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What Is a Qualified Settlement Fund?

What Is a Qualified Settlement Fund

Qualified Settlement Funds (QSFs), also known as 468B Trusts, provide an efficient and effective tool for resolving litigation involving a single claimant or multiple claimants. They offer a valuable option for defendants and claimants, allowing for time-sensitive resolution while maintaining financial and legal advantages. This article delves into the world of QSFs, discussing their benefits, applications, and the services related to their administration.

QSFs: An Overview

A QSF is an account or trust set up to settle one or more claims resulting from a tort, contract breach, or other violation of the law. The fund must be established pursuant to an order or approval from the United States, any state, state agency, or political subdivision, including courts of law, and must be subject to the continuing jurisdiction of the same. As a statutory trust created by a governmental authority, a QSF must also qualify as a trust under state law or keep its assets separate from the transferor's.

Unveiling the QSFs' Origin

The Qualified Settlement Fund originated from the Designated Settlement Fund concept introduced in 1986. This concept enabled defendants to deduct amounts paid to settle class action multi-plaintiff lawsuits before agreeing on how these amounts would be allocated individually. The §1.468B-1 et seq QSF was officially promulgated in 1993 to simplify the settlement and administration of settlements and judicial awards, and has since found popularity as a vehicle to settle cases involving multiple and single claimants.

The Role of QSFs in Legal Settlements

When established, a QSF assumes the liability from the defendant before the settlement is final, at which time the defendant is dismissed with prejudice. The QSF then stands in the shoes of the defendant with the plaintiff until all negotiations are final. This process may include negotiations with the plaintiff(s), healthcare providers with enforceable liens, and others, including government entities, with possible claims on the potential proceeds, and includes addressing legal (and other) experts' fees and costs.

Benefits for Defendants

There are several advantages of QSFs to the defendant's side:

Benefits for Claimants

On the other side, QSFs also present significant benefits to claimants:

Services Associated With QSFs

Several services are associated with the administration of QSFs. These can include:

Platforms like QSF 360 offer low-cost turnkey solutions to establish a QSF in as little as one business day, including the integrated administration of the QSF.

Use Cases for QSFs

QSFs are helpful in various scenarios, including:

Precautions While Using QSFs

While QSFs offer numerous benefits, it is crucial to exercise caution:

In conclusion, QSFs offer a valuable solution for resolving complex litigations. By understanding their benefits, applications, and associated services, you can utilize them effectively. Visit our Resource Library of articles related to various topics associated with Qualified Settlement Funds.

For more information about QSFs, contact us at (855) 979-0322.


Disclosure: This paper is an overview. It is not a detailed analysis and offers no legal or tax opinion on which you should solely rely. Always seek the advice of competent legal and tax advisors to review your specific facts and circumstances before making any decisions or relying on the content herein.

About the author Glen Armand: Glen is the founder and non-executive chairman of Eastern Point Trust Company, a non-depositary trust company with clients across the globe. He has almost 50 years of financial industry experience and specializes in Qualified Settlement Funds, trusts, tax, fiduciary subjects, and the trust and financial industry. As a widely respected expert, he is a consultant, frequent presenter to industry groups, and author of numerous articles and technical papers related to Qualified Settlement Funds, trusts, tax, fiduciary subjects, and the trust industry. Mr. Armand serves on several corporate boards and the boards of not-for-profit organizations.

Any opinions, views, findings, conclusions, or recommendations expressed in the articles contained herein are those of the author(s) and do not necessarily reflect the view of the Eastern Point Trust Company, its Affiliates, or their clients. The mere appearance of an article does not constitute an endorsement by Eastern Point Trust Company (“EPTC”) or its Affiliates. The author’s opinions are based upon information they consider reliable, but neither EPTC nor its Affiliates, nor the company with which such author(s) are affiliated, warrant completeness, accuracy or disclosure of opposing interpretations.

EPTC and its Affiliates disclaim all liability to any party for any direct, indirect, implied, special, incidental, or other consequential damages arising directly or indirectly from any use of the content herein, which is expressly provided as is, without warranties.


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