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Using QSFs to Resolve Smaller Multi-Claimant Settlements

Using QSFs to Resolve Smaller Multi-Claimant Settlements
Sage Settlement Consulting

By now, you are likely familiar with qualified settlement funds (QSFs) being utilized to resolve mass torts with hundreds or thousands of claimants. Did you know that QSFs (also referred to as 468B Trusts) can be a beneficial litigation resolution tool for smaller multi-claimant settlements? A QSF benefits all parties involved, regardless of the number of claimants.

What is the process for establishing a QSF?

First, the law firm of record retains a QSF administrator. The administrator files a petition to form the QSF, files for a tax ID, and opens a bank account for the QSF.

Next, the defendant pays the agreed-upon amount to the QSF. The defendant is released from liability of any claims brought against them and can take an immediate tax deduction.

The QSF administrator then handles the disbursement of funds to attorneys and claimants. The administrator manages the funds and ongoing claim resolution process, eventually winding down the trust and handling all necessary tax filings.

What are the benefits of utilizing a QSF?

A QSF is a win-win for all involved. It provides a vehicle for resolving the settlement, even when individual claimants have issues like pending liens, disputes between payees, bankruptcy proceedings, or estates that need to go through probate.

While some claimants may be ready to accept an immediate disbursement, others may not. In addition to permitting time for issue resolution, a QSF allows claimants to explore their settlement options, including annuity and market-based structured settlements, asset management, and trusts. The plaintiff attorney(s) can also explore their fee deferral options, which can be funded from the QSF.

On the defense side, a QSF provides closure. The defendant does not need to delay settling until third-party liens are resolved. Instead, the defendant is released from liability and can take an immediate tax deduction on the settlement.

Contact Sage for QSF Administration Services

Sage Settlement Consulting provides QSF Administration Services.  For more information about establishing a QSF, contact your Sage consultant today.

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