California Senate Bill 510, Approved by the Governor October 11, 2009, effective January 2010.
SECTION 1. Section 10134 of the Insurance Code is amended to read:
10134. For the purposes of this article, the following terms have the
following meanings:
(a) “Buyer’s first right of refusal” means any provision in the transfer
agreement or related documents that obligate the payee to give to the buyer
the first choice or option to purchase any remaining structured settlement
rights belonging to the payee.
(b) “Dependents” include the 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.
(c) “Discounted present value” means the fair present value of future
payments, as determined by discounting those 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.
(d) “Effective equivalent interest rate,” with respect to a transfer of
structured settlement payment rights, means the annualized rate of interest
on the net advance amount, calculated by treating the transferred structured
settlement payments as if they were installment payments on a loan, with
each payment applied first to accrued unpaid interest and then to principal.
(e) “Expenses” means all broker’s commissions, service charges,
application or processing fees, closing costs, filing or administrative charges,
legal fees, notary fees and other commissions, fees, costs, and charges that
a payee would have to pay to transfer the structured settlement payment
rights of a structured settlement agreement or that would be deducted from
the gross consideration that would be paid to the payee in connection with
the transfer of the structured settlement payment rights of a structured
settlement agreement.
(f) “Independent professional advice” means advice of an attorney,
certified public accountant, actuary, or other licensed professional adviser
meeting all of the following requirements:
(1) The adviser is engaged by a claimant or payee to render advice
concerning the legal, tax, or financial implications of a structured settlement
or a transfer of structured settlement payment rights.
(2) The adviser’s compensation for rendering independent professional
advice is not affected by occurrence or lack of occurrence of a settlement
or transfer.
(3) A particular adviser is not referred to the payee by the transferee or
its agent, except that the transferee may refer the payee to a lawyer referral
service or agency operated by a state or local bar association.
(g) “Interested parties” means, with respect to a structured settlement
agreement, the payee, the payee’s attorney, 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 who has continuing rights or obligations under the structured
settlement agreement. If the designated beneficiary is a minor, the
beneficiary’s parent or guardian shall be an interested party.
(h) “Payee” means an individual who received tax-free payments pursuant
to a structured settlement agreement.
(i) “Qualified assignment agreement” means an agreement providing for
a qualified assignment within the meaning of Section 130 of Title 26 of the
United States Code, as amended from time to time.
(j) “Structured settlement agreement” means an arrangement for periodic
payment of damages established by settlement or judgment in resolution of
a tort claim in which the payment of the judgment or award is paid in whole,
or in part, in periodic tax-free payments rather than a lump-sum payment.
A structured settlement agreement entered into pursuant to Section 667.7
of the Code of Civil Procedure or Section 970.6 or 984 of the Government
Code is not subject to the provisions of this article other than the
requirements of Section 10138.
(k) “Structured settlement obligor” means the party that has the continuing
periodic payment obligation to the payee under a structured settlement
agreement or a qualified assignment agreement.
(l) “Structured settlement payment rights” means rights to receive periodic
payments, including lump-sum payments, pursuant to a structured settlement
agreement, whether from the settlement obligor or an annuity issuer.
(m) “Terms of the structured settlement” include, with respect to a
structured settlement agreement, the terms of the structured settlement
agreement, annuity contract, qualified assignment agreement, and any order
or approval of a court or responsible administrative authority or other
governmental authority authorizing or approving the structured settlement.
(n) “Transfer” means any sale, assignment, pledge, hypothecation, or
other form of alienation or encumbrance made for consideration.
(o) “Transfer agreement” means the agreement providing for the transfer,
and any other document used to effectuate the transfer, from the payee to
the transferee of structured settlement payment rights of a structured
settlement agreement.
(p) “Transferee” means any person receiving structured settlement
payment rights resulting from a transfer.
SEC. 2. Section 10135 of the Insurance Code is amended to read:
10135. (a) This article is only applicable to transfers entered into on or
after January 1, 2000.
(b) Notwithstanding subdivision (a), the changes to this article made by
the act amending this section in the 2001–02 Regular Session shall only be
applicable to transfers entered into on or after January 1, 2002.
