AN ACT
ENTITLED, An Act to
provide certain protections for structured settlements.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA:
Section 1. Terms used in this Act mean:
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA:
Section 1. Terms used in this Act mean:
(1) "Annuity issuer," an insurer that has issued a contract to fund periodic payments under a
structured settlement;
(2) "Dependents," a payee's spouse and any minor child and any other person for whom the
payee is legally obligated to provide support, including alimony;
(3) "Discounted present value," the present value of future payments determined by
discounting such 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," 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 such consideration;
(5) "Independent professional advice," advice of an attorney, certified public accountant,
actuary, or other licensed professional advisor;
(6) "Interested parties," 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 such structured settlement;
(7) "Net advance amount," the gross advance amount less the aggregate amount of the actual
and estimated transfer expenses required to be disclosed under subdivision (5) of section
2 of this Act;
(8) "Payee," an individual who is receiving tax free payments under a structured settlement
and proposes to make a transfer of payment rights thereunder;
(9) "Periodic payments," includes both recurring payments and scheduled future lump sum
payments;
(10) "Qualified assignment agreement," an agreement providing for a qualified assignment
within the meaning of section 130 of the United States Internal Revenue Code, United
States Code Title 26, as of January 1, 2001;
(11) "Responsible administrative authority," with respect to a structured settlement, any
governmental authority vested by law with exclusive jurisdiction over the settled claim
resolved by such structured settlement;
(12) "Settled claim," the original tort claim or workers' compensation claim resolved by a
structured settlement;
(13) "Structured settlement," an arrangement for periodic payment of damages for personal
injuries or sickness 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," the agreement, judgment, stipulation, or release
embodying the terms of a structured settlement;
(15) "Structured settlement obligor," with respect to any structured settlement, the party that
has the continuing obligation to make periodic payments to the payee under a structured
settlement agreement or a qualified assignment agreement;
(16) "Structured settlement payment rights," rights to receive periodic payments under a
structured settlement, whether from the structured settlement obligor or the annuity issuer,
if at least one of the following applies:
(a) The payee is domiciled in, or the domicile or principal place of business of the
structured settlement obligor or the annuity issuer is located in, this state; or
(b) The structured settlement agreement was approved by a court or responsible
administrative authority in this state; or
(c) The structured settlement agreement is expressly governed by the laws of this state;
(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 such
structured settlement;
(18) "Transfer," any sale, assignment, pledge, hypothecation, or other alienation or
encumbrance of structured settlement payment rights made by a payee for consideration.
The term, transfer, does not include the creation of 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 such blanket security interest against the
structured settlement payment rights;
(19) "Transfer agreement," the agreement providing for a transfer of structured settlement
payment rights;
(20) "Transfer expenses," any expenses of a transfer that are required under the transfer
agreement to be paid by the payee or deducted from the gross advance amount, including
court filing fees, attorneys 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 do not include preexisting obligations of the payee payable
for the payee's account from the proceeds of a transfer;
(21) "Transferee," a party acquiring or proposing to acquire structured settlement payment
rights through a transfer.
Section 2. Not less than three days before the date on which a payee signs a transfer agreement, the transferee shall provide to the payee a separate disclosure statement, in bold type no smaller than 14 points, setting forth the following information:
Section 2. Not less than three days before the date on which a payee signs a transfer agreement, the transferee shall provide to the payee a separate disclosure statement, in bold type no smaller than 14 points, setting forth the following information:
(1) The amounts and due dates of the structured settlement payments to be transferred;
(2) The aggregate amount of such payments;
(3) 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 such discounted present value;
(4) The gross advance amount;
(5) An itemized listing of all applicable transfer expenses, other than attorneys' 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 any such fees and
disbursements;
(6) The net advance amount;
(7) The amount of any penalties or liquidated damages payable by the payee in the event of
any breach of the transfer agreement by the payee; and
(8) 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.
Section 3. No direct or indirect transfer of structured settlement payment rights is effective and
Section 3. No direct or indirect transfer of structured settlement payment rights is effective and
no structured settlement obligor or annuity issuer is required to make any payment directly or
indirectly to any transferee of structured settlement payment rights unless the transfer has been
approved in advance in a final court order or order of a responsible administrative authority based on
the following express findings by such court or responsible administrative authority:
(1) The transfer is in the best interest of the payee, taking into account the welfare and support
of the payee's dependents;
(2) The payee has been advised in writing by the transferee to seek independent professional
advice regarding the transfer and has either received such advice or knowingly waived
such advice in writing; and
(3) The transfer does not contravene any applicable statute or the order of any court or other
government authority.
Section 4. Following a transfer of structured settlement payment rights under this Act:
Section 4. Following a transfer of structured settlement payment rights under this Act:
(1) The structured settlement obligor and the annuity issuer shall, as to all parties except the
transferee, be discharged and released from any liability for the transferred payments;
(2) The transferee is 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; and
(b) For any other liabilities or costs, including reasonable costs and attorneys' 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;
(3) Neither the annuity issuer nor the structured settlement obligor may be required to divide
any periodic payment between the payee and any transferee or assignee or between two
or more transferees or assignees; and
(4) Any further transfer of structured settlement payment rights by the payee may be made
only after compliance with all of the requirements of this Act.
Section 5. An application under this Act for approval of a transfer of structured settlement payment rights shall be made by the transferee and may be brought in the county in which the payee resides, in the county in which the structured settlement obligor or the annuity issuer maintains its principal place of business, or in any court or before any responsible administrative authority which approved the structured settlement agreement.
