SF 640

as introduced - 81st Legislature (1999 - 2000) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to commerce; regulating structured settlement 
  1.3             agreements; proposing coding for new law in Minnesota 
  1.4             Statutes, chapter 549. 
  1.5   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.6      Section 1.  [549.30] [DEFINITIONS.] 
  1.7      Subdivision 1.  [SCOPE.] For the purposes of sections 
  1.8   549.30 to 549.34, the terms defined in this section have the 
  1.9   meanings given them. 
  1.10     Subd. 2.  [ANNUITY ISSUER.] "Annuity issuer" means an 
  1.11  insurer that has issued an annuity contract to be used to fund 
  1.12  periodic payments under a structured settlement. 
  1.13     Subd. 3.  [DEPENDENTS.] "Dependents" include a payee's 
  1.14  spouse and minor children and all other family members and other 
  1.15  persons for whom the payee is legally obligated to provide 
  1.16  support, including alimony. 
  1.17     Subd. 4.  [DISCOUNTED PRESENT VALUE.] "Discounted present 
  1.18  value" means the fair present value of future payments, as 
  1.19  determined by discounting the payments to the present using the 
  1.20  most recently published applicable federal rate for determining 
  1.21  the present value of an annuity, as issued by the United States 
  1.22  Internal Revenue Service. 
  1.23     Subd. 5.  [FAVORABLE TAX DETERMINATION.] "Favorable tax 
  1.24  determination" means, with respect to a proposed transfer of 
  1.25  structured settlement payment rights, any of the following 
  2.1   authorities that definitively establishes that the federal 
  2.2   income tax treatment of the structured settlement for the 
  2.3   parties to the structured settlement agreement and any qualified 
  2.4   assignment agreement, other than the payee, will not be affected 
  2.5   by the transfer: 
  2.6      (1) a provision of the United States Internal Revenue Code, 
  2.7   or a United States Treasury regulation; 
  2.8      (2) a revenue ruling or revenue procedure issued by the 
  2.9   United States Internal Revenue Service; 
  2.10     (3) a private letter ruling by the United States Internal 
  2.11  Revenue Service with respect to such transfer; or 
  2.12     (4) a decision of the United States Supreme Court or a 
  2.13  decision of a lower federal court in which the United States 
  2.14  Internal Revenue Service has acquiesced. 
  2.15     Subd. 6.  [INDEPENDENT PROFESSIONAL ADVICE.] "Independent 
  2.16  professional advice" means advice of an attorney, certified 
  2.17  public accountant, actuary, or other licensed professional 
  2.18  adviser: 
  2.19     (1) who is engaged by a payee to render advice concerning 
  2.20  the legal, tax, and financial implications of a transfer of 
  2.21  structured settlement payment rights; 
  2.22     (2) who is not affiliated in any manner with the transferee 
  2.23  of the transfer; and 
  2.24     (3) whose compensation for rendering advice is not affected 
  2.25  by whether a transfer occurs or does not occur. 
  2.26     Subd. 7.  [INTERESTED PARTIES.] "Interested parties" means 
  2.27  the payee, a beneficiary designated under the annuity contract 
  2.28  to receive payments following the payee's death or, if the named 
  2.29  beneficiary is a minor, the named beneficiary's parent or 
  2.30  guardian, the annuity issuer, the structured settlement obligor, 
  2.31  and any other party that has continuing rights or obligations 
  2.32  under the structured settlement. 
  2.33     Subd. 8.  [PAYEE.] "Payee" means an individual who is 
  2.34  receiving payments under a structured settlement and desires to 
  2.35  make a transfer of payment rights under the settlement. 
  2.36     Subd. 9.  [QUALIFIED ASSIGNMENT AGREEMENT.] "Qualified 
  3.1   assignment agreement" means an agreement providing for a 
  3.2   qualified assignment within the meaning of United States Code, 
  3.3   title 26, section 130. 
