Arizona Structured Settlements  

AMENDING TITLE 12, ARIZONA REVISED STATUTES, BY ADDING CHAPTER 20; RELATING TO STRUCTURED SETTLEMENTS.

Be it enacted by the Legislature of the State of Arizona:

Section 1. Title 12, Arizona Revised Statutes, is amended by adding chapter 20,

to read: CHAPTER 20

STRUCTURED SETTLEMENTS

ARTICLE 1. GENERAL PROVISIONS

12-2901. DEFINITIONS

IN THIS CHAPTER, UNLESS THE CONTEXT OTHERWISE REQUIRES:

1. "ANNUITY ISSUER" MEANS AN INSURER THAT HAS ISSUED A CONTRACT THAT IS USED

TO FUND PERIODIC PAYMENTS UNDER A STRUCTURED SETTLEMENT.

2. "DEPENDENTS" INCLUDES A PAYEE'S SPOUSE AND MINOR CHILDREN AND ALL OTHER

FAMILY MEMBERS AND OTHER PERSONS FOR WHOM THE PAYEE IS LEGALLY OBLIGATED TO

PROVIDE SUPPORT, INCLUDING ALIMONY.

3. "DISCOUNTED PRESENT VALUE" MEANS THE PRESENT VALUE OF FUTURE PAYMENTS, AS

DETERMINED BY DISCOUNTING THE PAYMENTS TO THE PRESENT USING THE MOST RECENTLY

PUBLISHED APPLICABLE FEDERAL RATE FOR DETERMINING THE PRESENT VALUE OF AN

ANNUITY, AS ISSUED BY THE UNITED STATES INTERNAL REVENUE SERVICE.

4. "GROSS ADVANCE AMOUNT" MEANS THE SUM PAYABLE TO THE PAYEE OR FOR THE

PAYEE'S ACCOUNT AS CONSIDERATION FOR A TRANSFER OF STRUCTURED SETTLEMENT

PAYMENT RIGHTS BEFORE ANY REDUCTIONS FOR TRANSFER EXPENSES OR OTHER DEDUCTIONS

TO BE MADE FROM THE CONSIDERATION.

5. "INDEPENDENT PROFESSIONAL ADVICE" MEANS THE ADVICE OF AN ATTORNEY,

CERTIFIED PUBLIC ACCOUNTANT, ACTUARY OR OTHER LICENSED PROFESSIONAL ADVISER.

6. "INTERESTED PARTIES" MEANS, WITH RESPECT TO ANY STRUCTURED SETTLEMENT, THE

PAYEE, ANY BENEFICIARY IRREVOCABLY DESIGNATED UNDER THE ANNUITY CONTRACT TO

RECEIVE PAYMENTS FOLLOWING THE PAYEE'S DEATH, THE ANNUITY ISSUER, THE

STRUCTURED SETTLEMENT OBLIGOR AND ANY OTHER PARTY THAT HAS CONTINUING RIGHTS OR

OBLIGATIONS UNDER THE STRUCTURED SETTLEMENT.

7. "NET ADVANCE AMOUNT" MEANS THE GROSS ADVANCE AMOUNT LESS THE AGGREGATE

AMOUNT OF THE ACTUAL AND ESTIMATED TRANSFER EXPENSES REQUIRED TO BE DISCLOSED

UNDER THIS CHAPTER.

8. "PAYEE" MEANS AN INDIVIDUAL WHO RECEIVES TAX-FREE DAMAGE PAYMENTS UNDER A

STRUCTURED SETTLEMENT AND WHO PROPOSES TO MAKE A TRANSFER OF PAYMENT RIGHTS

UNDER THE STRUCTURED SETTLEMENT.

9. "PERIODIC PAYMENTS" INCLUDES BOTH RECURRING PAYMENTS AND SCHEDULED FUTURE

LUMP SUM PAYMENTS.

10. "QUALIFIED ASSIGNMENT AGREEMENT" MEANS AN AGREEMENT THAT PROVIDES FOR A

QUALIFIED ASSIGNMENT WITHIN THE MEANING OF SECTION 130 OF THE INTERNAL REVENUE

CODE AS DEFINED BY SECTION 42-1001.

11. "RESPONSIBLE ADMINISTRATIVE AUTHORITY" MEANS, WITH RESPECT TO A STRUCTURED

SETTLEMENT, ANY GOVERNMENT AUTHORITY THAT IS VESTED BY LAW WITH EXCLUSIVE

JURISDICTION OVER THE SETTLED CLAIM THAT IS RESOLVED BY THE STRUCTURED

SETTLEMENT.

