Judges play an important role in the selling of structured settlement and annuity payments because they make the ultimate ruling on whether your reason for selling payments is valid and in your best interest.
Because structured settlement awards often involve large sums of money, federal and state legislators closely regulate the sale and transfer of payments to protect annuity recipients. The ultimate regulation is that every state that permits secondary market sales mandates the sales be approved in court by a judge.
Federal law and statutes in 48 states require this judicial approval—and no money can change hands until a judge is satisfied. In many cases, the person selling or transferring payments rights must go to court and answer any questions a judge might have.
By law, the judge’s guiding principle is to ensure that settlement owners only make transfers that meet a “best interest” standard, in other words that the transfer serves the needs of the individual as well as the interests of any affected family members or dependents.
Although the majority of transfer and sales requests that make it to court get approved, they’re not rubber-stamped. Knowing about situations in which a judge might deny a transfer can help you evaluate how likely you are to get your sale approved.
If you go to court for an annuity sale or transfer, you should expect the judge to ask you questions about your case. You’ll need to respond with honest, well-thought-out answers. Among the questions a judge is likely to ask are:
Prepare for these questions and others.
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If a judge doesn’t like your answers and decides your proposed agreement isn’t in your “best interest,” the court can deny the transfer.
Here are some examples of transfers that were turned down by various courts:
Even the small possibility that a court can block your proposed transfer makes it worth your while to craft a sale plan that’s fair, reasonable, in your best interest – and one you can explain to a judge.
In most cases, the lawyer presenting your case in court will know – or know of – the judge presiding over structured settlement transfers in your area. That makes it wise for you to listen to their recommendations and to conduct yourself in a manner most likely to gain a judge’s approval. Your strategy should be one of respect and understanding. Don’t take anything for granted.
Each judge will have a distinct personality and way of carrying out his or her responsibilities under the law. Some judges may be brisk and businesslike, while others show more sympathy to those who come before them. If you appear before the former, you may get peppered with questions. It can be intimidating, but realize that this is the judge’s job – making sure you’re not being taken advantage of in some way you can’t see.
If you find yourself standing before the latter, you may get fewer questions and are likely to leave court fairly quickly. Chances are, you’ll be a part of the majority who get their cash now.