(c) This article is only applicable to transfers of structured settlement
payment rights if one of the following requirements is met:
(1) The payee is domiciled in California at the time the transfer agreement
is signed by the payee.
(2) The payee is not domiciled in California at the time the transfer
agreement is signed and the state where the payee is domiciled does not
have a structured settlement transfer statute, but either the structured
settlement obligor or annuity issuer is domiciled in California.
SEC. 3. Section 10136 of the Insurance Code is amended to read:
10136. (a) No direct or indirect transfer of structured settlement payment
rights shall be effective by a payee to which this article applies 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
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:
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.”
(c) The transfer agreement shall be written in at least 12-point type and
shall be complete and without blank spaces to be completed after the payee’s
signature. The transfer agreement shall set forth clear and conspicuously,
and in no less than 12-point type, all of the following:
(1) A statement that the agreement is not effective until the date on which
a court enters a final order approving the transfer agreement and that payment
to the payee pursuant to the transfer agreement will be delayed up to 30
days or more after the date the payee signed the transfer agreement in order
for the court to review and approve the transfer agreement.
(2) The amounts and due dates of the structured settlement payments to
be transferred.
(3) The aggregate amount of the structured settlement payments to be
transferred. This amount shall be disclosed in the form prescribed in
subdivision (b).
(4) The aggregate amount of all expenses, if any, to be deducted from
the purchase price to be paid to the payee in exchange for the payments to
be transferred, and an itemization of all expenses by type and amount.
(5) The amount payable to the payee, net of all expenses, in exchange
for the payments to be transferred. This amount shall be disclosed in the
form prescribed in subdivision (b).
(6) The discounted present value of all structured settlement payments
to be transferred and a statement that “This is the value of your structured
settlement in current dollars.” This amount shall be disclosed in the form
prescribed in subdivision (b).
(7) The federal rate, as described in subdivision (c) of Section 10134,
used in determining the discounted present value.
(8) The effective equivalent interest rate, which shall be disclosed in the
following statement:
“YOU WILL BE PAYING THE EQUIVALENT OF AN INTEREST
RATE OF ____% PER YEAR.
Based on the net amount that you will receive from us and the amounts
and timing of the structured settlement payments that you are transferring
to us, if the transferred structured settlement payments were installment
payments on a loan, with each payment applied first to accrued unpaid
interest and then to principal, it would be as if you were paying interest to
us of ____% per year, assuming funding on the effective date of transfer.”
This percentage amount shall be disclosed in the form prescribed in
subdivision (b) in the space for “the equivalent interest rate you would be
paying for this loan would be ____% per year.”
(9) The quotient (expressed as a percentage) obtained by dividing the
net payment amount by the discounted present value of the payments.
(10) A statement that the payee should obtain independent professional
advice regarding any federal and state income tax consequences arising
from the proposed transfer, and that the transferee may not refer the payee
to any specific adviser for that purpose.
(11) A statement that the court approving the transfer agreement retains
continuing jurisdiction to interpret and monitor implementation of the
agreement as justice may require.
(12) The following statement: “If you believe you were treated unfairly
or were misled as to the nature of the obligations you assumed upon entering
into this agreement, you should report those circumstances to your local
district attorney or the office of the Attorney General.”
(13) The following statement printed in 14-point type, circumscribed by
a box with a bold border, and set forth immediately above or adjacent to
the space reserved for the payee’s signature: “You have the right to cancel
this agreement without any cost or obligation until the date the court
approves this agreement. You will receive notice of the court hearing date
when approval may occur. You must cancel in writing and send your
cancellation to [insert transferee’s name and address].”
(d) The contract for transferring the structured settlement payment rights
may not violate Section 10138.
(e) At any time before the date on which a court enters a final order
approving the transfer agreement pursuant to Section 10139.5, the payee
may cancel the transfer agreement, without cost or further obligation, by
providing written notice of cancellation to the transferee.
