How Do Qualified Settlement Funds Resolve Multi-Claimant Lawsuits More Efficiently?

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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.