Glossary of Terms

Affidavit

Any written document in which the signer swears under oath before a notary public or someone authorized to take oaths (like a County Clerk), that the statements in the document are true. In many states a declaration under penalty of perjury, which does not require the oath-taking before a notary, is the equivalent of an affidavit.

Annuitant

An individual receiving or entitled to the receive payments under the Annuity Contract – usually a Claimant.

Annuity Benefits

The payments that will be paid to the Annuitant during the life of the Annuity Contract.

Annuity Contract

The agreement between the annuity owner and the annuity issuer that provides that the annuity issuer shall make the periodic payments to the annuitant.

Annuity Deferral

A facility which allows you to delay buying an annuity if rates are low when you reach retirement age.

Annuity Issuer

An insurance company that issued an annuity contract to pay annuity benefits which fund periodic payments under a settlement agreement.

Annuity Owner

The person or entity which owns the Annuity Contract and has the right to approve changes to the Annuity Contract. Typically, in the case of structured settlements, the Structured Settlement Obligor is the Qualified Assignee and the Annuity Owner. The Structured Settlement Obligor typically purchases an Annuity Contract to fund its obligations under the Settlement Agreement.

Assigned Payments

The portion of the Periodic Payments/ Annuity Benefits that are subject to the Transfer

Assignment

The legal transfer/sale of one person’s interest to another.

Bankruptcy

A federal system of statutes and courts which permits persons and businesses which are insolvent (debtors) or (in some cases) face potential insolvency, to place his/her/its financial affairs under the control of the bankruptcy court. The procedure is that when the debtor’s debts exceed his/her/its assets or ability to pay, the debtor can file a petition with the bankruptcy court for voluntary bankruptcy or the debtor’s unpaid creditors can file an “involuntary” petition to force the debtor into bankruptcy, although voluntary bankruptcy is far more common.

Bankruptcy – Chapter 13

A type of bankruptcy in which an individual keeps some of his or her assets and pays creditors according to an approved plan.

Bankruptcy – Chapter 7

A type of bankruptcy in which an individual’s debt is eliminated, but his or her assets are liquidated to repay creditors.

Bench Trial

A trial where the judge serves as fact finder rather than the jury.

Beneficiary

The person(s) or entity who receives the death benefit when the Claimant or Annuitant dies.

Best Interest Standard

A court-determined analysis under which a judge decides whether the Claimant is permitted to transfer the Assigned Payments by looking at the surrounding circumstances and determining whether the Claimant should sell (whether the transfer is in the best interests of the seller).

Child Support

Court-ordered support paid by one parent to the other who has custody of the child or children after the parents are separated.

Child Support Arrears

The amount of past-due child support obligations. These amounts are typically paid in full at or before funding.

Child Support Payoff Letter

Documentation from the appropriate government agency (if applicable) which sets forth the amount of Child Support Arrears as of an anticipated funding date

Claimant

A person entitled to receive Periodic Payments under a Settlement Agreement

Community Property

Property and profits received by a husband and wife during the marriage, with the exception of inheritances, specific gifts to one of the spouses, and property and profits clearly traceable to property owned before marriage, all of which is separate property. Community property recognizes the equal contribution of both parties to the marriage even though one or the other may earn more income through employment.

Court Order

A legally binding ruling issued by a judge in the appropriate court.

Court Order AttorneyThe attorney that files a petition for court approval of a Transfer. This attorney typically represents the Transferee.

Deferred Annuity

An annuity in which payments begin at a stated time in the future.

Dependents

People who legally rely upon you for their financial support, including: spouse, natural children, stepchildren or anyone for whom you have been appointed as a legal guardian.

Disclosure Statement

The document prepared by the transferee and provided to the claimant/ payee which sets forth the terms of the proposed transfer, which must be reviewed and executed by the claimant/payee prior to execution of the transfer agreement. The information contained herein will vary from state to state, according to local law.

Discount Rate

The present value of future payments determined by discounting such 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

Discounted Present Value

The present value of future payments, this is determined by discounting the future payments to the present.

Divorce

The termination of a marriage by legal action, requiring a petition or complaint for divorce (or dissolution in some states) by one party.

Divorce Decree

A ruling that summarizes the rights and responsibilities of the parties. It will typically include basic information including the case number, the identity of the parties, the date of divorce and the terms to which the parties have agreed.

Escrow

Money, property, a deed or a bond put into custody of a third party (the escrow agent) for delivery to a grantee only after the fulfillment of specified conditions.

Estate

A person’s property (including money), entitlements and obligations. It is often used in the context of will and probate. It may also be used in reference to real estate or in a bankruptcy.

Executor

The person appointed to administer the estate of a person who has died

File 1) To deposit with the clerk of the court a written complaint or petition which is the opening step in a lawsuit. 2) the master folder of a lawsuit kept by the clerk of the court, including all legal pleadings (documents) filed by both sides. 3) the record an attorney keeps on a case, containing all papers deposited with the clerk, as well as all correspondence and notes on the case.

