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Qualified Settlement Fund
Qualified Settlement Fund (QSF) Administration & Setup Services
History of Qualified Settlement Funds | Section 468B Background
What Is a Qualified Settlement Fund (QSF)? | IRS Section 468B Explained
QSF Administration Checklist & Pitfalls | Choosing the Right QSF Provider & Administrator

 Benefits of Qualified Settlement Funds (QSFs) for Attorneys, Plaintiffs & Defendants
QSF Best Practices | Compliance, Reporting, Timing & Strategic Setup

Plaintiff Recovery Trust
Qualified Settlement Fund
Qualified Settlement Funds (QSF) Administration & Setup Services
History of Qualified Settlement Funds | Section 468B Background
What Is a Qualified Settlement Fund (QSF)? | IRS Section 468B Explained
QSF Administration Checklist & Pitfalls | Choosing the Right QSF Provider & Administrator

 Benefits of Qualified Settlement Funds (QSFs) for Attorneys, Plaintiffs & Defendants
QSF Best Practices | Compliance, Reporting, Timing & Strategic Setup

Plaintiff Recovery Trust
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Plaintiff Recovery Trust

Helping Plaintiffs Keep More of Their Settlement Proceeds, Maximizing plaintiff recoveries — before the case closes.

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The Plaintiff Double Tax: A Permanent Tax Problem with a Practical Solution

For non-business plaintiffs with taxable settlements, a significant and often-overlooked tax trap exists. The Tax Cuts and Jobs Act of 2017, made permanent in 2025, eliminated the above-the-line deduction for attorney fees in most taxable individual plaintiff recoveries. The result: plaintiffs may be taxed on the total gross recovery — including the portion paid directly to counsel — while receiving only their net share.
This is a structural feature of the current tax code that affects a broad range of contingency-fee cases. Most plaintiffs are not informed until it is too late to act.
The Plaintiff Recovery Trust (PRT) was designed to address this issue directly. Implementing a properly structured PRT early can increase a plaintiff’s net after-tax proceeds by 40% to 150%, making early setup crucial for maximizing tax savings. This difference depends on establishing the PRT before case closure.
Delaying action until after your dispute is finalized forfeits the potential benefits of the PRT and its tax savings, underscoring the need for early planning.
The Attorney Fee Double Tax
In taxable settlements, the IRS taxes the plaintiff on the entire recovery — including the portion paid directly to counsel. That means a plaintiff who is awarded $1,000,000 and receives $600,000 after fees is taxed as if they received the full million.
They never see $400,000.
But they pay tax as though they did.
Why This Matters
This is not academic.
This is not hypothetical.
This is every taxable settlement in the modern era.
A Permanent Problem
Post-Tax Cuts and Jobs Act, deductions for attorney fees in taxable settlements are severely restricted or eliminated. Plaintiffs cannot deduct fees. Plaintiffs are taxed on dollars they never keep.
Most lawyers are not aware of this. Most plaintiffs learn too late.

Understanding the Plaintiff Double Tax

Mechanics of the Problem
Under current law, in many taxable disputes with contingency fees, the IRS considers the full gross recovery as taxable income — including counsel fees and pass-through costs. Because the suspension and elimination of miscellaneous deductions under the Tax Cuts and Jobs Act of 2017 (made permanent in 2025) means plaintiffs often lack an offsetting deduction, highlighting the critical importance of establishing a PRT before the case closes.
Illustrative Example: $1,000,000 Taxable Settlement
A plaintiff with a $1,000,000 taxable settlement and a 40% contingency fee receives $600,000 after attorney fees. However, the IRS taxes the full $1,000,000 — including the $400,000 contingent attorney-fee portion that the plaintiff never received. Depending on the plaintiff's tax bracket and state of residency, this can result in an additional federal tax liability of up to $185,000 on income the plaintiff never received.
Why This Issue Is Often Discovered Too Late
Contingency-fee attorneys are often unaware of the plaintiff double tax, and settlement discussions rarely address it proactively. Once a case settles without a PRT in place, the tax exposure typically cannot be mitigated. Raising this issue early — before reaching a final resolution — is the only effective way to get relief. The PRT must be established before the matter is finally resolved.
This is a structural feature of the current tax code
The Plaintiff Recovery Trust (PRT) was designed to address this issue directly. Implementing a properly structured PRT early can increase a plaintiff's net after-tax proceeds by 40% to 150%, making early setup crucial for maximizing tax savings. Delaying action until after your dispute is finalized forfeits the potential benefits of the PRT and its tax savings, underscoring the need for early planning.

