TEN THINGS TO KNOW ABOUT A QUALIFIED SETTLEMENT FUND (QSF)

by Thomas D. Begley, Jr., Esquire, CELA

1. What is a QSF?  The QSF, also known as a 468B Trust, is used to settle multiple Plaintiff lawsuits, for example, mass torts.
2. Advantage.  The Defendant can pay and go and obtain a release of liability right away, allowing the Plaintiffs to delay tax consequences and time to allocate funds between various Plaintiffs.
3. Trustee/Administrator.  A QSF is essentially a trust requiring a Trustee (Administrator).
4. Investments.  The Administrator must invest the funds and often retains the services of an outside professional Financial Advisor to do so.
5. Accountings.  The Administrator must prepare and file accountings with the appropriate authorities.
6. Distributions.  The Administrator must make distributions from the trust to the appropriate Plaintiffs after determining the proper allocation.  The Administrator can outsource this task to an outside firm but must ensure that the distributions are correct and made in a timely manner.
7. Tax Returns.  The Administrator must prepare and file federal and state income tax returns for the QSF.  Again, the Administrator can hire an accountant to perform this service.
8. Court Involvement.  A Court need not establish the trust nor be involved in any way.
9. Releases.  The Administrator must obtain releases from individual Plaintiffs.
10. Personal Injury Attorney.  The QSF Administrator must work with the Personal Injury Attorney to ensure that his or her invoices are paid in a timely manner.