SEC. 4. Section 10137 of the Insurance Code is amended to read:
10137. A transfer of structured settlement payment rights is void unless
a court reviews and approves the transfer and finds the following conditions
are met:
(a) The transfer of the structured settlement payment rights is fair and
reasonable and in the best interest of the payee, taking into account the
welfare and support of his or her dependents.
(b) The transfer complies with the requirements of this article, will not
contravene other applicable law, and the court has reviewed and approved
the transfer as provided in Section 10139.5.
SEC. 5. Section 10138 of the Insurance Code is amended to read:
10138. (a) A transfer agreement, as defined in subdivision (o) of Section
10134, shall not include any provision described in the paragraphs below.
Any inclusion of a prohibited provision, with respect to a seller who is a
California resident, shall make the provision void and unenforceable.
(1) Any provision that waives the seller’s right to sue under any law, or
in which the seller agrees not to sue, or that waives jurisdiction or standing
to sue under the contract.
(2) Any provision that requires the seller to indemnify and hold harmless
the buyer, or to pay the buyer’s costs of defense, in any claim or action
brought by the seller or on the seller’s behalf contesting the sale for any
reason.
(3) Any provision that waives benefits or rights conferred by law with
respect to garnishment of wages.
(4) Any provision providing that the contract is confidential or
proprietary, belonging to the buyer.
(5) Any provision in which the seller stipulates to a confession of
judgment.
(6) Any provision requiring the seller to pay the buyer’s attorney’s fees
and costs if the purchase agreement is not completed.
(7) Any provision requiring the seller to pay any tax liability arising
under the federal tax laws, other than the seller’s own tax liability, if any,
that results from the transfer.
(8) Any provision providing for brokerage fees incurred in the contract
to be deducted from the purchase price disclosed pursuant to paragraph (5)
of subdivision (b) of Section 10136.
(9) If the payee is domiciled in California at the time that the transfer
agreement is signed by the payee, any forum selection provision providing
for jurisdiction to be in a court outside of California for any action arising
under the contract.
(10) If the payee is domiciled in California at the time that the transfer
agreement is signed by the payee, any choice-of-law provision that provides
for controlling law to be other than California law in any action arising
under the contract.
(11) A provision that provides the transferee with a security interest or
collateral interest in any structured settlement payment rights that exceed
the actual dollar amount of the structured settlement payment rights being
transferred.
(12) Any provision that creates a “buyer’s first right of refusal” to
purchase any remaining structured payment rights that the payee may desire
to sell in the future.
(b) The provisions in this section may not be waived by agreement of
the parties.
SEC. 6. Section 10139 of the Insurance Code is amended to read:
10139. (a) At the time of filing a petition pursuant to Section 10139.5
for court approval, the transferee shall file with the Attorney General a copy
of the transferee’s petition for approval, a copy of the written disclosure
statement required by subdivision (a) of Section 10136, a copy of the transfer
agreement as defined in subdivision (o) of Section 10134, and, unless
excepted pursuant to subparagraph (H) of paragraph (2) of subdivision (f)
of Section 10139.5, a copy of the annuity contract, any qualified assignment
agreement, the underlying structured settlement agreement, or any order or
approval of any court or responsible administrative authority authorizing
or approving the structured settlement, and a copy and proof of notice to
the interested parties, and a verified statement from the transferee stating
that all of the conditions set forth in Sections 10136, 10137, and 10138 have
been met.
(b) The Attorney General may, but is not required to, review any transfer
agreement in order to ensure that the transfer meets the requirements of this
article.
(c) The Attorney General may charge a reasonable fee for the filing of
the transfer agreement as provided in this section. The fee shall be paid by
the transferee.
(d) This section does not apply to a transfer by a payee who is not a
resident of California at the time the payee executes the transfer agreement.
SEC. 7. Section 10139.3 of the Insurance Code is amended to read:
10139.3. (a) None of the provisions of this article may be waived by
the payee.
(b) Compliance with the requirements set forth in Sections 10136, 10137,
and 10138 shall be solely the responsibility of the transferee in any transfer
of structured settlement payment rights.
