Can An Individual Enter Into Qualified Assignment As Assignor and Qualify under IRC §130

by John Darer® CLU ChFC MSSC RSP CLTC

An individual can enter into a qualified assignment as the assignor and the assignment will qualify under IRC §130

• The individual must be a party to a suit or agreement and the payment obligations being assigned must be exempt from income tax under IRC 104 (1) or IRC 104(a)(2)- generally on account of physical injury physical sickness, wrongful death, or workers compensation.
• The individual would have to have enough money to cover the cost of the qualified funding asset(s), which, pursuant to IRC §130(d) , may be  a structured settlement annuity or an obligation of the United States government.

While liability insurers and self-insured corporations are the most common type of assignor, for IRC §130 qualified assignments, an individual  with sufficient financial resources could be an assignor if:

• The individual has no insurance; or.
• The individual is under insured and the damages for the claim against the individual exceed the policy limits of insurance coverage;or
• The individual is insured but the insurer has denied coverage; or
• The individual's insurance company is insolvent.

An individual could also be the assignor if a structured settlement is for taxable damages, a so-called non qualified assignment, non qualified structured settlement, or tax deferred structured settlement.

Examples:

• taxable elements of a divorce settlement
• resolving a business dispute
• resolving a property dispute