California Insurance Code

§ 10136

INS § 10136 Effective Jan 1, 2011Div. 2 · Part 2 · Ch. 1 · Art. 2.3

Statute text

(a)No direct or indirect transfer of structured settlement payment rights by a payee to which this article applies shall be effective, and no structured settlement obligor or annuity issuer shall be required to make any payment directly or indirectly to a transferee, unless all of the provisions of this section are satisfied.

(b)Ten or more days before the payee executes a transfer agreement, the transferee shall provide the payee with a separate written disclosure statement, accurately completed with the information that applies to the transfer agreement, in substantially the following form, in at least 12-point type unless otherwise indicated (bracketed instructions shall not appear in the form): “Disclosure Notice Required By Law [14-point boldface type] You are selling (technically called ‘transferring’) your right to receive your payments under a structured settlement. You should get this disclosure notice at least 10 days before you sign any contract. IMPORTANT TERMS: [14-point boldface type ] You have agreed to sell to the transferee future payments totaling ____ dollars ($____) in exchange for a purchase price of ____ dollars ($____). Those future payments have a discounted present value equal to ____ dollars ($____), calculated by applying the discount rate of ____ percent utilized by the Internal Revenue Service to value annuities in probate proceedings. The purchase price to be paid to you was calculated using a discount rate of ____ percent. The purchase price payable to you is less than the present value of the future payments stated above because the discount rate of your transaction is greater than the rate utilized by the Internal Revenue Service. For comparison purposes: If you did not sell your right to receive structured settlement payments, but instead borrowed the net amount of $____ and paid that loan back in installments with each of the payments you are now selling, the equivalent interest rate you would be paying for that loan would be ____% per year. [The text and information set forth above under ‘IMPORTANT TERMS’ shall be in 14-point type and circumscribed by a box with a bold border] To figure the net amount we are paying, we have charged you for the following expenses: [itemize in a list by type and amount] for a total of $____ in expenses. You should get independent professional advice about whether selling your structured settlement payments is a good idea for you and for your dependents. You are advised to seek independent legal or financial advice regarding the transaction and, under the law, the cost of that advice, up to one thousand five hundred dollars ($1,500), will be paid by the transferee, the person or entity to whom you have agreed to transfer and assign the payments in question. The transferee or purchaser’s accountant, counsel, or actuary may not advise you in this transaction. You also should get independent professional advice from an accountant or lawyer experienced in tax matters about any income tax consequences from selling your structured settlement payments. We cannot give you the name of anyone to advise you. Court approval is needed [14-point boldface type]. A court must approve any agreement you sign to sell your rights under a structured settlement. You will not receive any money until the court approves the sale. Court approval could take more than 30 days following the day you sign an agreement selling your rights under a structured settlement. A sale of future structured settlement payments will mean that you will no longer receive the future payments that are sold. You are advised to enter into this transaction only after you have carefully considered the consequences of the transaction. You may cancel the contract before court approval [14-point boldface type]. You may cancel the agreement selling (or transferring) your rights under a structured settlement without any cost or obligation. You may cancel at any time before the court approves the contract. You will get notice of the date of the court hearing. If you want to cancel, you do not need any special form. But, you must cancel in writing. Send your cancellation to: [insert transferee’s name and address]. If you believe that you have been treated unfairly or have been misled, you should contact your local district attorney or the state Attorney General.”

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Legislative history

Amended by Stats. 2010, Ch. 328, Sec. 144. (SB 1330) Effective January 1, 2011.