The term qualified assignment usually refers to an assignment of a liability to make periodic payments or structured settlements.

Simply put, it refers to the process of a defendant (or its insurer) transferring the obligation to make future payments (and hence the term "qualified assignment") to a financially secure institution, often a life insurance company. For the Injured parties, the assignment (usually) provides them with strong financial security, and for the defendants, it allows them close the case for good.

Upon successful completion of a "Qualified Assignment," the defendant gets relieved of all his/her responsibility for the further payments, as well as that of the administration and record-keeping responsibilities. The company that the said responsibility gets assigned to takes over those responsibilities and usually offers better financial security for the claimant.

Most Structured Settlement awards (periodic payments) involve some form of compensatory damages. Such awards may arise from a litigation, an agreement for an out-of-court settlement, an award involving compensation under any workmen's compensation act, or a compensatory or punitive damage award for a personal injury or sickness caused by occupational hazards.

A "qualified assignment" occurs when an "assignee" assumes such liability from a person who may be a party to a suit or an agreement such as the ones mentioned above.

An assignee is likely to be willing to assume (i.e. "buy") such a settlement agreement if:

• Such periodic payments are fixed -in both the "amount" and the "time" of such payments,
  
• The terms of such periodic payments forbid said payments from being accelerated, deferred, increased, or decreased by the recipient,
  
• The assignee's obligation is no greater than the obligation of the person who was originally assigned to the said liability, and
  
• If other conditions are also met, such as whether or not such periodic payments are excludable from the gross income of the recipient

Specific requirements to establish a qualified assignment as outlined by the Congress in Section 130 can be summerized as follows: The periodic payments are fixed as to amount and the time; the payments cannot be accelerated, deferred, increased, or decreased by the recipient; the assignee's obligation being no greater than that of the assignor; and the payments are excludable by the recipient under corresponding Code sections (i.e. section 104(a)(1) as it relates to the amounts received under workmen's compensation acts as compensation for personal injuries or sickness or under the section 104(a)(2) as damages on account of personal injuries or sickness), assignments of such structured payment streams are usually deemed qualified assignments.