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FAQ for Claim Professionals
  1. Introduction
  2. What is a Structured Settlement?
  3. Why would a claimant want one?
  4. Why wouldn't they want one?
  5. How can the claimant manage the disadvantages?
  6. Why does my company want me to use them?
  7. Which kinds of cases are good candidates for structures?
  8. Which cases are not?
  9. What about case size?
  10. How do I get started?
  11. What's a typical negotiating scenario?
  12. What if the Claimant says no?
  13. Approved annuity issuers
  14. Why annuities?
  15. Annuity Pricing
  16. Reduced life expectancy discounts
  17. What is an "assignment"?
  18. Structure of the deal
  19. Insurance company ratings
  20. The closing process
  21. What do settlement brokers do?
  22. How are brokers paid?
  23. What if the claimant has their own broker?
Home Page > "How to" For Claims Professionals>ABC's

What is an "Assignment"?

An agreement to make periodic future payments to injured plaintiffs means the creation of a long-term financial obligation. In order for the plaintiff to receive payments over time, someone has to remain on the hook to make them.

Defendants and insurers are not interested in adding new liabilities to the books. They want a full and final release and the extinguishment of all liabilities related to the claim.

A solution was developed to solve this problem: it is resolved by "novation", the substitution of one party for another in a contract. The settlement agreement itself will first establish the liability for future payments, then reserve the right of the defendant to "assign" the obligations to a third party, in accordance with IRC Section 130 (the tax code section that governs these transactions).

Contemporaneous with the execution of the Settlement Agreement, the parties also execute an "Assignment Agreement" to achieve this result. (See also "Structure Of The Deal")