The settlement agreement is the document everything else refers back to. It says what you are owed, when, and by whom; it names the obligor and usually the annuity issuer; and in many cases it contains an anti-assignment clause saying the payments may not be transferred at all. A buyer will ask for it before quoting, and a court will read it.
What the agreement actually fixes
It fixes the schedule - the amounts, the dates, whether payments are life-contingent or guaranteed for a period certain - and those distinctions change what a buyer will pay. Guaranteed payments are worth more than life-contingent ones, because they do not stop if you die. It also names every party the statutes treat as interested: the obligor, the annuity issuer and any irrevocably designated beneficiary, each of whom must be notified when a transfer is proposed.
Anti-assignment clauses, and what they do
Most settlement agreements say the payments cannot be sold, assigned or encumbered. That clause has not stopped the market, because the Structured Settlement Protection Acts set up a court-approval route that operates alongside it, and courts approve transfers routinely. What it does mean is that the buyer and the court will look at the agreement's own wording, and it is one more reason the agreement is the first document to find before asking anyone for a number.
What a New York court has to find
New York is the statute on this record that looks hardest at the money. The court must find the transfer is in the best interest of the payee, taking into account the welfare and support of the payee's dependants, and whether the transaction, including the discount rate used to determine the gross advance amount and the fees and expenses used to determine the net advance amount, are fair and reasonable. It also requires the payee to have been advised to seek independent professional advice and the agreement to be written in plain language.
Questions people ask about structured settlement agreement
Does a court really have to approve this?
Yes, in every state. The federal exception in 26 U.S.C. 5891(b) applies only where the transfer was approved in advance in a qualified order, and the order must find the transfer is in the best interest of the payee, taking into account the welfare and support of the payee's dependents.
What is the single biggest variable in the price?
The discount rate, and after that how far in the future the payments you are selling fall due. The reported range across the market is between 9% and 18%.
Do you take a share of what I get?
No. Buyers pay a flat fee for the enquiry itself, never a share of the discount and never anything contingent on a transfer completing.