Illinois General Assembly - Full Text of SB1268
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Full Text of SB1268  99th General Assembly




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1    AN ACT concerning regulation.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The Structured Settlement Protection Act is
5amended by changing Sections 5, 10, 15, 20, 25, 30, and 35 as
7    (215 ILCS 153/5)
8    Sec. 5. Definitions. For purposes of this Act:
9    "Annuity issuer" means an insurer that has issued a
10contract to fund periodic payments under a structured
12    "Dependents" include a payee's spouse and minor children
13and all other persons for whom the payee is legally obligated
14to provide support, including maintenance.
15    "Discounted present value" means the present value of
16future payments determined by discounting such payments to the
17present using the most recently published Applicable Federal
18Rate for determining the present value of an annuity, as issued
19by the United States Internal Revenue Service.
20    "Gross advance amount" means the sum payable to the payee
21or for the payee's account as consideration for a transfer of
22structured settlement payment rights before any reductions for
23transfer expenses or other deductions to be made from such



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2    "Independent professional advice" means advice of an
3attorney, certified public accountant, actuary, or other
4licensed professional adviser.
5    "Interested parties" means, with respect to any structured
6settlement, the payee, any beneficiary irrevocably designated
7under the annuity contract to receive payments following the
8payee's death, the annuity issuer, the structured settlement
9obligor, and any other party to the structured settlement that
10has continuing rights or obligations to receive or make
11payments under such structured settlement.
12    "Net advance amount" means the gross advance amount less
13the aggregate amount of the actual and estimated transfer
14expenses required to be disclosed under item (5) of Section 10
15of this Act.
16    "Payee" means an individual who is receiving tax free
17payments under a structured settlement and proposes to make a
18transfer of payment rights thereunder.
19    "Periodic payments" includes both recurring payments and
20scheduled future lump sum payments.
21    "Qualified assignment agreement" means an agreement
22providing for a qualified assignment within the meaning of
23Section 130 of the United States Internal Revenue Code, United
24States Code Title 26, as amended from time to time.
25    "Responsible administrative authority" means, with respect
26to a structured settlement, any government authority vested by



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1law with exclusive jurisdiction over the settled claim resolved
2by such structured settlement.
3    "Settled claim" means the original tort claim or workers'
4compensation claim resolved by a structured settlement.
5    "Structured settlement" means an arrangement for periodic
6payment of damages for personal injuries or sickness
7established by settlement or judgment in resolution of a tort
8claim or for periodic payments in settlement of a workers'
9compensation claim.
10    "Structured settlement agreement" means the agreement,
11judgment, stipulation, or release embodying the terms of a
12structured settlement.
13    "Structured settlement obligor" means, with respect to any
14structured settlement, the party that has the continuing
15obligation to make periodic payments to the payee under a
16structured settlement agreement or a qualified assignment
18    "Structured settlement payment rights" means rights to
19receive periodic payments under a structured settlement,
20whether from the structured settlement obligor or the annuity
21issuer, when:
22        (1) the payee is domiciled in, or the domicile or
23    principal place of business of the structured settlement
24    obligor or the annuity issuer is located in, this State;
25        (2) the structured settlement agreement was approved
26    by a court or responsible administrative authority in this



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1    State; or
2        (3) the structured settlement agreement is expressly
3    governed by the laws of this State.
4    "Terms of the structured settlement" include, with respect
5to any structured settlement, the terms of the structured
6settlement agreement, the annuity contract, any qualified
7assignment agreement, and any order or other approval of any
8court or responsible administrative authority or other
9government authority that authorized or approved such
10structured settlement.
11    "Transfer" means any sale, assignment, pledge,
12hypothecation, or other alienation or encumbrance of
13structured settlement payment rights made by a payee for
14consideration; provided that the term "transfer" does not
15include the creation or perfection of a security interest in
16structured settlement payment rights under a blanket security
17agreement entered into with an insured depository institution
18in the absence of any action to redirect the structured
19settlement payments to such insured depository institution or
20an agent or successor in interest thereof or otherwise to
21enforce such blanket security interest against the structured
22settlement payment rights.
23    "Transfer agreement" means the agreement providing for a
24transfer of structured settlement payment rights.
25    "Transfer expenses" means all expenses of a transfer that
26are required under the transfer agreement to be paid by the



