Why use a Qualified Settlement Fund?

Qualified settlement funds promote the efficient settlement of cases by offering unique advantages to both defendants and plaintiffs.

For defendants, a QSF allows a clean break from negotiation and litigation. Upon payment of the settlement funds into a QSF, defendants are dismissed from the case with prejudice, receive an immediate tax deduction of the settlement amount, and have no further responsibility to the plaintiffs.

A QSF therefore frees defendants from a number of time-consuming and expensive issues, including:

  • litigation uncertainties;
  • potential or existing disputes between parties, including co-plaintiff and co-counsel issues; and
  • maintaining a legal presence in the case while plaintiff issues are resolved.

For plaintiffs, a QSF provides:

  • safety: settlement funds are held and professionally managed, and case expenses structured and paid, by a third party to the litigation.
  • security: the litigation is concluded without the uncertainties and delay of trial.
  • options and control: plaintiffs have the time and tools to structure payouts for each individual need and circumstance, without the interference of the defendants. Cash, structured settlements, trusts, and estate planning are all available options for the trustee and the plaintiffs.

A QSF also avoids any issue with “constructive receipt” by the plaintiffs. Because the funds are held by a separate entity, plaintiffs are not immediately responsible for tax payments.

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               Lordan CPA | Eden Prairie, Minnesota | chris@murraycamp.com | 952 698 2044