Tex. Government Code § 466.410 — TX Code / Code gv / Chapter 466 / Section 466.410
§ 466.410. ASSIGNMENT OF PRIZES.
Status: in_force

(a) A person may assign, in whole or in part, the right to receive prize payments that are paid by the department in installments over time if the assignment is made to a person designated by an order of a district court of Travis County, except that a person may not assign the right to receive prize payments if the person is subject to a child support order and is delinquent in making support payments under that order.

(b) A district court shall issue an order approving a voluntary assignment and directing the department to direct prize payments in whole or in part to the assignee if:

(1) a copy of the petition for the order and copies of all notices of any hearing in the matter have been served on the executive director not later than 20 days prior to any hearing or entry of any order. The department may intervene in a proceeding to protect the interests of the department but shall not be considered an indispensable or necessary party. A petition filed under this section shall include in the caption the prize winner's name as it appears on the lottery claim form;

(2) the assignment is in writing, executed by the assignor and assignee (or designated agent), and by its terms subject to the laws of this state; and

(3) the assignor provides a sworn and notarized affidavit stating that the assignor:

(A) is of sound mind, over 18 years of age, is in full command of the person's faculties, and is not acting under duress;

(B) is not delinquent in payment of child support under a court or administrative order issued in this state or another state;

(C) has been advised regarding the assignment by independent legal counsel and has had the opportunity to receive independent financial and tax advice concerning the effects of the assignment;

(D) understands that the assignor will not receive the prize payments, or portions of the prize payments, for the assigned years;

(E) understands and agrees that with regard to the assigned payments, the state, the department, and its officials and employees will have no further liability or responsibility to make the assigned payments to the assignor;

(F) has been provided a one-page written disclosure statement stating, in boldfaced type, 14 points or larger:

(i) the payments being assigned, by amounts and payment dates;

(ii) the purchase price being paid, if any;

(iii) if a purchase price is paid, the rate of discount to the present value of the prize, assuming daily compounding and funding on the contract date; and

(iv) the amount, if any, of any origination or closing fees that will be charged to the assignor; and

(G) was advised in writing, at the time the assignment was signed, that the assignor had the right to cancel without any further obligation not later than the third business day after the date the assignment was signed.

(c) It shall be the responsibility of the assignor to bring to the attention of the court, either by sworn testimony or by written declaration submitted under penalty of perjury, the existence or nonexistence of a current spouse. If married, the assignor shall identify his or her spouse and submit to the court a sworn and notarized statement wherein the spouse consents to the assignment. If the assignor is married and the sworn and notarized statement is not presented to the court, the court shall determine, to the extent necessary and as appropriate under applicable law, the ability of the assignor to make the proposed assignment without the spouse's consent.

(d) With respect to any given prize, the order shall also recite and identify all prior assignments by amount of or fraction of payment assigned, the identity of the assignee, and the date(s) of payment(s) assigned. A court order obtained pursuant to this section, together with all such prior orders, shall not require the department to divide any single prize payment among more than three different persons.

(e) The court order shall include specific findings as to compliance with the requirements of Subsections (b), (c), and (d) and shall specify the prize payment or payments assigned, or any portion thereof, including the dates and amounts of the payments to be assigned, the years in which each payment is to begin and end, the gross amount of the annual payments assigned before taxes, and the name of the prize winner as it appears on the lottery claim form.

(f) A certified copy of a court order granted under this section shall be delivered to the department and such order must be provided to the department no later than 20 days prior to the date upon which the first assigned payment is to be paid to the assignee. Within 20 days of receipt of the court order, the department shall acknowledge in writing to both the assignor and the assignee its receipt of said court order. Unless the department provides written notice to the assignor and assignee that the department cannot comply with the court order, the department shall thereafter make the prize payments in accordance with the court order.

(g) The department shall establish and collect a reasonable fee to defray any administrative expenses associated with an assignment made under this section, including the cost to the department of any processing fee imposed by a private annuity provider. The department shall establish the amount of the fee to reflect the direct and indirect costs associated with processing the assignment.

(h) An assignment pursuant to court order may not include or cover payments or portions of payments that are subject to any offset provided by this chapter.

(i) Notwithstanding any other provision of this section, there will be no right to assign prize payments following:

(1) the issuance, by the Internal Revenue Service, of a technical rule letter, revenue ruling, or other public ruling of the Internal Revenue Service that determines that, based on the right of assignment as provided by this section, a lottery prize winner who does not assign prize payments would be subject to an immediate income tax liability for the value of the entire prize rather than annual income tax liability for each installment when paid; or

(2) the issuance by a court of a published decision holding that, based on the right of assignment as provided by this section, a lottery prize winner who does not assign prize payments would be subject to an immediate income tax liability for the value of the entire prize rather than annual income tax liability for each installment when paid.

(j) After receiving a letter or ruling from the Internal Revenue Service or a published decision of a court as provided by Subsection (i)(1) or (2), the executive director shall immediately file a copy of the letter, ruling, or published decision with the secretary of state. When the executive director files a copy of the letter, ruling, or published decision with the secretary of state, an assignor is ineligible to assign a prize under this section, and the department shall not make any payment to an assignee pursuant to a court order entered after the date of such letter or ruling.

(k) Section 9.406, Business & Commerce Code, does not apply to periodic payments of lottery prize winnings under this section.