The Solution — Plaintiff Recovery Trust

The only trust structure designed to prevent the double-taxation of attorney fees.
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EPTC, in conjunction with other highly respected tax professionals, developed and administers the PRT. It is available with no setup cost and can be established quickly once a case is identified as a candidate. The PRT uses a specialized trust structure — adapted from established charitable planning techniques — designed to realign the tax treatment of plaintiff recoveries with the economic reality of how proceeds are distributed.

How It Works

The PRT process is designed to integrate cleanly into the existing settlement and litigation workflow. There are five steps:
Step 1

Establish the PRT early. The claim is transferred to the Plaintiff Recovery Trust before final resolution. The PRT can be established quickly with no setup fee.

Step 2

Case resolves. Whether through litigation or settlement, the recovery is paid to the PRT. The PRT is compatible with structured settlements for both plaintiff and attorney, and with cases involving both taxable and tax-free recoveries.

Step 3

PRT distributes proceeds. When there is a recovery, it is paid to the PRT. The PRT pays the plaintiff their net share and the attorney their fee — preserving the economic deal while restructuring the tax recognition.

Step 4

Tax recognition shifts. Taxation on amounts the plaintiff does not receive is eliminated from the plaintiff’s income recognition — thereby reducing the taxation to the plaintiff. The structure realigns tax recognition with the economic reality of how proceeds are actually distributed.

Step 5

The plaintiff is taxed on net recovery only. The plaintiff’s taxable income reflects what they actually received, resulting in meaningful tax savings and a significantly improved after-tax result. The economic deal between plaintiff and attorney remains intact throughout.

Representative Case Outcomes

The hypothetical scenarios below illustrate how the PRT positively affects net after-tax plaintiff proceeds under the noted assumptions. Individual results will vary based on case-specific facts, recovery allocation, applicable tax rates, and fee arrangements.

The supporting chart and data following.