12. "SETTLED CLAIM" MEANS THE ORIGINAL TORT CLAIM OR WORKERS' COMPENSATION

CLAIM THAT IS RESOLVED BY A STRUCTURED SETTLEMENT.

13. "STRUCTURED SETTLEMENT" MEANS AN ARRANGEMENT FOR PERIODIC PAYMENT OF

DAMAGES FOR PERSONAL INJURIES OR SICKNESS THAT IS ESTABLISHED BY SETTLEMENT OR

JUDGMENT IN RESOLUTION OF A TORT CLAIM OR FOR PERIODIC PAYMENTS IN SETTLEMENT

OF A WORKERS' COMPENSATION CLAIM.

14. "STRUCTURED SETTLEMENT AGREEMENT" MEANS THE AGREEMENT, JUDGMENT,

STIPULATION OR RELEASE THAT EMBODIES THE TERMS OF A STRUCTURED SETTLEMENT.

15. "STRUCTURED SETTLEMENT OBLIGOR" MEANS, WITH RESPECT TO ANY STRUCTURED

SETTLEMENT, THE PARTY THAT HAS THE CONTINUING PERIODIC PAYMENT OBLIGATION TO

THE PAYEE UNDER A STRUCTURED SETTLEMENT AGREEMENT OR A QUALIFIED ASSIGNMENT

AGREEMENT.

16. "STRUCTURED SETTLEMENT PAYMENT RIGHTS" MEANS THE RIGHT TO RECEIVE PERIODIC

PAYMENTS UNDER A STRUCTURED SETTLEMENT, WHETHER FROM THE SETTLEMENT OBLIGOR OR THE ANNUITY ISSUER, IF ANY OF THE FOLLOWING APPLY:

(A) THE PAYEE, THE STRUCTURED SETTLEMENT OBLIGOR, THE ANNUITY ISSUER OR ANY

OTHER INTERESTED PARTY IS DOMICILED IN THIS STATE.

(B) THE STRUCTURED SETTLEMENT AGREEMENT WAS APPROVED BY A COURT OR RESPONSIBLE

ADMINISTRATIVE AUTHORITY IN THIS STATE.

(C) THE LAWS OF THIS STATE EXPRESSLY GOVERN THE STRUCTURED SETTLEMENT

AGREEMENT.

17. "TERMS OF THE STRUCTURED SETTLEMENT" INCLUDE, WITH RESPECT TO ANY

STRUCTURED SETTLEMENT, THE TERMS OF THE STRUCTURED SETTLEMENT AGREEMENT, THE

ANNUITY CONTRACT, ANY QUALIFIED ASSIGNMENT AGREEMENT AND ANY ORDER OR OTHER

APPROVAL OF ANY COURT OR RESPONSIBLE ADMINISTRATIVE AUTHORITY OR OTHER

GOVERNMENT AUTHORITY THAT AUTHORIZED OR APPROVED THE STRUCTURED SETTLEMENT.

18. "TRANSFER" MEANS ANY SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER FORM

OF ALIENATION OR ENCUMBRANCE OF STRUCTURED SETTLEMENT PAYMENT RIGHTS. TRANSFER

DOES NOT INCLUDE THE CREATION OR PERFECTION OF A SECURITY INTEREST IN

STRUCTURED SETTLEMENT PAYMENT RIGHTS UNDER A BLANKET SECURITY AGREEMENT ENTERED INTO WITH AN INSURED DEPOSITORY INSTITUTION, IN THE ABSENCE OF ANY ACTION TO REDIRECT THE STRUCTURED SETTLEMENT PAYMENTS TO SUCH INSURED DEPOSITORY

INSTITUTION, OR AN AGENT OR SUCCESSOR IN INTEREST THEREOF, OR OTHERWISE TO

ENFORCE THE BLANKET SECURITY INTEREST AGAINST THE STRUCTURED SETTLEMENT PAYMENT RIGHTS.

19. "TRANSFER AGREEMENT" MEANS THE AGREEMENT THAT PROVIDES FOR TRANSFER OF

STRUCTURED SETTLEMENT PAYMENT RIGHTS FROM A PAYEE TO A TRANSFEREE.