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1payee or deducted from the gross advance amount, including,
2without limitation, court filing fees, attorneys fees, escrow
3fees, lien recordation fees, judgment and lien search fees,
4finders' fees, commissions, and other payments to a broker or
5other intermediary; "transfer expenses" do not include
6preexisting obligations of the payee payable for the payee's
7account from the proceeds of a transfer.
8    "Transferee" means a party acquiring or proposing to
9acquire structured settlement payment rights through a
11(Source: P.A. 93-502, eff. 1-1-04.)
12    (215 ILCS 153/10)
13    Sec. 10. Required disclosures to payee. Not less than 10 3
14days prior to the date on which a payee signs a transfer
15agreement, the transferee shall provide to the payee a separate
16disclosure statement, in bold type no smaller than 14 points,
17setting forth all of the following:
18        (1) the amounts and due dates of the structured
19    settlement payments to be transferred;
20        (2) the aggregate amount of the payments;
21        (3) the discounted present value of the payments to be
22    transferred, which shall be identified as the "calculation
23    of current value of the transferred structured settlement
24    payments under federal standards for valuing annuities",
25    and the amount of the Applicable Federal Rate used in



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1    calculating the discounted present value;
2        (4) the gross advance amount;
3        (5) an itemized listing of all applicable transfer
4    expenses, other than attorneys' fees and related
5    disbursements payable in connection with the transferee's
6    application for approval of the transfer, and the
7    transferee's best estimate of the amount of any such fees
8    and disbursements;
9        (6) the net advance amount;
10        (7) the amount of any penalties or liquidated damages
11    payable by the payee in the event of any breach of the
12    transfer agreement by the payee; and
13        (8) a statement that the payee has the right to cancel
14    the transfer agreement, without penalty or further
15    obligation, not later than the third business day after the
16    date the agreement is signed by the payee; and .
17        (9) the effective annual interest rate, which must be
18    disclosed in the following statement: "Based on the net
19    amount that you will receive from us and the amounts and
20    timing of the structured settlement payments that you are
21    turning over to us, you will, in effect, be paying interest
22    to us at a rate of .... percent per year.".
23(Source: P.A. 93-502, eff. 1-1-04.)
24    (215 ILCS 153/15)
25    Sec. 15. Approval of transfers of structured settlement



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1payment rights. No direct or indirect transfer of structured
2settlement payment rights shall be effective and no structured
3settlement obligor or annuity issuer shall be required to make
4any payment directly or indirectly to any transferee of
5structured settlement payment rights unless the transfer has
6been approved in advance in a final court order or order of a
7responsible administrative authority based on express findings
8by such court or responsible administrative authority that:
9        (1) the transfer is in the best interest of the payee,
10    taking into account the welfare and support of the payee's
11    dependents;
12        (2) the payee has been advised in writing by the
13    transferee to seek independent professional advice
14    regarding the transfer and has either received such advice
15    or knowingly waived in writing the opportunity to seek and
16    receive such advice in writing; and
17        (3) the transfer does not contravene any applicable
18    statute or the order of any court or other government
19    authority.
20(Source: P.A. 93-502, eff. 1-1-04.)
21    (215 ILCS 153/20)
22    Sec. 20. Effects of transfer of structured settlement
23payment rights. Following a transfer of structured settlement
24payment rights approved under this Act:
25        (1) the structured settlement obligor and the annuity



