The Settlement Alliance

Qualified Settlement Funds: A Favorable Option for Both Sides

Qualified Settlement Funds: A Favorable Option for Both Sides

Jan 12, 2018

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Qualified Settlement Funds (also referred to as“QSFs” or 468B trusts) are often the preferred option for resolving settlements involving multiple claimants. While QSFs provide many benefits for claimants, there are also certain characteristics that make QSFs an advantageous choice for defendants.

Benefits for the Claimants

Of all the advantages offered by a QSF, one of the greatest is time. With tens, thousands, or even hundreds of thousands of claimants involved in a settlement, it is reasonable to assume that any number of issues that could potentially delay disbursement. Some claimants may want to take a lump sum cash payment while others may want to explore other options, such as a structured settlement annuity or a special needs trust. Claimants may have suffered varying levels of injury, making it a lengthy process to determine appropriate allocations.

Furthermore, some claimants may have outstanding medical liens that need to be resolved before their settlement funds can be distributed. The claimant may want to get the full lien itemization so that their settlement expert can review it for any unrelated charges; if those charges are paid out of the settlement, it could potentially create a liability issue for the plaintiff attorney. Liens that are not properly resolved can create a host of problems for the claimant, including a disruption in benefits, hefty financial penalties, and or the loss of settlement proceeds.

Many claimants also run into issues surrounding bankruptcy and probate. In certain states, settlement proceeds may be considered an asset of the bankruptcy estate. Any possible bankruptcy exemptions should be properly addressed before determining how to handle the settlement proceeds. For instances in which a loved one is accepting the settlement on behalf of a loved one’s estate, the settlement may need to go through the estate administration process. The loved one may require the assistance of local counsel to manage the estate administration process.

Regardless of individual circumstances, a QSF allows time to address any concerns, determine proper allocations, and educate claimants on their settlement options.

Benefits for the Defendant

Once the settlement funds are placed in a QSF, the defendant is released from liability. Even if some claimants require a substantial amount of time to resolve settlement-related issues, the defendant can wrap up their portion of the settlement proceeds. Moreover, the defendant can also take the current year’s tax deduction. It can often take years to resolve all settlement issues and to distribute allocations, so a QSF is a particularly attractive option for many defendants.

Contact us to learn more

The Settlement Alliance is an award-winning claims administrator. Our experienced team has worked with hundreds of thousands of mass tort and class action claimants. To learn more, contact us today at 800-464-2500 or info@settlement-alliance.com.

We are proud to partner with the highest rated structured settlement providers in the industry:

  • American general Life Companies
  • Berkshire Hathaway Structured Settlements
  • MetLife
  • Mutual of Omaha
  • New York Life
  • Pacific Life
  • Prudential