by John Darer ® CLU ChFC MSSC CeFT RSP CLTC
What is a Qualified Assignment?
A qualified assignment is the transfer of a liability to make future periodic payments that complies with 
the requirements of Internal Revenue Code IRC §130.
The future periodic payments must constitute damages owed by the defendant, its liability insurer, or from a Qualified Settlement Fund (QSF), and must be excludable from income under IRC §104(a)(1) or IRC §104(a)(2).
A qualified assignment is a critical component of the structured settlement value proposition. A qualified assignment enables the combination of the tax exclusion with one or more customized payment streams
- In a structured settlement agreement, the original obligor (the defendant, insurance carrier for the defendant, or the trustee of a qualified settlement fund, assigns its obligation to make the future periodic payments called for in the settlement agreement to a “qualified assignee”.
- Generally, a qualified assignment company is a special purpose company, which does little more than hold an annuity as a qualified funding asset to back up the obligations it assumes from Defendants, Insurers or qualified settlement fund trustees.
- A qualified assignment company may actually be an insurance company itself. The qualified assignment company is usually related to the life insurance company issuing the structured settlement annuity.
- The qualified assignment company typically purchases an annuity from the related life insurance company to fund the liability to make future periodic payments it assumes.
- The annuity purchased to fund the the future perioidc payment liability assumed is known as a qualified funding asset and is subject to the terms of IRC §130(d).
- A qualified assignment requires the plaintiff’s consent.
Other resources on qualified assignments can be found on the 4structures.com website.
What is a Qualified Assignment?(4structures.com)
Looks like some industry folks have decided to play wordsmith, claiming a qualified assignment means “to a financially stable insurance company” or “an assignment to the life company.” Nice try but, nope!
For example,
“From the plaintiff’s perspective, an assignment to a financially secure insurance company gives them the assurance that future payments will be made as promised. For many plaintiffs, this assignment to the life company alleviates the stress of future contact with the defendant, their insurer, or any party responsible for the injury”.
The truth is, among the companies offering structured settlements, only the qualified assignee of New York Life (New York Life Insurance and Annuity Corporation) is an actual life insurance company. However, many annuity issuers provide a wraparound guarantee for the periodic payment obligations assumed by their affiliated qualified assignment companies.
Last updated November 22, 2025
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