New Jersey Bill Targets Structured Settlement Companies
New legislation introduces stricter oversight for firms purchasing structured settlement payments from state residents.
Updated on Oct. 21, 2026 in Financial Planning
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New Jersey has introduced Assembly Bill 5695 to regulate companies that purchase structured settlements. The measure mandates new registration requirements, bond postings, and disclosure windows to protect payees from deceptive practices.
Why it matters
The legislation aims to curb predatory tactics, such as the use of mailers designed to resemble checks, while ensuring that transfers do not compromise a payee's long-term financial security or public benefits.
Purchase companies must post a $50,000 bond, pay a $1,250 initial registration fee, and adhere to 14 newly defined prohibited conduct rules. Failure to comply with registration mandates carries a $10,000 administrative fine.
The players
Commissioner of Banking and Insurance
This official is responsible for overseeing the registration process and ensuring that financial companies operating within New Jersey comply with state regulations.
The details
Assembly Bill 5695 requires firms to provide a 10-day disclosure window before a contract is signed and mandates court-appointed guardians for minors or impaired individuals. Judges will evaluate the payee's mental capacity and potential loss of public benefits before approving transfers, ensuring orders meet federal tax law standards.
Timeline
October 19, 2026: Assembly Bill 5695 was introduced.
January 1, 2027: Disclosure and court-approval provisions take effect.
January 1, 2028: Registration and bonding requirements take effect.
Market Dynamics
This legislation aligns state-level oversight with federal tax law requirements to ensure that structured settlement transfers maintain their tax-advantaged status. By establishing a formal regulatory framework, New Jersey joins a growing movement to standardize the secondary market for annuities.
New Jersey residents looking to sell structured settlement payments will benefit from mandatory 10-day review periods and judicial oversight of their financial capacity. These protections help ensure that payees are not pressured into disadvantageous agreements that could jeopardize their future public benefits.
The takeaway
This legislation provides a critical layer of protection for individuals receiving structured settlements by standardizing the approval process. Residents should carefully review any offer to purchase future payments to ensure it meets these new state-mandated transparency standards.
What happens next
The disclosure and court-approval provisions will take effect on January 1, 2027, followed by the registration and bonding requirements on January 1, 2028.
Further reading
For more on managing personal assets and legal protections, visit the New Jersey Financial Planning section.
Source note: This article includes information reported by Insurance Business.
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