The Invasion of the Trust and Settlement Discounters?

March 19, 2007 Hull & Hull LLP Ethical Issues, Executors and Trustees Tags: , , , , , , 0 Comments

Anyone can discount a commercial interest they own, trading money for convenience. There is always someone looking for a bargain.

In the United States, dozens of companies are offering to buy structured settlements and trusts. In fact, it is a huge business. Most U.S. states have passed laws requiring court approval of the sale of a structured settlement. However, in many instances, courts will approve sales of structured settlements and trusts for anyone claiming financial hardship.

I am not aware of any prohibition in Canadian law stopping such a discount trade in Canada. The owner of a trust can sell it, unless the trust contains a prohibition against its sale. As another example, one can sell his/her remainder interest in a trust, at a huge discount. It will be interesting to see if this type of discount trade catches on in Canada. If it does, regulation may become necessary to protect vulnerable beneficiaries of structured settlements or trusts. For example, court approval and/or full disclosure of potential consequences may be required. However, it seems unlikely that the government will seek to stop beneficiaries who are sui juris from selling their interest in structured settlements or trusts.

Have a great day!


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