses to the application must be filed in order to be considered by the court
or responsible administrative authority. An interested party shall have at least fifteen
days after service of the transferee's notice in which to respond.
12-2904 Waiver; penalties
A. The provisions of this chapter shall not be waived.
B. A payee who proposes to make a transfer of structured settlement payment rights
shall not inure any penalty, forfeit any application fee or other payment or otherwise
incur any liability to the proposed transferee based on any failure of the transfer to
satisfy the conditions specified in section 12-2902.
C. Any transfer agreement entered into on or after the effective date of this
section 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. A transfer agreement shall not
authorize the transferee or any other party to confess judgment or consent to entry of
judgment against the payee.
D. A transfer of structured settlement payment rights shall not extend to any
payments that are life contingent unless, before 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
both of the following:
1. Periodically confirming the payee's survival.
2. Giving the annuity issuer and the structured settlement obligor prompt written
notice if the payee dies.
E. Compliance with the requirements and fulfillment of the conditions set forth in
this chapter is the sole responsibility of the transferee in any transfer of structured
settlement payment rights, and the structured settlement obligor or the annuity issuer is
not responsible for, or any liability arising from, noncompliance with the requirements
or failure to fulfill the requirements of this chapter.
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