  3.4      Subd. 10.  [STRUCTURED SETTLEMENT.] "Structured settlement" 
  3.5   means an arrangement for periodic payment of damages established 
  3.6   by settlement or judgment in resolution of a tort claim or for 
  3.7   periodic payments in settlement of a workers' compensation claim.
  3.8      Subd. 11.  [STRUCTURED SETTLEMENT AGREEMENT.] "Structured 
  3.9   settlement agreement" means the agreement, judgment, 
  3.10  stipulation, or release embodying the terms of a structured 
  3.11  settlement including the rights of the payee to receive periodic 
  3.12  payments. 
  3.13     Subd. 12.  [STRUCTURED SETTLEMENT OBLIGOR.] "Structured 
  3.14  settlement obligor" means, with respect to a structured 
  3.15  settlement, the party that has the continuing periodic payment 
  3.16  obligation to the payee under a structured settlement agreement 
  3.17  or a qualified assignment agreement. 
  3.18     Subd. 13.  [STRUCTURED SETTLEMENT PAYMENT RIGHTS.] 
  3.19  "Structured settlement payment rights" means rights to receive 
  3.20  periodic payments, including lump-sum payments, under a 
  3.21  structured settlement, whether from the settlement obligor or 
  3.22  the annuity issuer. 
  3.23     Subd. 14.  [TRANSFER.] "Transfer" means a sale, assignment, 
  3.24  pledge, hypothecation, or other form of alienation or 
  3.25  encumbrance made for consideration. 
  3.26     Subd. 15.  [TRANSFER AGREEMENT.] "Transfer agreement" means 
  3.27  the agreement providing for transfer of structured settlement 
  3.28  payment rights from a payee to a transferee. 
  3.29     Subd. 16.  [TRANSFEREE.] "Transferee" means a person 
  3.30  receiving structured settlement payment rights resulting from a 
  3.31  transfer. 
  3.32     Sec. 2.  [549.31] [CONDITIONS TO TRANSFERS OF STRUCTURED 
  3.33  SETTLEMENT PAYMENT RIGHTS.] 
  3.34     No transfer of structured settlement payment rights, either 
  3.35  directly or indirectly, is effective, and no structured 
  3.36  settlement obligor or annuity issuer is required to make any 
  4.1   payment directly or indirectly to a transferee of structured 
  4.2   settlement payment rights, unless the transfer has been approved 
  4.3   in advance in an order of a court of competent jurisdiction 
  4.4   based on the court's express written findings that: 
  4.5      (a) the transfer complies with the requirements of sections 
  4.6   549.30 to 549.34 and will not contravene other applicable law; 
  4.7      (b) not less than ten days before the date on which the 
  4.8   payee entered into the transfer agreement, the transferee has 
  4.9   provided to the payee a disclosure statement in bold type, no 
  4.10  smaller than 14 points, setting forth: 
  4.11     (1) the amounts and due dates of the structured settlement 
  4.12  payments to be transferred; 
  4.13     (2) the aggregate amount of the payments; 
  4.14     (3) the discounted present value of the payments, together 
  4.15  with the discount rate used in determining the discounted 
  4.16  present value; 
  4.17     (4) the gross amount payable to the payee in exchange for 
  4.18  the payments; 
  4.19     (5) an itemized listing of all brokers' commissions, 
  4.20  service charges, application fees, processing fees, closing 
  4.21  costs, filing fees, administrative charges, legal fees, notary 
  4.22  fees, and other commissions, fees, costs, expenses, and charges 
  4.23  payable by the payee or deductible from the gross amount 
  4.24  otherwise payable to the payee; 
  4.25     (6) the net amount payable to the payee after deduction of 
  4.26  all commissions, fees, costs, expenses, and charges described in 
  4.27  clause (5); 
  4.28     (7) the quotient, expressed as a percentage, obtained by 
  4.29  dividing the net payment amount by the discounted present value 
  4.30  of the payments; and 
  4.31     (8) the amount of any penalty and the aggregate amount of 
  4.32  any liquidated damages, including penalties payable by the payee 
  4.33  in the event of any breach of the transfer agreement by the 
  4.34  payee; 
  4.35     (c) the payee has established that the transfer is 
  4.36  necessary to enable the payee, the payee's dependents, or both, 
  5.1   to avoid imminent financial hardship; 
  5.2      (d) the transfer will not subject the payee, the payee's 
  5.3   dependents, or both, to undue financial hardship in the future; 
  5.4      (e) the payee has received independent professional advice 
  5.5   regarding the legal, tax, and financial implications of 
  5.6   transfer; 
  5.7      (f) the payee has consented in writing to the transfer; 
  5.8      (g) the signed originals of all approvals required under 
  5.9   paragraph (f) have been filed with the court from which 
  5.10  authorization of the transfer is sought under this section, and 
  5.11  originals or copies have been furnished to all interested 
  5.12  parties; and 
  5.13     (h) the transferee has given written notice of the 
  5.14  transferee's name, address, and taxpayer identification number 
  5.15  to the annuity issuer and the structured settlement obligor and 
  5.16  has filed a copy of the notice with the court. 