(c) A payee who proposes to make a transfer of structured settlement
payment rights shall not incur any penalty, shall not forfeit any application
fee or other payment, and shall not otherwise incur any liability to the
proposed transferee based on any failure of that transfer to satisfy the
requirements of Sections 10136, 10137, and 10138.
(d) The transferee and any assignee shall be liable to the structured
settlement obligor and the annuity issuer for any and all taxes incurred as
a consequence of the transfer or as a consequence of any failure of the
transferee or assignee to comply with this article or the terms of the
structured settlement agreement.
(e) Neither the annuity issuer nor the structured settlement obligor may
be required to divide any structured settlement payment between the payee
and any transferee or assignee or between two or more transferees or
assignees.
SEC. 8. Section 10139.5 of the Insurance Code is amended to read:
10139.5. (a) A direct or indirect transfer of structured settlement payment
rights is not effective and a structured settlement obligor or annuity issuer
is not required to make any payment directly or indirectly to any transferee
of structured settlement payment rights unless the transfer has been approved
in advance in a final court order based on express written findings by the
court that:
(1) The transfer is in the best interest of the payee, taking into account
the welfare and support of the payee’s dependents.
(2) The payee has been advised in writing by the transferee to seek
independent professional advice regarding the transfer and has either received
that advice or knowingly waived, in writing, the opportunity to receive the
advice.
(3) The transferee has complied with the notification requirements
pursuant to paragraph (2) of subdivision (f), the transferee has provided the
payee with a disclosure form that complies with Section 10136, and the
transfer agreement complies with Sections 10136 and 10138.
(4) The transfer does not contravene any applicable statute or the order
of any court or other government authority.
(5) The payee understands the terms of the transfer agreement, including
the terms set forth in the disclosure statement required by Section 10136.
(6) The payee understands and does not wish to exercise the payee’s
right to cancel the transfer agreement.
(b) When determining whether the proposed transfer should be approved,
including whether the transfer is fair, reasonable, and in the payee’s best
interest, taking into account the welfare and support of the payee’s
dependents, the court shall consider the totality of the circumstances,
including, but not limited to, all of the following:
(1) The reasonable preference and desire of the payee to complete the
proposed transaction, taking into account the payee’s age, mental capacity,
legal knowledge, and apparent maturity level.
(2) The stated purpose of the transfer.
(3) The payee’s financial and economic situation.
(4) The terms of the transaction, including whether the payee is
transferring monthly or lump sum payments or all or a portion of his or her
future payments.
(5) Whether, when the settlement was completed, the future periodic
payments that are the subject of the proposed transfer were intended to pay
for the future medical care and treatment of the payee relating to injuries
sustained by the payee in the incident that was the subject of the settlement
and whether the payee still needs those future payments to pay for that future
care and treatment.
(6) Whether, when the settlement was completed, the future periodic
payments that are the subject of the proposed transfer were intended to
provide for the necessary living expenses of the payee and whether the payee
still needs the future structured settlement payments to pay for future
necessary living expenses.
(7) Whether the payee is, at the time of the proposed transfer, likely to
require future medical care and treatment for the injuries that the payee
sustained in connection with the incident that was the subject of the
settlement and whether the payee lacks other resources, including insurance,
sufficient to cover those future medical expenses.
(8) Whether the payee has other means of income or support, aside from
the structured settlement payments that are the subject of the proposed
transfer, sufficient to meet the payee’s future financial obligations for
maintenance and support of the payee’s dependents, specifically including,
but not limited to, the payee’s child support obligations, if any. The payee
shall disclose to the transferee and the court his or her court-ordered child
support or maintenance obligations for the court’s consideration.
(9) Whether the financial terms of the transaction, including the discount
rate applied to determine the amount to be paid to the payee, the expenses
and costs of the transaction for both the payee and the transferee, the size
of the transaction, the available financial alternatives to the payee to achieve
the payee’s stated objectives, are fair and reasonable.
(10) Whether the payee completed previous transactions involving the
payee’s structured settlement payments and the timing and size of the
previous transactions and whether the payee was satisfied with any previous
transaction.
