by John Darer CLI ChFC MSSC CeFT RSP CLTC
A Qualified Assignment Release and Pledge Agreement (QARP) is a legal document, the execution of which sets the second stage of a structured settlement transaction in motion (see structured settlement flow chart below).
A Qualified Assignment Release and Pledge Agreement(QARP) is used where there is a desire for the Payee to have Secured Creditor status
What are the Compoents of a QARP
Structured Settlement: A structured settlement is a negotiated financial arrangement where as part of the consideration for the release of claims, the defendant or its/their insurers agree to make one or more customized streams of periodic payments to the plaintiff (injured party). A structured settlement is not an all or nothing arrangement.
- Qualified Assignment: A qualified assignment is type of assignment used to establish a structured settlement, that complies with the requirements of the Internal Revenue Code (IRC) Section 130. A qualified assignment is an intrinsic part of a structured settlement transaction where the periodic payments represent damages for personal physical injury or physical sickness, wrongful death or workers compensation claims. Meeting the requirements is essential so that the assignment is considered “qualified” for tax purposes, and the defendant or insurer can generally claim a tax deduction for the qualified assignment.
Release: The plaintiff typically agrees to release the defendant or insurer from any further liability related to the original claim in exchange for the promise to make the periodic payments (structured settlement payments).This release is a crucial part of the agreement.
- Pledge: In the Pledge part of the QARP, typical language includes “the Assignee-Debtor pledges and grants to Claimant-Secured Party a lien on and security interest in all of Assignee-Debtor’s right, title, and interest in the Annuity and all payments therefrom in order to secure the obligation of Assignee-Debtor to make the Periodic Payments. Assignee-Debtor and Claimant-Secured Party shall notify Annuity Issuer of the lien created under this Agreement, and Assignee-Debtor shall deliver Assignee-Debtor shall have all rights of ownership and control in the Annuity, including the right to receive and retain all benefits under the Annuity, which are not inconsistent with the security interest granted inthe QARP, and Claimant- Secured Party shall have no right to anticipate, sell, assign, pledge, encumber, or otherwise exercise any right with respect to the Annuity, so long as Assignee-Debtor has not failed due to insolvency or bankruptcy to make any of the Periodic Payments. If such a failure occurs and is continuing, Claimant-Secured Party shall have all of the rights and remedies of a secured party under the law then in effect in the State of________________
All settlement documents should be carefully drafted to comply with both federal and state laws governing structured settlements and assignments. Additionally, individuals entering into such agreements often seek legal and financial advice to ensure they make informed decisions.
John Darer Reviews of Qualified AssignmentTopics and Sub-Topics
- Structured Settlements with Inclusive Qualified Assignments (4structures.com)
- Qualified Assignments With Multiple Family Members on Same Form | Why Its May Not Be Such a Good Idea – Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews (typepad.com)
- If You See a Qualified Assignment and Release Like This, Seek a Second Opinion – Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews (typepad.com)
- Qualified Assignments and Tax Rules Concerning Structured Settlements – Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews (typepad.com)
- What is a Qualified Assignment? (4structures.com)
Last updated December 1, 2025