  5.17     Sec. 3.  [549.32] [JURISDICTION; PROCEDURE FOR APPROVAL OF 
  5.18  TRANSFERS.] 
  5.19     Subdivision 1.  [JURISDICTION.] The district court in the 
  5.20  county in which the original action was or could have been filed 
  5.21  or the county where the applicant resides has jurisdiction over 
  5.22  an application for approval of a transfer of structured 
  5.23  settlement payment rights under section 549.31. 
  5.24     Subd. 2.  [NOTICE.] Not less than 20 days before the 
  5.25  scheduled hearing on an application for court approval of a 
  5.26  transfer of structured settlement payment rights under section 
  5.27  549.31, the transferee shall file with the court and serve on 
  5.28  all interested parties a notice of the proposed transfer and the 
  5.29  application for its authorization.  The notice must include: 
  5.30     (1) a copy of the transferee's application; 
  5.31     (2) a copy of the transfer agreement; 
  5.32     (3) a copy of the disclosure statement required under 
  5.33  section 549.31, paragraph (b); 
  5.34     (4) notification that any interested party is entitled to 
  5.35  support, oppose, or otherwise respond to the transferee's 
  5.36  application, either in person or by counsel, by submitting 
  6.1   written comments to the court or by participating in the 
  6.2   hearing; and 
  6.3      (5) notification of the time and place of the hearing and 
  6.4   notification of the manner in which and the time by which 
  6.5   written responses to the application must be filed, which shall 
  6.6   be not less than ten days after service of the transferee's 
  6.7   notice, in order to be considered by the court. 
  6.8      Sec. 4.  [549.33] [NO WAIVER; NO PENALTIES.] 
  6.9      (a) The provisions of sections 549.30 to 549.34 may not be 
  6.10  waived. 
  6.11     (b) No payee who proposes to make a transfer of structured 
  6.12  settlement payment rights shall incur any penalty, forfeit any 
  6.13  application fee or other payment, or otherwise incur any 
  6.14  liability to the proposed transferee based on any failure of 
  6.15  such transfer to satisfy the conditions of section 549.31. 
  6.16     Sec. 5.  [549.34] [CONSTRUCTION.] 
  6.17     Nothing contained in sections 549.30 to 549.34 shall be 
  6.18  construed to authorize any transfer of structured settlement 
  6.19  payment rights in contravention of applicable law or to give 
  6.20  effect to any transfer of structured settlement payment rights 
  6.21  that is void under applicable law. 
  6.22     Sec. 6.  [EFFECTIVE DATE; APPLICATION.] 
  6.23     Minnesota Statutes, sections 549.30 to 549.34 are effective 
  6.24  August 1, 1999, and apply to a transfer of structured settlement 
  6.25  payment rights under a transfer agreement entered into on or 
  6.26  after that date.  Nothing contained in Minnesota Statutes, 
  6.27  sections 549.30 to 549.34 implies that a transfer under a 
  6.28  transfer agreement reached before August 1, 1999, is effective.