(11) Whether the transferee attempted previous transactions involving
the payee’s structured settlement payments that were denied, or that were
dismissed or withdrawn prior to a decision on the merits, within the past
five years.
(12) Whether, to the best of the transferee’s knowledge after making
inquiry with the payee, the payee has attempted structured settlement
payment transfer transactions with another person or entity, other than the
transferee, that were denied, or which were dismissed or withdrawn prior
to a decision on the merits, within the past five years.
(13) Whether the payee, or his or her family or dependents, are in or are
facing a hardship situation.
(14) Whether the payee received independent legal or financial advice
regarding the transaction. The court may deny or defer ruling on the petition
for approval of a transfer of structured settlement payment rights if the court
believes that the payee does not fully understand the proposed transaction
and that independent legal or financial advice regarding the transaction
should be obtained by the payee.
(15) Any other factors or facts that the payee, the transferee, or any other
interested party calls to the attention of the reviewing court or that the court
determines should be considered in reviewing the transfer.
(c) Every petition for approval of a transfer of structured settlement
payment rights, except as provided in subdivision (d), shall include, to the
extent known after the transferee has made reasonable inquiry with the
payee, all of the following:
(1) The payee’s name, address, and age.
(2) The payee’s marital status, and, if married or separated, the name of
the payee’s spouse.
(3) The names, ages, and place or places of residence of the payee’s
minor children or other dependents, if any.
(4) The amounts and sources of the payee’s monthly income and financial
resources and, if presently married, the amounts and sources of the monthly
income and financial resources of the payee’s spouse.
(5) Whether the payee is currently obligated under any child support or
spousal support order, and, if so, the names, addresses, and telephone
numbers of any individual, entity, or agency that is receiving child or spousal
support from the payee under that order or that has jurisdiction over the
order or the payments in question.
(6) Information regarding previous transfers or attempted transfers, as
described in paragraph (11), (12), or (13) of subdivision (b). The transferee
or payee may choose to provide this information by providing copies of
pleadings, transaction documents, or orders involving any previous attempted
or completed transfer or by providing the court a summary of available
information regarding any previous transfer or attempted transfer, such as
the date of the transfer or attempted transfer, the payments transferred or
attempted to be transferred by the payee in the earlier transaction, the amount
of money received by the payee in connection with the previous transaction,
and generally the payee’s reasons for pursuing or completing a previous
transaction. The transferee’s inability to provide the information required
by this paragraph shall not preclude the court from approving the proposed
transfer, if the court determines that the information is not available to the
transferee after the transferee has made a reasonable effort to secure the
information, including making an inquiry with the payee.
(d) With respect to the information required to be included in every
petition for approval of a transfer of structured settlement payment rights
pursuant to paragraphs (2), (3), (4), (5), and (6) of subdivision (c), that
information shall be deemed to be included in the petition if it is provided
at the scheduled hearing on the proposed transfer through oral testimony or
documentary evidence filed with the court and made a part of the record
consistent with the rules of evidence and procedure.
(e) Following a transfer of structured settlement payment rights under
this article:
(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 if the transfer contravenes the terms of the structured
settlement for the following:
(A) Any taxes incurred by those parties as a consequence of the transfer.
(B) Any other liabilities or costs, including reasonable costs and attorney’s
fees, arising from compliance by those parties with the order of the court
or arising as a consequence of the transferee’s failure to comply with this
article.
(3) Neither the annuity issuer nor the structured settlement obligor may
be required to divide any periodic payment between the payee and any
transferee or assignee or between two, or more, transferees or assignees.
(4) Any further transfer of structured settlement payment rights by the
payee may be made only after compliance with all of the requirements of
this article.
(f) (1) A petition under this article for approval of a transfer of structured
settlement payment rights shall be made by the transferee and brought in
the county in which the payee resides at the time the transfer agreement is
signed by the payee, or, if the payee is not domiciled in California, in the
county in which the payee resides or in the county where the structured
settlement obligor or annuity issuer is domiciled.