20. "TRANSFER EXPENSES" MEANS ALL EXPENSES OF A TRANSFER REQUIRED UNDER THE

TRANSFER AGREEMENT TO BE PAID BY THE PAYEE OR DEDUCTED FROM THE GROSS ADVANCE

AMOUNT, INCLUDING COURT FILING FEES, ATTORNEY FEES, ESCROW FEES, LIEN

RECORDATION FEES, JUDGMENT AND LIEN SEARCH FEES, FINDERS' FEES, COMMISSIONS AND

OTHER PAYMENTS TO A BROKER OR OTHER INTERMEDIARY. TRANSFER EXPENSES DOES NOT

INCLUDE PREEXISTING OBLIGATIONS OF THE PAYEE PAYABLE FOR THE PAYEE'S ACCOUNT

FROM THE PROCEEDS OF A TRANSFER.

21. "TRANSFEREE" MEANS A PARTY ACQUIRING OR PROPOSING TO ACQUIRE STRUCTURED

SETTLEMENT PAYMENT RIGHTS THROUGH A TRANSFER.

12-2902. PAYMENT RIGHTS; TRANSFER CONDITIONS

A. DIRECT OR INDIRECT TRANSFER OF STRUCTURED SETTLEMENT PAYMENT RIGHTS SHALL

NOT BE EFFECTIVE AND A STRUCTURED SETTLEMENT OBLIGOR OR ANNUITY ISSUER SHALL

NOT BE REQUIRED TO MAKE ANY PAYMENT DIRECTLY OR INDIRECTLY TO ANY TRANSFEREE OF

STRUCTURED SETTLEMENT PAYMENT RIGHTS UNLESS THE TRANSFER HAS BEEN AUTHORIZED IN ADVANCE IN A FINAL ORDER OF A COURT OF COMPETENT JURISDICTION OR RESPONSIBLE

ADMINISTRATIVE AUTHORITY.

B. BEFORE ISSUING A FINAL ORDER PURSUANT TO SUBSECTION A, THE COURT OR

RESPONSIBLE ADMINISTRATIVE AUTHORITY SHALL EXPRESSLY FIND THAT:

1. THE TRANSFER COMPLIES WITH THE REQUIREMENTS OF THIS CHAPTER AND WILL NOT

CONTRAVENE ANY OTHER APPLICABLE LAW.

2. NOT LESS THAN THREE DAYS BEFORE THE DATE ON WHICH THE PAYEE SIGNED THE

TRANSFER AGREEMENT, THE TRANSFEREE PROVIDED TO THE PAYEE A DISCLOSURE STATEMENT

IN BOLD TYPE, NO SMALLER THAN FOURTEEN POINTS, SETTING FORTH:

(A) THE AMOUNTS AND DUE DATES OF THE STRUCTURED SETTLEMENT PAYMENTS TO BE

TRANSFERRED.

(B) THE AGGREGATE AMOUNT OF THE PAYMENTS.

(C) THE DISCOUNTED PRESENT VALUE OF THE PAYMENTS TO BE TRANSFERRED, WHICH

SHALL BE IDENTIFIED AS THE CALCULATION OF CURRENT VALUE OF THE TRANSFERRED

STRUCTURED SETTLEMENT PAYMENTS UNDER FEDERAL STANDARDS FOR VALUING ANNUITIES,

AND THE AMOUNT OF THE APPLICABLE FEDERAL RATE USED IN CALCULATING THE

DISCOUNTED PRESENT VALUE.

(D) THE GROSS ADVANCE AMOUNT THAT IS PAYABLE TO THE PAYEE IN EXCHANGE FOR THE

PAYMENTS.

(E) AN ITEMIZED LISTING OF ALL APPLICABLE TRANSFER EXPENSES, OTHER THAN

ATTORNEY FEES AND RELATED DISBURSEMENTS PAYABLE IN CONNECTION WITH THE

TRANSFEREE'S APPLICATION FOR APPROVAL OF THE TRANSFER, AND THE TRANSFEREE'S

BEST ESTIMATE OF THE AMOUNT OF ATTORNEY FEES AND RELATED DISBURSEMENTS.

(F) THE NET ADVANCE AMOUNT THAT IS PAYABLE TO THE PAYEE AFTER DEDUCTION OF ALL

COMMISSIONS, FEES, COSTS, EXPENSES AND CHARGES LISTED IN SUBDIVISION (E) OF

THIS PARAGRAPH.

