3 Reasons to Consider a Qualified Settlement Fund

A Qualified Settlement Fund (QSF) is a type of account, fund, or trust that qualifies under Internal Revenue Code Section 468B to receive settlement funds from a defendant and assume liability for disbursement. A QSF offers many benefits for all parties involved in the litigation, including time, protection, and efficiency.

#1: Time

Whether there are still allocations to be decided, outstanding liens, claimants who want to review structured settlement options, or attorneys who wish to explore contingency fee deferrals, a QSF provides a mechanism for holding the settlement funds until the time of disbursement. In the meantime, the defendant receives a release of liability and can take the tax deduction.

#2: Protection

In some instances, there may be concerns about the financial stability of a defendant or insurer. A QSF protects claimants from future insolvency by assuming liability for disbursements.

A QSF also minimizes the potential for future disputes regarding claimant allocations. The defendant can move on after signing the release and issuing the funds.

#3: Efficiency

Allocating funds among claimants is time-consuming. By transferring that responsibility to a QSF administrator, all parties—the defendants, the plaintiff attorneys, and the claimants—can be assured that distributions are organized and systematic.

The QSF administrator also manages all accounting, reporting, tax filing, 1099 issuance, and the eventual closing of the account. Centralizing these processes helps ensure a more efficient, precise approach to managing the settlement funds.

Contact Sage for Qualified Settlement Fund Administration

Sage provides expert qualified settlement fund administration services. For more information, contact your Sage settlement consultant today.