Statutory Guidelines [Appendix A(7) IRC 5891] regarding rules for structured settlement factoring transactions.
A structured settlement factoring transaction refers to a legal process in Wisconsin where a seller assigns the right to receive future periodic payments from a structured settlement to a buyer in exchange for a lump sum payment. This enables the seller to access immediate cash instead of waiting for the structured settlement payments to be disbursed over time. In Wisconsin, structured settlement factoring transactions are governed by the Wisconsin Structured Settlement Protection Act (WISPA). This Act ensures that such transactions are conducted in compliance with specific rules and regulations to protect the interests of sellers. There are several types of structured settlement factoring transactions in Wisconsin, which include: 1. Sale of Structured Settlement Payment Rights: Under this type of transaction, a seller transfers the rights to receive periodic payments from a structured settlement to a buyer in exchange for a lump sum payment. The buyer assumes the right to receive the future payments, while the seller receives immediate cash. 2. Partial Sale of Structured Settlement Payments: In this scenario, a seller chooses to sell only a portion of their future structured settlement payments to a buyer. This allows the seller to access a lump sum while still retaining some future payments. 3. Sale of Partial Payments: Sometimes, a seller may decide to sell certain specific payments from their structured settlement, rather than selling all future payments. This provides the seller with immediate funding while still maintaining a portion of their structured settlement. Wisconsin imposes certain requirements and proceedings for structured settlement factoring transactions. These include: — The seller must provide written disclosure to the buyer regarding the terms, conditions, and financial factors associated with the sale. — The seller must obtain independent professional advice from a Wisconsin-licensed attorney or financial adviser who is not affiliated with the transaction. — The court must review and approve the sale, ensuring that it is in the best interest of the seller, taking into account the seller's welfare and the financial impact of the transaction. — A notice must be sent to interested parties, such as annuity issuers and beneficiaries, informing them of the proposed transaction. It is important to note that structured settlement factoring transactions are regulated in Wisconsin to ensure fairness and transparency in the process. The WISPA aims to safeguard the rights and interests of structured settlement sellers while allowing them to access immediate funds when needed.
