Legal Framework and Court Approval Flashcards
6 cards from real Structured Settlements practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Legal Framework and Court Approval flashcards as text
What is a 'settlement agreement' in the context of structured settlements?
Answer: The binding contract between the plaintiff and defendant that specifies the terms of the periodic payments
The settlement agreement is the master contract between plaintiff and defendant (and their insurers) that documents the payment terms, releases, and all conditions of the structured settlement.
When minors are claimants in a structured settlement, what additional legal requirement typically applies?
Answer: Court approval of the settlement is required to protect the minor's interests
Because minors cannot legally contract, settlements on their behalf must be approved by a court (usually a probate or civil court), which acts to protect the minor's best interests.
What is a 'general release' in a structured settlement?
Answer: A legal document in which the claimant releases the defendant from all claims in exchange for the structured settlement consideration
A general release is the plaintiff's written relinquishment of all claims against the defendant, which is exchanged for the structured settlement payment stream.
What is a 'Medicare Set-Aside' (MSA) and how does it relate to structured settlements?
Answer: A portion of a workers' compensation or liability settlement set aside to cover future Medicare-covered medical expenses, sometimes structured as periodic payments
An MSA allocates a portion of a settlement to pay for future medical expenses that Medicare would otherwise cover, protecting Medicare's interests; this MSA portion can itself be structured as periodic payments.
What is the 'anti-assignment' clause in a structured settlement agreement?
Answer: A clause prohibiting the claimant from transferring or assigning the right to receive periodic payments
The anti-assignment clause bars the claimant from voluntarily transferring payment rights, which is essential to maintaining the tax-free status of the payments under IRC §104(a)(2).
What is a 'structured settlement protection order' (SSPO)?
Answer: A court order approving a transfer of structured settlement payment rights as compliant with the applicable SSPA
An SSPO is the court's order granting approval for a factoring transfer, confirming that the transaction satisfies the state SSPA requirements and is in the payee's best interest.