Fixed Annuity

An annuity in which the insurance company invests the assets on behalf of the contract holder and pays a fixed rate of interest.

Gross Advance Amount

The sum payable to the payee or for the payee’s account as consideration for a transfer of structured settlement payment rights before any reductions for transfer expenses or other deductions to be made from such consideration

Gross Purchase Price

See Gross Advance Amount

Guaranteed Payments

Payments made regardless of whether the annuitant is living or deceased.

Guardian

A person who has the power and duty to take care of another person and/or to manage the property and rights of another person, who is either a minor or considered incapable of taking care of his or her personal affairs.

Hearing

Any proceeding before a judge or other magistrate without a jury in which evidence and/or argument is presented to determine some issue of fact or both issues of fact and law. A hearing usually refers to brief sessions involving a specific question or such specialized proceedings as administrative hearings.

Immediate Annuity

An annuity in which the annuity payout period begins immediately or within one year of the purchase date.

Independent Professional Advice

Advice of an attorney, certified public accountant, actuary or other licensed professional adviser

Insurance Settlement

The payment of proceeds by an insurance company to the insured to settle an insurance claim within the guidelines stipulated in the insurance policy.

Interested PartiesThe Claimant, the Structured Settlement Obligor/ Annuity Owner, the Annuity Issuer and often any beneficiary designated to receive payments following the Claimant’s death and any other party that has continuing rights or obligations under the Settlement Agreement or Annuity Contract.

Joint Annuitants

Two or more recipients of the same monthly benefit payment or a joint and survivor option.

Jurisdiction

The authority given by law to a court to try cases and rule on legal matters within a particular geographic area and/or over certain types of legal cases. It is vital to determine before a lawsuit is filed which court has jurisdiction.

Legal Representative

A person acting for and legally authorized to execute a contract for an individual.

Lifetime Payments

An annuity income option that makes monthly payments of equal amounts for the remainder of the annuitant’s life, regardless of the length of time.

Liquid

Assets that are easily converted into cash.

Lump Sum

A sum of money paid in a single installment.

Lump Sum Payment

A sum of money paid in a single installment.

Net Advance Amount

The sum payable to the payee or for the payee’s account as consideration for a transfer of structured settlement payment rights after any reductions for transfer expenses or other deductions to be made from such consideration.

Net Present Value

The amount of cash today that is the equivalent in value to cash to be received in the future based on a specific discount rate.

Net Purchase Price

See: Net Advance Amount

Net Value

The value of an estate after all debts have been paid.

Notarize

The act of a notary public witnessing a person signing a document. Many legal documents require a notarized signature.

Notary Public

A person authorized by the state in which the person resides to administer oaths (swearings to truth of a statement), take acknowledgments, certify documents and to take depositions if the notary is also a court reporter. The signature and seal or stamp of a notary public is necessary to attest to the oath of truth of a person making an affidavit and to attest that a person has acknowledged that he/she executed a deed, power of attorney or other document, and is required for recording in public records. The Secretary of State of each state appoints notaries public for a specified term of years. A notary public must see proof of identity (e.g. driver’s license) of those swearing and keep an official journal of documents notarized. The authority is good only in the state which appoints the notary.

Notice

The act of providing information, usually in writing, of all documents filed, decisions, requests, motions, petitions, and upcoming dates. Notice is a vital principle of fairness and due process in legal procedure and must be given to all those affected by the proceeding

Partial Purchase

When a customer sells only a portion of his or her structured settlement annuity.

Payee

An individual who is receiving periodic payments under a settlement agreement.

Payment Stream

Payments received periodically from a structured settlement or an annuity.

Period Certain Payments

The period that structured settlement or income annuity payments will be paid whether or not the annuitant dies prior to the completion of the period.

Periodic Payments

Future payments that are due under a Settlement Agreement, which are paid under a specific payment schedule, which may or may not be paid on a regular (ie. monthly or annual) basis.

Personal Injury

An injury to a person’s body or mind, as the result of an accident.

Plaintiff

The aggrieved party in a civil or criminal case who bills papers against the defendant in court.

Power of Attorney

A written document signed by a person giving another person the power to act in conducting the signer’s business, including signing papers, checks, title documents, contracts, handling bank accounts and other activities in the name of the person granting the power. There are two types of power of attorney: a) general power of attorney, which covers all activities, and b) special power of attorney, which grants powers limited to specific matters, such as selling a particular piece of real estate, handling some bank accounts or executing a limited partnership agreement. A power of attorney may expire on a date stated in the document or upon written cancellation. Usually the signer acknowledges before a notary public that he/she executed the power, so that it is recordable if necessary, as in a real estate transaction.

Present Value

The current worth of an amount to be received in the future. In the case of an annuity, present value is the current worth of a series of equal payments to be made in the future.

Probate

The process of administering the estate of a dead person according to the terms of a will or otherwise.

Purchase Price

This is the amount that the purchaser is offering to pay for the asset.