Section 5. An application under this Act for approval of a transfer of structured settlement payment rights shall be made by the transferee and may be brought in the county in which the payee resides, in the county in which the structured settlement obligor or the annuity issuer maintains its principal place of business, or in any court or before any responsible administrative authority which approved the structured settlement agreement.
Not less than twenty days prior to the scheduled hearing on any application for approval of a
transfer of structured settlement payment rights under section 3 of this Act, the transferee shall file
with the court or responsible administrative authority and serve on all interested parties a notice of
the proposed transfer and the application for its authorization, including the following with such
notice:
(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 2 of this Act;
(4) A listing of each of the payee's dependents, together with each dependent's age;
(5) Notification 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 responsible administrative authority or by participating in the
hearing; and
(6) Notification of the time and place of the hearing and notification of the manner in which,
and the time by which written responses to the application must be filed, which may not
be less than fifteen days after service of the transferee's notice, in order to be considered
by the court or responsible administrative authority.
Section 6. The provisions of this Act may not be waived by any payee.
Section 7. Any transfer agreement entered into on or after the effective date of this Act by a payee who resides in this state shall provide that disputes under such transfer agreement, including any claim that the payee has breached the agreement, shall be determined in and under the laws of this state. No such transfer agreement may authorize the transferee or any other party to confess judgment or consent to entry of judgment against the payee.
Section 8. No transfer of structured settlement payment rights may extend to any payments that are life-contingent unless, prior to 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 periodically confirming the payee's survival and giving the annuity issuer and the structured settlement obligor prompt written notice in the event of the payee's death.
Section 9. No payee who proposes to make a transfer of structured settlement payment rights may incur any penalty, forfeit any application fee or other payment, or otherwise incur any liability to the proposed transferee or any assignee based on any failure of such transfer to satisfy the conditions of this Act.
Section 10. Nothing contained in this Act authorizes any transfer of structured settlement payment rights in contravention of any law or to imply that any transfer under a transfer agreement entered into prior to the effective date of this Act is valid or invalid.
Section 11. Compliance with the requirements set forth in section 2 of this Act and fulfillment of the conditions set forth in section 3 of this Act shall be solely the responsibility of the transferee in any transfer of structured settlement payment rights, and neither the structured settlement obligor nor the annuity issuer bears any responsibility for, or any liability arising from, noncompliance with such requirements or failure to fulfill such conditions.
Section 12. This Act applies to any transfer of structured settlement payment rights under a transfer agreement entered into on or after July 1, 2001. Nothing contained in this Act implies that any transfer under a transfer agreement reached prior to such date is either effective or ineffective.
An Act to provide certain protections for structured settlements.
Section 6. The provisions of this Act may not be waived by any payee.
Section 7. Any transfer agreement entered into on or after the effective date of this Act by a payee who resides in this state shall provide that disputes under such transfer agreement, including any claim that the payee has breached the agreement, shall be determined in and under the laws of this state. No such transfer agreement may authorize the transferee or any other party to confess judgment or consent to entry of judgment against the payee.
Section 8. No transfer of structured settlement payment rights may extend to any payments that are life-contingent unless, prior to 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 periodically confirming the payee's survival and giving the annuity issuer and the structured settlement obligor prompt written notice in the event of the payee's death.
Section 9. No payee who proposes to make a transfer of structured settlement payment rights may incur any penalty, forfeit any application fee or other payment, or otherwise incur any liability to the proposed transferee or any assignee based on any failure of such transfer to satisfy the conditions of this Act.
Section 10. Nothing contained in this Act authorizes any transfer of structured settlement payment rights in contravention of any law or to imply that any transfer under a transfer agreement entered into prior to the effective date of this Act is valid or invalid.
Section 11. Compliance with the requirements set forth in section 2 of this Act and fulfillment of the conditions set forth in section 3 of this Act shall be solely the responsibility of the transferee in any transfer of structured settlement payment rights, and neither the structured settlement obligor nor the annuity issuer bears any responsibility for, or any liability arising from, noncompliance with such requirements or failure to fulfill such conditions.
Section 12. This Act applies to any transfer of structured settlement payment rights under a transfer agreement entered into on or after July 1, 2001. Nothing contained in this Act implies that any transfer under a transfer agreement reached prior to such date is either effective or ineffective.
An Act to provide certain protections for structured settlements.
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I certify that the attached Act originated in the
HOUSE as
Bill
No.
1185
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____________________________
Chief Clerk
Chief Clerk
____________________________
Speaker of the House
Speaker of the House
Attest:
____________________________
Chief Clerk
Chief Clerk
____________________________
President of the Senate
Attest:
____________________________
Secretary of the Senate
Secretary of the Senate
House
Bill
No.
1185
File No. ____
Chapter No. ______=========================
Received at this Executive Office this _____ day of _____________ ,
File No. ____
Chapter No. ______
Received at this Executive Office this _____ day of _____________ ,
20____ at ____________ M.
By _________________________
for the Governor
for the Governor
The attached Act is hereby
approved this ________ day of
______________ , A.D., 20___
____________________________
Governor
Governor
STATE OF SOUTH DAKOTA,
ss.
Office of the Secretary of State
Filed ____________ , 20___
at _________ o'clock __ M.
____________________________
Secretary of State
Secretary of State
By _________________________
Asst. Secretary of State