Case TypeGross RecoveryAttorney Fee (40%)PRT Contrib. (3%)Tax Without PRTTax With PRTTax SavingsNet Proceeds Increase*
Case 1 — Business Fraud / Breach of Contract$750,000$300,000$22,500$262,500‡$149,625‡$112,875+48%
Case 2 — Securities Litigation$2,000,000$800,000$60,000$820,000§$467,400§$352,600+77%
Case 3 — IP Infringement / Defamation$5,000,000$2,000,000$150,000$2,000,000$1,140,000$860,000+71%
Case 4 — Punitive Damages + Pre-Judgment Interest†$12,000,000$4,800,000$360,000$5,400,000†$3,078,000†$2,322,000+109%
Tax Rate Footnotes
‡ Tax Rate (Scenario 1 — Business Fraud / Breach of Contract): 35% combined federal and state effective income tax rate. Reflects a plaintiff in a lower tax bracket or a state with no or low state income tax (e.g., Florida or Texas). Net after-tax proceeds increase approximately 48% with PRT.
§ Tax Rate (Scenario 2 — Securities Litigation): 41% combined federal and state effective income tax rate. Reflects a plaintiff in a moderate-to-high-tax jurisdiction. Net after-tax proceeds increase approximately 77% with the PRT.
Tax Rate (Scenario 3 — IP Infringement / Defamation): 40% combined federal and state effective income tax rate. Baseline scenario. Net after-tax proceeds increase 71% with the PRT.
† Tax Rate (Scenario 4 — Punitive Damages + Interest): 45% combined federal and state effective income tax rate. Reflects a high-income plaintiff in a high-tax state (e.g., California or New York) where the federal top marginal rate of 37% plus a state rate of approximately 13% yields a blended effective rate of approximately 45%, accounting for partial SALT deduction limits. Net after-tax proceeds increase approximately 109% with the PRT.
Table Assumptions and Disclosures
These are only hypothetical illustrations. They do not reflect actual client outcomes. Past results do not guarantee future results. The PRT must be set up before the matter is finally resolved.
Attorney Fee: Assumed at 40% of gross recovery in all scenarios. Actual contingency fee rates vary by case and engagement agreement, and pass-through costs may also be subject to double taxation.
PRT Charitable Contribution: 3% of gross recovery. This amount is paid to a qualifying charitable organization as part of the trust structure. The charitable contribution is required to support the PRT’s economic structure.
Without PRT — Double Tax Calculation: Plaintiff’s income tax is calculated on the full gross recovery (including the attorney fee portion). No offsetting deduction for attorney fees is assumed, consistent with the permanent elimination of the above-the-line deduction under current law for most taxable individual plaintiff recoveries.
With PRT — Tax Calculation: Plaintiff’s taxable income is limited to the net distributable share (Gross Recovery minus Attorney Fee minus PRT Charitable Contribution). Tax is applied to this reduced base. The attorney’s fee and charitable contribution are not included in the plaintiff’s taxable income.
Net Proceeds Increase: Percentage by which the plaintiff’s net after-tax proceeds improve with the PRT versus without. Formula: (Net With PRT − Net Without PRT) ÷ Net Without PRT. This figure reflects the economic benefit of eliminating the double taxation of the attorney-fee portion of the recovery.
Tax Rates by Scenario: Case 1 = 35% (Business Fraud, lower bracket or no state tax); Case 2 = 41% (Securities, moderate-to-high jurisdiction); Case 3 = 40% (IP / Defamation, baseline); Case 4 = 45% (Punitive Damages, high-income plaintiff in high-tax state such as California or New York).

The Financial Case — Illustrated

Hypothetical comparison of tax liability and net plaintiff proceeds across four representative case types — with and without a properly structured PRT. Attorney fee = 40% of gross recovery. PRT charitable contribution = 3%.
Figure 1

Income Tax Paid by Plaintiff

Total federal & state income tax on the plaintiff's recovery. Without PRT (Red), plaintiff is taxed on the full gross recovery including attorney fees. The PRT reduces taxes significantly (Green).

Without PRT (Double Tax)With PRT

↓ Tax Reduction Achieved with PRT

Case 1$112,875Saved · 35% bracket
Case 2$352,600Saved · 41% bracket
Case 3$860,000Saved · 40% bracket
Case 4$2,322,000Saved · 45% bracket
Figure 2

Net After-Tax Proceeds to Plaintiff

The plaintiff's net proceeds after attorney fees. The PRT eliminates taxation of contingent attorney fees, significantly increasing the plaintiff's net proceeds. (Red = without PRT, Green = with PRT)

Without PRTWith PRT

↑ Net Proceeds Increase with PRT

Case 1+48%More take-home
Case 2+77%More take-home
Case 3+71%More take-home
Case 4+109%More take-home
Figure 3

Additional Net Proceeds the Plaintiff Gains Through the PRT

Additional after-tax dollars the plaintiff receives by using a PRT. Calculated as Net Proceeds With PRT minus Net Proceeds Without PRT. Percentage labels show the proportional gain. These are dollars lost to double-tax treatment under current law without the PRT.

↑ Total Additional Dollars Recovered Through the PRT

Case 1 · Business Fraud+$90,375+48% more$187K → $278K
Case 2 · Securities+$292,600+77% more$380K → $673K
Case 3 · IP / Defamation+$710,000+71% more$1.0M → $1.71M
Case 4 · Punitive Damages+$1,962,000+109% more$1.8M → $3.76M

Hypothetical Illustrations Only. These figures do not reflect actual client outcomes and are for illustrative purposes only. Past results do not guarantee future results. The PRT must be established before the matter is finally resolved. Tax rates: Case 1 = 35%; Case 2 = 41%; Case 3 = 40%; Case 4 = 45% combined federal + state. Attorney fee = 40%. PRT charitable contribution = 3% of gross recovery.