Qualified Assignment

An assignment of the obligation to make periodic payments which satisfies the requirements of Internal Revenue Code for favorable tax treatment of a structured settlement (section 130). Typically, the insurance carrier of the tortfeasor assigns its obligation to make the periodic payments called due under the settlement agreement to an assignee which takes on such obligations and typically funds the obligation through the purchase of an annuity from an annuity issuer.

Quote

An offer to purchase all or a portion of a payment stream for a set price.

Responsible Administrative Authority

With respect to a structured settlement, any governmental authority vested by law with exclusive jurisdiction over the settled claim resolved by such structured settlement.

Separation Agreement

A contract between a husband and a wife, signed when a legal separation has been granted or when they have agreed to live apart in contemplation of a divorce. The agreement is designed to settle any property, debt, alimony, child custody, visitation, insurance, tax, and child support issues that may lie between them.

Service of Process

The delivery of copies of legal documents such as summons, complaint, subpoena, order to show cause (order to appear and argue against a proposed order), writs and certain other documents, usually by personal delivery to the defendant or other person to whom the documents are directed (in the case of a structured settlement transfer, to the interested parties). Once a party has appeared in a lawsuit, further documents usually can be served on that party by mail or even facsimile.

Settled Claim

The original tort claim which has been resolved by a structured settlement.

Settlement Agreement

The arrangement made between an injured party (a tort victim) and an insurer under which the insurer promises to pay the injured party and a policy owner (or beneficiary) concerning the manner in which the insurer will pay the policy proceeds to the beneficiary.

Settlement Date

The date agreed on for transferring funds to complete a transaction.

Spouse

A person’s partner in marriage.

State Tax Lien

A claim against property for the amount of the owner’s unpaid state taxes.

Stipulation

An agreement or concession made by parties in a judicial proceeding (or by their attorneys) relating to the business before the court.

Stream of Payments

Payments received periodically from a structured settlement or an annuity.

Structured Settlement

An arrangement for periodic payment of damages for personal injuries or sickness established by settlement or judgment in resolution of a tort claim

Structured Settlement Agreement

The agreement, judgment, stipulation or release embodying the terms of a structured settlement, including the rights of the payee to receive periodic payments.

Structured Settlement ObligorThe party that has the continuing periodic payment obligation to the payee under a structured settlement agreement or a qualified assignment agreement.

Structured Settlement Payment Rights

Rights to receive periodic payments, including lump-sum payments under a structured settlement, whether from the structured settlement obligor or the annuity issuer

Tax Deferral

A postponement of current income taxes until a later date.

Tax-Deferred Interest

Interest that is not currently subject to income taxation.

Term Certain

See: Period Certain Payments

Term of Policy

Period for which the policy runs. For term insurance, this is the length of time the death-benefit protection is available.

Terms of the Structured Settlement

Includes, with respect to any structured settlement, the terms of the structured settlement agreement, the annuity contract, a qualified assignment agreement or approval of any court or responsible administrative authority or government authority authorizing or approving such structured settlement.

Tort

A body of the law which permits an injured person to recover compensation from the injuring party. When one person injures another, either intentionally or by negligence, a court may award money damages to the injured party so that they will suffer the pain caused by their action.

Transfer

Any sale, assignment, pledge, hypothecation or other alienation or encumbrance of structured settlement payment rights made by a payee for consideration; provided that the term “transfer” does not include the creation or perfection of a security interest in structured settlement payment rights under a blanket security agreement entered into with an insured depository institution, in the absence of any action to redirect the structured settlement payments to such insured depository institution, or an agent or successor in interest thereof, or otherwise to enforce such blanket security interest against the structured settlement payment rights.

Transfer Agreement

The agreement providing for a transfer of structured settlement payment rights from a payee/ claimant/ annuitant to a transferee.

Transfer Expenses

All expenses of a transfer that are required under the transfer agreement to be paid by the payee/ claimant or deducted from the gross advance amount/ gross purchase price, including, without limitation, court filing fees, attorneys fees, escrow fees, lien recordation fees, judgment and lien search fees, finders’ fees, commissions, and other payments to a broker or other intermediary; “transfer expenses” do not include preexisting obligations of the payee payable for the payee’s account from the proceeds of a transfer.

Transferee

A party acquiring or proposing to acquire structured settlement payment rights through a transfer

Trustee in Bankruptcy

A person appointed by a bankruptcy court to supervise the affairs of a person or business which is in bankruptcy, determine both assets and debts, marshal (gather) and manage the assets if necessary, and report to the court. Most trustees in bankruptcy are full-time professionals and are paid from the estates of the debtors.

Venue

The forum in which a court action is filed. For transfer matters, venue is usually appropriate in the county (or parish) in which the payee/ claimant resides. However, the parties may sometimes agree to a different venue for convenience.

W-9 Form

A tax form for the United States which certifies an individual’s taxpayer identification number.

Workers Compensation

Compensation that covers the medical expenses and lost income of employees if they are hurt in the course of doing work-related activities.

Wrongful Death

When a person’s death is caused by the negligent or intentional act of a wrongdoer.

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