(G) A STATEMENT THAT THE PAYEE HAS THE RIGHT TO CANCEL THE TRANSFER AGREEMENT,

WITHOUT PENALTY OR FURTHER OBLIGATION, NOT LATER THAN THE THIRD BUSINESS DAY

AFTER THE DATE THE AGREEMENT IS SIGNED BY THE PAYEE.

(H) THE AMOUNT OF ANY PENALTY AND THE AGGREGATE AMOUNT OF ANY LIQUIDATED

DAMAGES INCLUSIVE OF PENALTIES THAT ARE PAYABLE BY THE PAYEE IN THE EVENT OF

ANY BREACH OF THE TRANSFER AGREEMENT BY THE PAYEE.

3. THE TRANSFER IS IN THE BEST INTEREST OF THE PAYEE, TAKING INTO ACCOUNT THE

WELFARE AND SUPPORT OF THE PAYEE'S DEPENDENTS.

4. THE PAYEE HAS BEEN ADVISED IN WRITING BY THE TRANSFEREE TO SEEK INDEPENDENT

PROFESSIONAL ADVICE REGARDING THE TRANSFER AND HAS EITHER RECEIVED THE ADVICE

OR KNOWINGLY WAIVED THE ADVICE IN WRITING.

5. IF THE TRANSFER WOULD CONTRAVENE ANY APPLICABLE STATUTE OR THE ORDER OF ANY

COURT OR OTHER GOVERNMENT AUTHORITY.

C. FOLLOWING A TRANSFER OF STRUCTURED SETTLEMENT PAYMENT RIGHTS UNDER THIS

CHAPTER:

1. THE STRUCTURED SETTLEMENT OBLIGOR AND THE ANNUITY ISSUER SHALL, AS TO ALL

PARTIES EXCEPT THE TRANSFEREE, BE DISCHARGED AND RELEASED FROM ANY AND ALL

LIABILITY FOR THE TRANSFERRED PAYMENTS.

2. THE TRANSFEREE SHALL BE LIABLE TO THE STRUCTURED SETTLEMENT OBLIGOR AND THE

ANNUITY ISSUER:

(A) IF THE TRANSFER CONTRAVENES THE TERMS OF THE STRUCTURED SETTLEMENT, FOR

ANY TAXES INCURRED BY SUCH PARTIES AS A CONSEQUENCE OF THE TRANSFER.

(B) FOR ANY OTHER LIABILITIES OR COSTS, INCLUDING REASONABLE COSTS AND

ATTORNEY FEES, ARISING FROM COMPLIANCE BY SUCH PARTIES WITH THE ORDER OF THE

COURT OR RESPONSIBLE ADMINISTRATIVE AUTHORITY OR ARISING AS A CONSEQUENCE OF

THE TRANSFEREE'S FAILURE TO COMPLY WITH THIS ACT.

12-2903. JURISDICTION: TRANSFER APPROVAL

A. THE SUPERIOR COURT HAS JURISDICTION OVER ANY APPLICATION FOR AUTHORIZATION

TO TRANSFER STRUCTURED SETTLEMENT PAYMENT RIGHTS PURSUANT TO SECTION 12-2902.

B. NOT LESS THAN TWENTY DAYS BEFORE THE SCHEDULED HEARING ON ANY APPLICATION

FOR AUTHORIZATION TO TRANSFER STRUCTURED SETTLEMENT PAYMENT RIGHTS, THE

TRANSFEREE SHALL FILE WITH THE COURT A NOTICE OF THE PROPOSED TRANSFER AND THE

APPLICATION FOR ITS AUTHORIZATION AND SHALL SERVE A COPY OF THE NOTICE ON ANY

OTHER GOVERNMENT AUTHORITY THAT PREVIOUSLY APPROVED THE STRUCTURED SETTLEMENT,

ON ALL INTERESTED PARTIES. THE NOTICE SHALL INCLUDE:

1. A COPY OF THE TRANSFEREE'S APPLICATION.

2. A COPY OF THE TRANSFER AGREEMENT.

3. A COPY OF THE DISCLOSURE STATEMENT REQUIRED UNDER SECTION 12-2902.

4. A LISTING OF EACH OF THE PAYEE'S DEPENDENTS, TOGETHER WITH EACH DEPENDENT'S

AGE.

