Structured Settlements

Installment Sales

Steps to Complete the Structured Sale (Assuming that there is a valid installment sale):

  1. Buyer and the Assignment Company enter into an assignment agreement whereby the Buyer transfers to the Assignment Company its obligation to make future payments and thereby making the Assignment Company responsible for making future payments. The Seller is not a party to the assignment, and the Buyer will remain liable to the Seller pursuant to any agreement between the Buyer and the Seller.
  2. Broker ensures all necessary documents, including, but not limited to, Purchase Agreement, Assignment Agreement, annuity application, and wire transmittal forms are sent to the assignment company.
  3. Buyer then wires funds to the Assignment Company as agreed.
  4. The Assignment Company wires funds to the Life Company to purchase an annuity contract, for which it retains all rights and incidents of ownership.
  5. The Assignment Company, for its convenience, directs the Life Company to make payments directly to the Seller. Assignment Documents and Assignment Company Obligations

Assignment Documents and Assignment Company Obligations

The Assignment Company’s primary business involves assuming liabilities to make periodic payments to payees on behalf of obligors. An obligor enters into an agreement with the assignment company whereby, in exchange for consideration, the Assignment Company agrees to assume the liability of the obligor to make periodic payments.

The Assignment Company and the Buyer enter into an agreement called an “Assignment.” The assignment document provides that the Assignment Company’s obligation to make the periodic payments to the Seller will be no greater than that of the Buyer/Assignor immediately preceding the assignment.

The Assignment Company subsequently purchases an annuity contract from the Life Company to fund its payment obligations to the payee. The Life Company will accept applications for annuities from the Assignment Company Assignments, Ltd. The Assignment specifically provides that all rights of ownership and control of such annuity contract shall be and remain vested exclusively in the Assignment Company. Although the Assignment Company may direct the Life Company to send the payments directly to the payee, such direct payment would be for the Assignment Company’s convenience only. Thus, the payee has no rights under the annuity contract.

After the purchase of the annuity, the Life Company provides the payee with an “Agreement to Pay” wherein the Life Company states that the payee will receive all payments required to be made by the Assignment Company under the terms of the Assignment of Obligation agreement. The Agreement to Pay is a separate and independent agreement that is entered into by the Life Company at the time the Assignment Company purchases an annuity contract with the Life Company to fund its obligations to the payee. There is no consideration for the Life Company’s Agreement to Pay. This Agreement does not give the payee any status greater than that of a general creditor of the Life Company and does not impose any greater obligation on the Life Company than that of the Assignment Company. The payee is at risk for the insolvency of the Assignment Company and neither the Assignment Company nor the Life Company set aside any funds or assets as security or collateral for the benefit of the payee.

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