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1    issuer shall, as to all parties except the transferee or an
2    assignee designated by the transferee, be discharged and
3    released from any and all liability for the transferred
4    payments, and the discharge and release shall not be
5    affected by the failure of any party to the transfer to
6    comply with this Act or with the order of the court
7    approving the transfer;
8        (2) the transferee shall be liable to the structured
9    settlement obligor and the annuity issuer:
10            (A) if the transfer contravenes the terms of the
11        structured settlement, for any taxes incurred by the
12        parties as a consequence of the transfer; and
13            (B) for any other liabilities or costs, including
14        reasonable costs and attorneys' fees, arising from
15        compliance by the structured settlement obligor or
16        annuity issuer parties with the order of the court or
17        responsible administrative authority or from arising
18        as a consequence of the transferee's failure of any
19        party to the transfer to comply with this Act;
20        (3) neither the annuity issuer nor the structured
21    settlement obligor may be required to divide any periodic
22    payment between the payee and any transferee or assignee or
23    between 2 or more transferees or assignees; and
24        (4) any further transfer of structured settlement
25    payment rights by the payee may be made only after
26    compliance with all of the requirements of this Act.



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1(Source: P.A. 93-502, eff. 1-1-04.)
2    (215 ILCS 153/25)
3    Sec. 25. Procedure for approval of transfers.
4    (a) No annuity issuer or structured settlement obligor may
5make payments on a structured settlement to anyone other than
6the payee or beneficiary of the payee without prior approval of
7the circuit court or responsible administrative authority. No
8payee or beneficiary of a payee of a structured settlement may
9assign in any manner the structured settlement payment rights
10without the prior approval of the circuit court or responsible
11administrative authority.
12    (b) An application under this Act for approval of a
13transfer of structured settlement payment rights shall be made
14by the transferee and shall be brought in the circuit court of
15the county in which the payee is domiciled, except that, if the
16payee is not domiciled in this State, the application may be
17filed in the court in this State that approved the structured
18settlement agreement or in the circuit court of the county in
19this State in which the structured settlement obligor or
20annuity issuer has its principal place of business an action
21was or could have been maintained or before any responsible
22administrative authority that approved the structured
23settlement agreement.
24    (c) A hearing shall be held on an application for approval
25of a transfer of structured settlement payment rights. The



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1payee shall appear in person at the hearing unless the court
2determines that good cause exists to excuse the payee from
3appearing. Not less than 20 days prior to the scheduled hearing
4on an application, the transferee shall file with the court and
5serve on all interested parties a notice of the proposed
6transfer and the application, including the information and
7documentation required under subsection (d) of this Section.
8    (d) In addition to complying with the other requirements of
9this Act, the application shall include:
10        (1) the payee's name, age, and county of domicile and
11    the number and ages of the payee's dependents;
12        (2) a copy of the transfer agreement and disclosure
13    statement;
14        (3) a description of the reasons why the payee seeks to
15    complete the proposed transfer;
16        (4) a summary of:
17            (i) any prior transfers by the payee to the
18        transferee or an affiliate, or through the transferee
19        or an affiliate to an assignee, within the 4 years
20        preceding the date of the transfer agreement and any
21        proposed transfers by the payee to the transferee or an
22        affiliate, or through the transferee or an affiliate to
23        an assignee, applications for approval of which were
24        denied within the 2 years preceding the date of the
25        transfer agreement;
26            (ii) any prior transfers by the payee to any person



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1        or entity other than the transferee or an affiliate or
2        an assignee of a transferee or affiliate within the 3
3        years preceding the date of the transfer agreement and
4        any prior proposed transfers by the payee to any person
5        or entity other than the transferee or an affiliate or
6        an assignee of a transferee or affiliate, applications
7        for approval which were denied within the one year
8        preceding the date of the current transfer agreement,
9        to the extent that the transfers or proposed transfers
10        have been disclosed to the transferee by the payee in
11        writing or otherwise are actually known by the
12        transferee;
13        (5) notification that any interested party is entitled
14    to support, oppose, or otherwise respond to the
15    transferee's application, either in person or by counsel,
16    by submitting written comments to the court or by
17    participating in the hearing; and
18        (6) notification of the time and place of the hearing
19    and notification of the manner in which and the time by
20    which written responses to the application must be filed,
21    which shall be not less than 5 days prior to the hearing,
22    in order to be considered by the court.
23(Source: P.A. 93-502, eff. 1-1-04.)
24    (215 ILCS 153/30)
25    Sec. 30. General provisions; construction.