5. A STATEMENT THAT ANY INTERESTED PARTY IS ENTITLED TO SUPPORT, OPPOSE OR

OTHERWISE RESPOND TO THE TRANSFEREE'S APPLICATION, EITHER IN PERSON OR BY

COUNSEL, BY SUBMITTING WRITTEN COMMENTS TO THE COURT OR OTHER RESPONSIBLE

ADMINISTRATIVE AUTHORITY OR BY PARTICIPATING IN THE HEARING.

6. THE TIME AND PLACE OF THE HEARING AND THE MANNER IN WHICH AND THE TIME BY

WHICH WRITTEN RESPONSES TO THE APPLICATION MUST BE FILED IN ORDER TO BE

CONSIDERED BY THE COURT OR RESPONSIBLE ADMINISTRATIVE AUTHORITY. AN INTERESTED

PARTY SHALL HAVE AT LEAST FIFTEEN DAYS AFTER SERVICE OF THE TRANSFEREE'S NOTICE

IN WHICH TO RESPOND.

12-2904. WAIVER; PENALTIES

A. THE PROVISIONS OF THIS CHAPTER SHALL NOT BE WAIVED.

B. A PAYEE WHO PROPOSES TO MAKE A TRANSFER OF STRUCTURED SETTLEMENT PAYMENT

RIGHTS SHALL NOT INURE ANY PENALTY, FORFEIT ANY APPLICATION FEE OR OTHER

PAYMENT OR OTHERWISE INCUR ANY LIABILITY TO THE PROPOSED TRANSFEREE BASED ON

ANY FAILURE OF THE TRANSFER TO SATISFY THE CONDITIONS SPECIFIED IN SECTION

12-2902.

C. ANY TRANSFER AGREEMENT ENTERED INTO ON OR AFTER THE EFFECTIVE DATE OF THIS

ACT BY A PAYEE WHO RESIDES IN THIS STATE SHALL PROVIDE THAT DISPUTES UNDER THE

TRANSFER AGREEMENT, INCLUDING ANY CLAIM THAT THE PAYEE HAS BREACHED THE

AGREEMENT, SHALL BE DETERMINED IN AND UNDER THE LAWS OF THIS STATE. A TRANSFER

AGREEMENT SHALL NOT AUTHORIZE THE TRANSFEREE OR ANY OTHER PARTY TO CONFESS

JUDGMENT OR CONSENT TO ENTRY OF JUDGMENT AGAINST THE PAYEE.

D. A TRANSFER OF STRUCTURED SETTLEMENT PAYMENT RIGHTS SHALL NOT EXTEND TO ANY

PAYMENTS THAT ARE LIFE CONTINGENT UNLESS, BEFORE THE DATE ON WHICH THE PAYEE

SIGNS THE TRANSFER AGREEMENT, THE TRANSFEREE HAS ESTABLISHED AND HAS AGREED TO

MAINTAIN PROCEDURES REASONABLY SATISFACTORY TO THE ANNUITY ISSUER AND THE

STRUCTURED SETTLEMENT OBLIGOR FOR BOTH OF THE FOLLOWING:

1. PERIODICALLY CONFIRMING THE PAYEE'S SURVIVAL.

2. GIVING THE ANNUITY ISSUER AND THE STRUCTURED SETTLEMENT OBLIGOR PROMPT

WRITTEN NOTICE IF THE PAYEE DIES.

E. COMPLIANCE WITH THE REQUIREMENTS AND FULFILLMENT OF THE CONDITIONS SET

FORTH IN THIS CHAPTER IS THE SOLE RESPONSIBILITY OF THE TRANSFEREE IN ANY

TRANSFER OF STRUCTURED SETTLEMENT PAYMENT RIGHTS, AND THE STRUCTURED SETTLEMENT OBLIGOR OR THE ANNUITY ISSUER IS NOT RESPONSIBLE FOR, OR ANY LIABILITY ARISING FROM, NON-COMPLIANCE WITH THE REQUIREMENTS OR FAILURE TO FULFILL THE

REQUIREMENTS OF THIS CHAPTER.

Sec. 2. Construction

Title 12, chapter 20, Arizona Revised Statutes, as added by this act, shall not be construed to authorize any transfer of structured settlement payment rights in contravention of applicable law or to give effect to any transfer of

structured settlement payment rights that is invalid under applicable law.

Sec. 3. Applicability

Title 12, chapter 20, Arizona Revised Statutes, as added by this act, applies to any transfer of structured settlement payment rights under a transfer agreement that is entered into on or after the effective date of this act,

except that this act shall not imply that any transfer under a transfer agreement that is reached before the effective date of this act is effective.