An IPA is an independent professional adviser who is separate from the factoring company that is buying a structured settlement from an individual. They are simply to write or sign an opinion letter stating that they have reviewed the transfer of the structured settlement and that it is fair and in the best interest of the seller.
Some factoring companies have a list of attorneys that will sign off on their deals, other companies will direct you to the internet to find one. Some courts will accept the seller waving his/ her rights to independent professional advice.
Ultimately it is the sellers who are responsible for looking out for their best interest and ensuring they are getting a fair deal, and the transactions are in their best interest.
The courts will try to look out for the best interest of both parties but sometimes they miss things that either get transfers approved that shouldn’t be, or transfers denied that should be approved. A well written IPA letter can protect you from this. If the professional writing the letter is well versed in the transfer of structured settlements.
Typically when selling a structured settlement it is important to seek independent professional advice.
Legal Benefits for the Structured Settlement Industry since Legislation in 2002
Before 2002, only the first issue of a structured settlement was recognized and defined by the IRS and Congress. The aftermarket (where someone wants to sell their future payment rights for a lump sum of money) for these structured settlements existed, but not with protection from our government.
Not only were consumers getting ripped off, but companies trying to buy these annuities were getting ripped off and investors in these companies were getting ripped off. Now, since 2002, the Structured Settlement Industry has expanded to include the aftermarket for structured settlements (factoring transactions) as well as structured settlements. ”Structured Settlement” and “Structured Settlement Factoring Transaction” are now both defined in the Internal Revenue Code.
There are more structured settlement product opportunities since 2002. In the past, the traditional structured settlement industry was slow to respond with product improvements and education. They were slow to meet the needs of the customer trying to sell: greater flexibility to meet unanticipated future costs.
Now, the Industry can receive a tax break to design a sale of improved structured settlement products. There is mandated education for people of companies that are trying to sell a product (the structured settlement rights) whose payment rights are assignable under federal and state law. And, areas that historically were most used to rip off a consumer, now require close attention by the Courts.
So, any pending litigation will need to be reconsidered. A company wishing to buy structured settlement payment rights will have to do it in another way.