By: Patterson S.B. No. 1031
A BILL TO BE ENTITLED
AN ACT
1-1 relating to the assignment of a lottery prize.
1-2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-3 SECTION 1. Subsection (d), Section 466.402, Government Code,
1-4 is amended to read as follows:
1-5 (d) The state is discharged of all further liability on the
1-6 payment of a prize under Section 466.403, 466.404, 466.406, [or]
1-7 466.407, or 466.410 or this section or under any additional
1-8 procedures established by rule.
1-9 SECTION 2. Section 466.406, Government Code, is amended to
1-10 read as follows:
1-11 Sec. 466.406. RIGHT TO PRIZE [NOT ASSIGNABLE]. (a) [Except
1-12 as otherwise provided by this section, the right of any person to a
1-13 prize is not assignable.]
1-14 [(b)] Payment of a prize may be made to the estate of a
1-15 deceased prizewinner.
1-16 (b) [(c)] A prize to which a winner is otherwise entitled
1-17 may be paid to any person under an appropriate judicial order.
1-18 SECTION 3. Subchapter I, Chapter 466, Government Code, is
1-19 amended by adding Section 466.410 to read as follows:
1-20 Sec. 466.410. ASSIGNMENT OF PRIZES. (a) A person may
1-21 assign, in whole or in part, the right to receive prize payments
1-22 that are paid in installments over time by the commission if the
1-23 assignment is made to a person designated by an order of a district
2-1 court of Travis County.
2-2 (b) The commission may intervene in a proceeding under this
2-3 section but is not a necessary or indispensable party in the
2-4 proceeding.
2-5 (c) A district court shall issue an order approving a
2-6 voluntary assignment and directing the commission to direct prize
2-7 payments in whole or in part to the assignee if:
2-8 (1) a copy of the petition for the order and a copy of
2-9 the notice of a hearing in the matter are served on the executive
2-10 director not later than the 10th day before the date of each
2-11 hearing or the entry of an order;
2-12 (2) the assignment is in writing, executed by the
2-13 assignor, and by its terms subject to the laws of this state; and
2-14 (3) the assignor provides a sworn affidavit stating
2-15 that the assignor:
2-16 (A) is at least 18 years of age;
2-17 (B) is of sound mind, is in full command of the
2-18 person's faculties, and is not acting under duress;
2-19 (C) has been advised regarding the assignment by
2-20 an independent legal counsel and has had the opportunity to receive
2-21 independent financial and tax advice concerning the effects of the
2-22 assignment;
2-23 (D) understands that the person will not receive
2-24 the prize payments, or portions of the prize payments, for the
2-25 assigned years;
3-1 (E) understands and agrees that with regard to
3-2 the assigned payments, the state, the commission, and its officials
3-3 and employees will have no further liability or responsibility to
3-4 make the assigned payments to the assignor;
3-5 (F) has been provided a one-page written
3-6 disclosure statement stating, in boldface type, 14 points or
3-7 larger:
3-8 (i) the payments being assigned by amounts
3-9 and payment dates;
3-10 (ii) the purchase price being paid;
3-11 (iii) the rate of discount to the present
3-12 value of the prize, assuming daily compounding and funding on the
3-13 contract date; and
3-14 (iv) the amount, if any, of any
3-15 origination or closing fees that will be charged to the assignor;
3-16 (G) was advised in writing, at the time the
3-17 assignment contract was signed, that the assignor had the right to
3-18 cancel the contract without any further obligation not later than
3-19 the third business day after the date the contract was signed; and
3-20 (H) acknowledges that the assignment will not
3-21 have the effect of avoiding a child support obligation that may be
3-22 owed by the assignor.
3-23 (d) A court shall include in its order specific findings
3-24 regarding compliance with the requirements of Subsection (c) and
3-25 shall specify:
4-1 (1) the prize payments or portion of prize payments
4-2 assigned;
4-3 (2) the year in which each assigned payment is to be
4-4 made;
4-5 (3) the gross amount of the annual payments assigned
4-6 before taxes;
4-7 (4) the prizewinner's name as it appears on the
4-8 lottery claim form;
4-9 (5) the full legal name of the assignor if different
4-10 than the prizewinner's name as it appears on the lottery claim
4-11 form;
4-12 (6) the assignor's social security or tax
4-13 identification number;
4-14 (7) the assignee's full legal name and social security
4-15 number or tax identification number; and
4-16 (8) if applicable, the citizenship and resident alien
4-17 number of the assignee.
4-18 (e) It is the responsibility of the prizewinner to bring to
4-19 the attention of the court, either by sworn testimony or by
4-20 notarized declaration submitted under penalty of perjury, the
4-21 existence or nonexistence of a spouse. A prizewinner who is
4-22 married:
4-23 (1) shall identify the prizewinner's spouse and submit
4-24 to the court a notarized statement signed by the spouse consenting
4-25 to the assignment; or
5-1 (2) may allow the court to determine the ability of
5-2 the prizewinner to make the assignment without the consent of the
5-3 spouse.
5-4 (f) After receiving a certified copy of a court order under
5-5 this section, the commission shall:
5-6 (1) provide to the assignor and the assignee a written
5-7 acknowledgement of the commission's receipt of a court order
5-8 granted under this section; and
5-9 (2) make prize payments as provided by the order.
5-10 (g) A voluntary assignment may not include or cover payments
5-11 or portions of payments that are subject to any offset provided by
5-12 this chapter.
5-13 (h) The commission shall establish and collect a reasonable
5-14 fee to defray any administrative expenses associated with an
5-15 assignment made under this section, including the cost to the
5-16 commission of any processing fee imposed by a private annuity
5-17 provider. The commission shall establish the amount of the fee to
5-18 reflect the direct and indirect costs associated with processing
5-19 the assignment.
5-20 (i) Notwithstanding any other provision of this section, a
5-21 prizewinner does not have a right to assign prize payments
5-22 following:
5-23 (1) the issuance, by the United States Internal
5-24 Revenue Service, of a technical rule letter, revenue ruling, or
5-25 other public ruling of the Internal Revenue Service that determines
6-1 that, based on the right of assignment provided by this section, a
6-2 lottery prizewinner who does not assign prize payments would be
6-3 subject to an immediate income tax liability for the value of the
6-4 entire prize rather than annual income tax liability for each
6-5 installment when paid; or
6-6 (2) the issuance by a court of a published decision
6-7 holding that, based on the right of assignment provided by this
6-8 section, a lottery prizewinner who does not assign prize payments
6-9 under this section would be subject to an immediate income tax
6-10 liability for the value of the entire prize rather than annual
6-11 income tax liability for each installment when paid.
6-12 (j) After receiving a letter or ruling from the Internal
6-13 Revenue Service or a published decision of a court, as provided by
6-14 Subsection (i), the director shall immediately file a copy of the
6-15 letter, ruling, or published decision with the secretary of state.
6-16 When the director files a copy of the letter, ruling, or published
6-17 decision with the secretary of state, a prizewinner is ineligible
6-18 to assign a prize under this section.
6-19 SECTION 4. This Act takes effect September 1, 1997.
6-20 SECTION 5. The importance of this legislation and the
6-21 crowded condition of the calendars in both houses create an
6-22 emergency and an imperative public necessity that the
6-23 constitutional rule requiring bills to be read on three several
6-24 days in each house be suspended, and this rule is hereby suspended.
< By: Patterson S.B. No. 1031 A BILL TO BE ENTITLED