(2) Not less than 20 days prior to the scheduled hearing on any petition
for approval of a transfer of structured settlement payment rights under this
article, the transferee shall file with the court and serve on all interested
parties a notice of the proposed transfer and the petition for its authorization,
and shall include the following with that notice:
(A) A copy of the transferee’s current petition and any other prior petition,
whether approved or withdrawn, that was filed with the court in accordance
with paragraph (6) of subdivision (c).
(B) A copy of the proposed transfer agreement and disclosure form
required by paragraph (3) of subdivision (a).
(C) A listing of each of the payee’s dependents, together with each
dependent’s age.
(D) A copy of the disclosure required in subdivision (b) of Section 10136.
(E) A copy of the annuity contract, if available.
(F) A copy of any qualified assignment agreement, if available.
(G) A copy of the underlying structured settlement agreement, if available.
(H) If a copy of a document described in subparagraph (E), (F), or (G)
is unavailable or cannot be located, then the transferee is not required to
attach a copy of that document to the petition or notice of the proposed
transfer if the transferee satisfies the court that reasonable efforts to locate
and secure a copy of the document have been made, including making
inquiry with the payee. If the documents are available, but contain a
confidentiality or nondisclosure provision, then the transferee shall
summarize in the petition the payments due and owing to the payee, and,
if requested by the court, shall provide copies of the documents to the court
at a scheduled hearing.
(I) Proof of service showing compliance with the notification
requirements of this section.
(J) Notification that any interested party is entitled to support, oppose,
or otherwise respond to the transferee’s petition, either in person or by
counsel, by submitting written comments to the court or by participating in
the hearing.
(K) Notification of the time and place of the hearing and notification of
the manner in which and the time by which written responses to the petition
must be filed, which may not be less than 15 days after service of the
transferee’s notice, in order to be considered by the court.
(L) If the payee entered into the structured settlement at issue within five
years prior to the date of the transfer agreement, then the transferee shall
provide the following notice to the payee’s attorney of record at the time
the structured settlement was created, if the attorney is licensed to practice
in California, at the attorney’s address on file with the State Bar of California.
The notice shall be delivered by regular mail and shall contain the following
language:
“Your former client, (insert name, address and telephone number of
payee), the ‘payee,’ has entered into a contract with (insert name of
transferee) to transfer and assign certain future structured settlement payment
rights. The transaction is subject to court review and approval under
California law. As the payee’s former attorney, you are entitled to receive
this notice. You are not required to represent, advise, or consult with the
payee in connection with the proposed transaction. You are not required to
take any action at all in response to this notice. You may, but are not required
to, contact the payee regarding the transaction. The payee is not required
to consult with you or provide you any information regarding the transaction,
but the payee may do so if he or she wishes.”
The notice to the former attorney described in this section is not required
to be provided if the payee in the transaction was not a party to the original
structured settlement at issue (for example, if the payee is an heir or
beneficiary of the person who was a party to the original structured
settlement). Also, if the payee cannot recall or identify his or her former
attorney and if the identity of the former attorney cannot be ascertained
from the available structured settlement documents, then the notice described
in this subparagraph is not required to be provided and the transfer may
proceed without the notice.
(g) All court costs and filing fees shall be paid by the transferee.
(h) No later than the time of filing the petition for court approval, the
transferee shall advise the payee of the payee’s right to seek independent
counsel and financial advice in connection with the transferee’s petition for
court approval of the transfer agreement, and shall further advise the payee
that if the payee retains counsel, a licensed certified public accountant, or
a licensed actuary in connection with a petition for an order approving the
transfer agreement, that the transferee shall pay the fees of the payee’s
counsel, accountant, or actuary, regardless of whether the transfer agreement
is approved, and regardless of whether the attorney, accountant, or actuary
files any document or appears at the hearing on the petition for transfer, in
an aggregate amount not to exceed one thousand five hundred dollars
($1,500). The transferee’s accountant, counsel, or actuary may not advise
the payee.
(i) The court shall retain continuing jurisdiction to interpret and monitor
the implementation and closing of the transaction that is the subject of the
transfer agreement as justice requires.
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