Reducing Taxes in Taxable Cases

The Recovery Trust is based on a commonly used estate planning arrangement. Formal tax opinions are available for a minimal fee from a firm of 1,000+ advisors.
Woman in business suit standing confidently among large stone columns with text The Plaintiff Recovery Trust and Eastern Point Trust Company logo.

Avoid Unnecessary Taxes

Download the Recovery Trust brochure to learn more about the problem, the solution, and next steps.
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Why EPTC Administers the Plaintiff Recovery Trust

Eastern Point Trust Company (EPTC) is an independent, licensed fiduciary with more than 20 years of experience administering billions of dollars in specialty trusts in the settlement and recovery space. EPTC does not sell financial products and does not act as a broker.

EPTC Qualifications

EPTC’s qualifications in connection with the PRT include:
Originator and administrator of the Plaintiff Recovery Trust structure, developed in conjunction with highly respected tax professionals
Experience structuring taxable settlements with net-recovery tax mitigation across a broad range of case types
Established presence and recognized expertise in the plaintiff settlement community with demonstrated track record
Pure-play fiduciary — no product sales, no broker relationships. EPTC’s sole interest is proper trust administration and maximum plaintiff benefit

Advisors, Planners & Brokers

Advisors, planners, and brokers are critical to informing plaintiffs about arrangements like the Recovery Trust. Up to 10% of the PRT Cost is available to compensate eligible proffesionals for their services. Thank you to those who have already helped their clients avoid unnecessary taxation.

Attorneys, financial advisors, and settlement professionals play a critical role in identifying plaintiffs who may benefit from a Plaintiff Recovery Trust. Raising the issue proactively — before final resolution — is essential, as the PRT must be established before the settlement or judgment becomes final.


Eligible professionals whose clients adopt a PRT may receive a consulting fee from the charity. To discuss a specific matter or learn more about how the PRT can benefit your clients, contact EPTC directly.

“Every trial lawyer should know about this. It dramatically reduces client taxes.”
Smiling woman with straight blonde hair wearing a beige blazer against a neutral background.
Paula Elliot
Trial Lawyer
“This saved my client millions. I’d absolutely recommend that plaintiff lawyers consider it. Using the trust was easy and the team was incredibly helpful.”
Portrait of a man with short dark hair wearing a white shirt and black jacket.
Jeffrey Travers
Trial Lawyer
“Every trial lawyer should know about this. It dramatically reduces client taxes.”
Portrait of a man with brown hair wearing a dark suit and red tie against a black background.
Jeff Kemp
Guardian Ad Litem
“This makes a huge difference to the client. It also helped them trust us.”
Portrait of a woman with shoulder-length wavy brown hair, smiling against a dark background.
Lauren Grantham
Paralegal
“It was a great vehicle. It increased my clients’ monies by 140% of what they would have had.”
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Rebekah Miller
President, American Association of Settlement Consultants
“The only effective solution I know to the plaintiff double tax. Efficient and professional!”
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Joe Di Gangi
Past President,
Society of Settlement Planners

Learn More

Download the Plaintiff Recovery Trust brochure for a detailed overview of the double-tax problem, how the PRT works structurally, and the steps to engage EPTC. The brochure includes the full technical explanation of the trust structure, supporting case studies, and guidance for attorneys and settlement professionals.
To discuss a specific matter, model a case with the PRT Calculator, or learn more about establishing a Plaintiff Recovery Trust for your client, contact Eastern Point Trust Company directly. The PRT can be established quickly with no setup fee once a candidate case is identified. Early engagement is essential — the PRT must be in place before the case closes.
↓ Download the PRT BrochureContact EPTC

Don’t Let Taxes Erode Your Settlements

PRT protects recoveries, strengthens client outcomes, and helps attorneys deliver true value beyond the verdict.

You Have Needs,
We Have Expertise

Discover trust and settlement solutions you won’t find anywhere else – thoughtfully designed to protect assets, simplify processes, and deliver peace of mind.
Expert guidance, every step of the way.

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