Academic journal article Defense Counsel Journal

Structured Settlements: Beneficiaries May Not Assign Future Payments

Academic journal article Defense Counsel Journal

Structured Settlements: Beneficiaries May Not Assign Future Payments

Article excerpt

The Georgia Supreme Court, in a case of first impression in the state, held that recipients of a structured settlement may not sell or assign their right to future payments if the settlement agreement prohibits it. In Singer Asset Finance Co. v. CGU Life Insurance Co. of America, 2002 Ga. Lexis 591, vacating and replacing 2002 Ga. Lexis 484, the court held that a tax-- preferred structured settlement agreement may validly preclude the beneficiaries from assigning the future payments.

The structured settlement agreement between CGU Life Insurance Co. of America and Christopher and Jonathan Revill provided for an initial lump sum payment and for future periodic payments. The agreement also contained a clause stating that the future payments may not be "accelerated, deferred or decreased" and that the Revills could not "sell or mortgage or encumber same, or any part thereof, by assignment or otherwise."

Later the Revills, in exchange for a lump sum payment, assigned their right to receive some of their future payments to Singer Asset Finance Co. When CGU learned of the transaction, it filed suit against Singer and the Revills to have the assignment declared unenforceable. On cross-motions for summary judgment, the trial court upheld the assignment as valid, but the Georgia Court of Appeals reversed, holding that the settlement agreement precluded the assignment. 553 S.E.2d 8 (Ga.App. 2001).

Affirming the Court of Appeals, the Georgia high court said that the assignment the Revills made will materially reduce the value of the contract to CGU. The insurer, following terms within the structured settlement agreement, had made a qualified assignment to an annuity service of CGU's obligation to make future payments within the meaning of Section 130(c) of the Internal Revenue Code, which allows the qualified assignee to exclude the qualified funding asset from its gross income. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.