What is a Uniform Qualified Assignment (UQA)?
The intent of the Uniform Qualified Assignment is to transfer ownership of the annuity, and any future liability for the payments from the purchaser to a subsidiary of the life insurance company/annuity carrier. The structured settlement annuity cannot be purchased and still qualify as a structured Settlement annuity without the purchaser owning the annuity or transferring such ownership via the industry –standard UQA. Clearly, the casualty carrier does not wish to retain ownership the annuity. Please note that this is “standard procedure” in the structured settlement industry. Also, please note that the transfer of liability from the casualty company will be clearly stated in the settlement agreement and is seen as a vehicle to release the liability carrier.
A qualified assignment is a legal contract and the second step of a typical structured settlement transaction. if a standard form is used it is often referred to as a Uniform Quallfied Assignment. The Qualified Assignment is used to effect a legal novation and transfer an obligation to make future periodic payments from a defendant (or the insurer for the defendant) to a qualified assignment company. A certain sum of money (the structured settlement funding amount) is paid to the qualified assignment company by the Defendant (or Defendant’s Insurer) as consideration for contract. the qualified assignment company then purchases a qualified funding asset to fund its obligation to make the periodic payments in accordance with IRC 130(d). Most of the time the qualified funding asset is an annuity but occasionally obligations of the United States Treasury are used. an important detail to remember is that it is the obligation that being transferred NOT the ownership of an annuity.
You may find this video to helpful to further explain ‘what is a qualified assignment?’. the video includes a schematic diagram that takes you through the 4 essential steps of a structured settelment that includes a qualified assignment.
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