Most structured settlement protection acts provide that a transfer of the right to receive a future structured settlement payment is effective only when a court approves a transfer based on findings that (1) the transfer is in the payee’s best interest, (2) the transfer does not contravene a court order or statute, and (3) the payee has received independent professional advice, or knowingly, and in writing, waived the right to receive such advice.
As to that last requirement, a New York judge recently raised questions about whether an lawyer who appeared with the payee was “independent”. See Attorney Who Appeared With Payee Was Paid By Factoring Company, So No ‘Independent Professional Advice’ Under New York’s Structured Settlement Protection Act, here.
Most of the 49 state SSPAs have similar requirements concerning “independent professional advice”, with a majority of statutes authorizing a court to approve a transfer if, among other things, the payee has been advised by the proposed transferee, or factoring company, to obtain such advice – and has received it or waived it.
But some state SSPAs prohibit waiver. Instead, the statutes of these states require that payees receive independent professional advice. If they do not receive such advice, then the transfer cannot receive court approval.
One such state is Minnesota, and that state’s independent professional advice requirement has been the subject of a reported appellate court opinion, Settlement Capital Corp. v. State Farm Mut. Auto Ins. Co., 646 N.W.2d 550 (Minn. Ct. App. 2002). In that opinion from more than fifteen years ago, the Minnesota Court of Appeals said the following about the Minnesota SSPA’s “independent professional advice” provision.
[The SSPA] requires the court to make an express written finding that ‘the payee has received independent professional advice regarding the legal, tax, and financial implications of the transfer.’ Minn. Stat. § 549.21, sued. 1(d). Independent professional advice means:
The advice of an attorney, certified public accountant, actuary, or other professional advisor: (1) who is engaged by a payee to render advice concerning the legal, tax, and financial implications of a transfer of structured settlement payment rights; (2) who is not in any manner affiliated with or compensated by the transferee of the transfer; and (3) whose compensation for providing the advice is not affected by whether a transfer occurs or does not occur.
Minn. Stat. § 549.30, subd. 6.
The district court found that Lundgren [(the payee)] failed to show that she was given independent tax or financial advice. This factual finding is supported by the record. . . . Under the plain language of the statute, in the absence of the required independent advice, the district court properly declined to approve the transfer. . . .
The full opinion in Settlement Capital Corp. v. State Farm Mut. Auto Ins. Co., 646 N.W.2d 550 (Minn. Ct. App. 2002), available here.