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1    (a) The provisions of this Act may not be waived by any
3    (b) Any transfer agreement entered into on or after the
4effective date of this Act by a payee who is domiciled resides
5in this State shall provide that disputes under the transfer
6agreement, including any claim that the payee has breached the
7agreement, shall be determined in and under the laws of this
8State. No such transfer agreement shall authorize the
9transferee or any other party to confess judgment or consent to
10entry of judgment against the payee.
11    (c) No transfer of structured settlement payment rights
12shall extend to any payments that are life-contingent unless,
13prior to the date on which the payee signs the transfer
14agreement, the transferee has established and has agreed to
15maintain procedures reasonably satisfactory to the annuity
16issuer and the structured settlement obligor for (1)
17periodically confirming the payee's survival, and (2) giving
18the annuity issuer and the structured settlement obligor prompt
19written notice in the event of the payee's death.
20    (d) No payee who proposes to make a transfer of structured
21settlement payment rights shall incur any penalty, forfeit any
22application fee or other payment, or otherwise incur any
23liability to the proposed transferee or any assignee based on
24any failure of the transfer to satisfy the conditions of this
26    (e) Nothing contained in this Act shall be construed to



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1authorize any transfer of structured settlement payment rights
2in contravention of any law or to imply that any transfer under
3a transfer agreement entered into prior to the effective date
4of this Act is valid or invalid. A court shall not be precluded
5from hearing an application for approval of a transfer of
6payment rights under a structured settlement where the terms of
7the structured settlement prohibit sale, assignment, or
8encumbrance of such payment rights, nor shall the interested
9parties be precluded from waiving or asserting their rights
10under those terms. The court hearing an application for
11approval of a transfer of payment rights under such a
12settlement shall have authority to rule on the merits of the
13application and any objections to such application.
14    (f) Compliance with the requirements set forth in Section
1510 of this Act and fulfillment of the conditions set forth in
16Section 15 of this Act shall be solely the responsibility of
17the transferee in any transfer of structured settlement payment
18rights, and neither the structured settlement obligor nor the
19annuity issuer shall bear any responsibility for, or any
20liability arising from, non-compliance with those requirements
21or failure to fulfill those conditions.
22    (g) Following issuance of a court order approving a
23transfer of structured settlement payment rights under this
24Act, the structured settlement obligor and annuity issuer may
25rely on the court order in redirecting future structured
26settlement payments to the transferee or an assignee in



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1accordance with the order.
2    (h) The changes made to this Section by this amendatory Act
3of the 99th General Assembly are declarative of existing law.
4(Source: P.A. 93-502, eff. 1-1-04.)
5    (215 ILCS 153/35)
6    Sec. 35. Applicability. This Act shall apply to any
7transfer of structured settlement payment rights under a
8transfer agreement entered into on or after the 30th day after
9the effective date of this Act, including any transfer in which
10the structured settlement obligor and annuity issuer have
11affirmatively waived, or have not objected to the transfer
12based upon, the terms of the settlement prohibiting sale,
13assignment, or encumbrance of the payee's structured
14settlement payment rights. The changes made to this Section by
15this amendatory Act of the 99th General Assembly are
16declarative of existing law ; provided, however, that nothing
17contained herein shall imply that any transfer under a transfer
18agreement reached prior to that date is either effective or
20(Source: P.A. 93-502, eff. 1-1-04.)
21    Section 99. Effective date. This Act takes effect upon
22becoming law.