Lawsuits involving multiple claimants require significant coordination. Attorneys must grapple with many issues, including outstanding liens, pending bankruptcies and probate issues, presenting structured settlement options, and preserving claimants’ government benefits. A Qualified Settlement Fund can help to streamline the settlement process as attorneys work through these issues and more.
What is a Qualified Settlement Fund?
A Qualified Settlement Fund (QSF), also known as a 468B Trust, is established to hold settlement funds until the appropriate time for disbursement. The defendant(s) pays the settlement funds directly to the QSF in exchange for a full release of all claims. A QSF offers time to ensure proper allocations, resolve individual issues, and determine how each claimant wants to receive funds.
What are the Requirements for Establishing a Qualified Settlement Fund?
Several conditions must be met when creating a QSF:
- The QSF must be established under a court order or by order of a government authority
- The establishment of the QSF must resolve or satisfy one or more contested or uncontested claims asserting specific types of liability
- The QSF must qualify as a trust under state law
What are the Benefits of a Qualified Settlement Fund?
A QSF offers many benefits for claimants and defendants:
Benefits for Claimants:
- Additional time for ensuring correct allocations
- Time to resolve liens, bankruptcies, probate, government benefits, and other outstanding issues
- Opportunity to meet with a settlement consultant and create an individualized plan that may include structured settlement annuities, market-based structured settlements, or a range of other options
- Funds the settlement while avoiding constructive receipt
- Interest is earned on the money while it is held in the QSF
Benefits for the Defendant(s):
- Full release from liability once the QSF is funded
- Immediate tax deduction (rather than waiting for individual claimant issues to be resolved before disbursement)
Contact Sage for Qualified Settlement Fund Assistance
For more information about resolving multi-claimant cases with a Qualified Settlement Fund, contact your Sage consultant today.