This is with reference to your June 5, 1992 inquiry concerning whether Bethany L~
could under Wisconsin law irrevocably assign her income from an annuity to the Winnebago
County Department of Community Programs so that the funds would not be considered
income to her and she would be eligible for SSI and Medicaid. We conclude that the
assignment appears valid under Wisconsin law, but that the validity of the assignment
may be controlled by the law of another state.
Background
Bethany, a minor, was burned in a fire in a group home where she lived, and a lawsuit
was filed on her behalf for the injuries she sustained. As part of a court-approved
settlement of that action, the group home and its insurance company were required
to purchase an annuity contract, underwritten by the Transamerica Occidental Life
Insurance Company, that would pay Bethany $679.00 per month. With this income, Bethany
would be ineligible for SSI.
Bethany is now under state care and lives in a county group home. Because she has
excessive medical expenses, the County would like to entitle her to medical assistance.
Accordingly, Bethany (through her guardian) assigned her income from the annuity to
the County. The assignment provides that it will terminate and all future proceeds
will revert to Bethany if she is removed from the care of the Winnebago County Department
of Community Programs. Also, the assignment will terminate and the future proceeds
revert to Bethany's estate or her heirs on her death. The assignment states that it
is given "for valuable consideration," presumably her care at the group home.
Discussion
As a general rule, payments under an annuity contract are assignable, by contract
or by gift, unless prohibited by contract or by statute. See Restatement (Second)
of Contracts § 317(2) (1981) (contractual right can be assigned unless forbidden by
statute or agreement, or there is a material change in obligations, burdens, or risks);
id. § 321 comment a (the right to payment that has not yet matured is assignable);
4 Am. Jur. 2d Annuities § 21 (annuity can be assigned); 6 Am. Jur. 2d Assignments
§ 90 (assignment of personal property may pass by gift or contract); cf. also 6 Am.
Jur. 2d Assignments § 16 (the right to receive money due or to become due under a
contract may be assigned). Here, the contract apparently permits such assignment,
since the underwriter of the annuity has accepted the assignment and has been making
payments to the County in accordance with the assignment. And under Wisconsin statutes,
"the owner of any rights under a[n] ... annuity contract may assign any of those rights.
See Wis. Stat. Ann. § 632.47(1) (1995). We think it likely that Bethany would be considered
the "owner" of the right to receive payments under the annuity contract for the purposes
of this statute. But compare Allstate Ins. Co. v. American Bankers Ins. Co., 882 F.2d
856, 859 (4th Cir. 1989) (annuitant could not assign his interest in annuity because
policy stated Allstate Insurance was owner of the annuity). Even if she were not,
however, we found nothing in Wisconsin law that would prohibit such an assignment.
Bethany's written assignment, executed by her guardian, that expresses her intent
to assign her right to receive the annuity payments and that was delivered to and
accepted by the county appears sufficient to effectuate the assignment. See 6 Am.
Jur. 2d Assignments § 91.
Once such payments are assigned, the assignee (here, the county) obtains all of the
rights and remedies possessed by or available to the assignor. See 6 Am. Jur. 2d Assignments
§§ 102, 105. Thus, Bethany has no right to the income after the assignment, unless
she is removed from the group home.
We note that there is a possibility that another state's law would govern the assignability
of Bethany's interest. It is likely that another state also would uphold the assignment
in this case. See Restatement (Second) of Contracts §§ 317(2), 321 comment a; 4 Am.
Jur. 2d Annuities § 21; 6 Am. Jur. 2d Assignments §§ 16, 90; but see Allstate Ins.
Co., 882 F.2d at 859-60 (annuitant could not assign payments because he was not owner
of annuity policy issued as part of structured settlement of personal injury claim
and because it would not be a valid legal assignment of existing right). But you may
wish to resubmit the issue for further evaluation if you should determine that the
annuity contract provides that another state's law applies; that the contract was
issued or executed in a state other than Wisconsin; or that another state may have
substantial contacts with the annuity agreement or assignment.
Conclusion
We conclude that the assignment of Bethany's payments under the annuity contract is
valid under Wisconsin law. If it should come to your attention that another state's
law might apply in this case, however, you may wish to resubmit the question for further
evaluation.