What is a Qualified Assignee?
A Qualified Assignee, or qualified assignment company is the entity that assumes the liability to make future perioidic paymentsb from the Defendant, or the Defendant’s Insuer when a structured settlement is established
Key Takeaway
Qualified Assignee Role: Assignment and Assumption of liability to pay periodic payments as eligible damages
Qualified assignment——–>Assignment of a liability make perioidic payments———->qualified assignee (qualified assignment company)——->assumes the liability to make periodic payments———–>funds obligation by buying a qualified funding asset (annuity, US Treasuries)
Qualified Assugnee continues to own qualified fudning asset even if all or a portu=ion of strctured setlement payment rights are sold in a structrued settlement factoring transction.
What is a Court Ordered Assignee ?
How does Court Ordered Assignee Differ from a Qualified Assignee?
A court ordered assignee comes into play whe someone sells existing structured settlement payment rights in a structured settlement factoring transaction.
A qualified order is a final order, judgment, or decree that meets specific legal requirements under U.S. tax, particularly in this context of structured settlement factoring transactions
Under 26 CFR § 157.5891-1 and 26 USC § 5891(b)(2), a qualified order must:
- Find that the transfer of structured settlement payment rights:
- Does not contravene any federal or state statute, or the order of any court or responsible administrative authority.
- Is in the best interest of the payee, taking into account the welfare and support of the payee’s dependents.
- Be issued:
- Under the authority of an applicable state statute by an applicable state court, or
- By the responsible administrative authority (if any) with exclusive jurisdiction over the underlying action or proceeding that created the structured settlement
Summary Comparison
| Feature | Qualified Assignee | Court-Ordered Assignee |
|---|---|---|
| Market | Primary market (new settlement) | Secondary market (sale of existing structured settlement payment rights, structured settlement receivables) |
| Role | Assumes obligation to make payments | Receives right to receive payments |
| Annuity Ownership | Retains ownership | Does not acquire annuity ownership |
| Legal Basis | IRC §130, qualified assignment requirements | State Structured Settlement Protection Acts, 26 USC §5891 |
| Trigger | Settlement agreement creation | Sale/factoring of existing structured settlement payment rights |
| Tax Treatment | Tax-qualified assignment | Requires qualified order to avoid factoring tax |
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