Settlement: Strategies & Solutions

In general, a Claimant (a.k.a. beneficiary) of a Qualified Settlement Fund (QSF) trust has a right to certain details about the QSF, which may include seeing the related trust documents.

Understanding a Claimant’s Rights

Claimants of an QSF (which is an irrevocable statutory trust) generally have the right to see the trust documents. This right arises from the Claimants having a beneficial interest in the trust property and being entitled to information about how the trust is being managed and operated. In most cases, the trustee is responsible for providing the Claimants access to the trust documents.

State Law Matters

The specific rules regarding a QSF Claimant’s right to access trust documents can vary by state law and the terms of the trust agreement. However, the general principles apply in most cases to provide access.

What Documents May a Claimant Request

First, it’s essential to understand what types of trust documents are involved. Generally, trust documents include the trust agreement or instrument, which outlines the terms and conditions of the trust, as well as any amendments or modifications to the trust. Trust documents can also include financial statements, tax returns, and other documents related to the management and operation of the trust.

Second, it’s important to note that QSF Claimants do not automatically have access to trust documents. Instead, they must request access to the documents from the trustee. The trustee may be required to provide the documents or allow the Claimant to review them in person.

In some cases, the trustee is required to provide certain trust documents to Claimants without a request. For example, some states require trustees to provide annual accountings to Claimants, which detail the trust’s income, expenses, and distributions. In other cases, the trustee may have the discretion to withhold certain information from the Claimants, such as information that could compromise the privacy or security of the trust or its Claimants.

Third, depending on the terms of the QSF, the trustee may at some level of duty to provide the Claimants accurate and timely information about the trust’s assets and management. If the trustee fails to provide the information requested, the Claimant may have legal recourse to seek redress.

What Recourse Does a Claimant Have to Compel Access

In some cases, Claimants may need to go to court to enforce their right to access QSF documents if the trustee refuses to provide the documents or if there is a dispute over what documents the Claimant is entitled to see. In such cases, the court shall consider factors such as the nature of the documents, the Claimant’s interest in the trust, and the trustee’s fiduciary duty when determining whether to order the trustee to provide access to the documents.

Case Law Analysis

Many cases and legal precedents have addressed a beneficiary’s (Claimant’s) right to access trust documents. Here are a few examples:

• Restatement (Third) of Trusts: The Restatement of the Law Third, Trusts (Restatement), is a legal treatise that provides guidance on the law of trusts. In Section 82 of the Restatement, it states that a beneficiary has the right to information about the trust, including the right to see the trust documents. This has been cited in numerous cases as persuasive authority.
  
• Riggs Nat'l Bank v. Zimmer: In this case, the court held that beneficiaries of a trust have the right to examine trust documents to determine if the trustee has acted properly. The court found that the trustee’s fiduciary duty to the beneficiaries requires the trustee to provide access to the trust documents.
  
• Barnes v. Estate of Barnes: In this case, the court held that beneficiaries have the right to see trust documents, including financial statements and tax returns, to ensure that the trustee is managing the trust property properly. The court found that the trustee’s duty to account to the beneficiaries requires the trustee to provide access to the trust documents.
  
• Restatement (Second) of Trusts: The Restatement of the Law Second, Trusts (Restatement), is another legal treatise that provides guidance on the law of trusts. In Section 173 of the Restatement, it states that a beneficiary has the right to see the trust documents, including the trust agreement, amendments, and financial statements. This has also been cited in numerous cases as persuasive authority.
  
• O’Brien v. Hill: In this case, the court held that beneficiaries have the right to access trust documents to ensure that the trustee is fulfilling its fiduciary duty to manage the trust properly. The court found that the trustee’s duty to account to the beneficiaries requires the trustee to provide access to the trust documents.
  

These authorities demonstrate the importance of a beneficiary’s right to access trust (QSF) documents and the trustee’s duty to provide access. They also highlight that the specific rules and requirements regarding access to trust documents can vary depending on the applicable state law and the terms of the trust agreement.

Summary

In summary, Claimants of a QSF generally have the right to see the associated documents, but this right can be subject to certain limitations and requirements. If you are a Claimant of a QSF and are unsure about your rights to access the documents, you should consult with an attorney who is knowledgeable to help you understand your legal rights and options.

As someone who has worked in the settlement and tax industry for numerous years, I have seen the various complexities of settling cases. One tool that has become increasingly popular in recent years is Qualified Settlement Funds (QSFs). In this paper, we discuss the benefits of QSFs, the complexities that come with them, and tips for effective implementation.

Understanding QSFs

A QSF is a legal arrangement used to settle a lawsuit or claim. It is essentially an escrow account that holds the funds from a settlement until they can be distributed to the appropriate parties. However, it is more than a simple escrow account, a QSF is a Statutory Trust. (More on this below).

One of the key benefits of a QSF is that it allows the plaintiff to defer taxes on the settlement until the distribution of the funds. This feature can be beneficial in cases where the settlement amount is large and the plaintiff would incur a significant tax liability.

A governmental authority must establish a QSF, and a QSF trustee/administrator oversees the QSF administration. The administrator is responsible for managing the funds in the QSF and administering the distribution process.

Benefits of Using QSFs in Settlements

There are several benefits to using a QSF in settlements. One of the most significant benefits is the ability to defer taxes. This advantage can be beneficial in cases where the settlement amount is large and would result in a significant tax liability for the plaintiff. By employing various tax strategies to defer taxes, the plaintiff can keep more settlement funds and use them to cover expenses or invest for the future.

Another benefit of using a QSF is simplifying the settlement process. Instead of negotiating individual settlements with each plaintiff, the defendant can make a single payment to the QSF. The QSF administrator can then distribute the funds to the appropriate parties, saving time and reducing the administrative burden of settling a large case.

Statutory Trust - What It Means for QSFs

One of the critical components of a QSF is that it is a “statutory trust.” The QSF, as a statutory trust, is created, approved and registered by the government authority approving the QSF as a legal entity that is separate from the QSF administrator and the plaintiffs. The statutory trust is formed when the QSF is approved by the governmental entity and thus established.

What Is a Statutory Trust

A statutory trust is a type of trust created by statute, meaning it is established by a specific law or regulation, in this case, IRC §1.468B-1 et seq., rather than through the traditional trust agreement.

The Restatement of the Law Third, Trusts (Restatement) defines a statutory trust as:

“a trust created by statute other than a trust created by a judgment or decree that imposes a constructive trust, resulting trust, or other trust that arises by operation of law.” ¹

The Restatement further clarifies that a statutory trust differs from other trusts; its establishment is governed by a specific law or statute, which provides the rules and guidelines for the trust’s creation, management, and operation. This “statutory basis” differs from a traditional trust agreement, created through a private contract between the settlor (the person creating the trust) and the trustee.

Statutory trusts are commonly used in business and tax contexts, particularly in forming investment funds, real estate investment trusts (REITs), and various tax arrangements.

The Uniform Trust Code (UTC) is a set of model laws governing trusts, which has been adopted in some form by many states in the United States and also addresses the definition of statutory trusts. The UTC includes provisions related to statutory trusts, similar to the Restatement’s definition.

The UTC defines a statutory trust as:

“a trust created by the filing of a certificate of trust with the secretary of state or similar officer, or as otherwise provided by statute.”

This definition emphasizes the statutory requirement for a formal filing or registration process with a government agency or official. The definition thus applies to QSFs, as IRC §1.468B-1(c) enumerates the statutory requirement for a formal filing, approval, and registration process with an empowered governmental authority.

The UTC also includes terms and provisions which govern the management and operation of the trusts, including the authority of trustees, the rights of beneficiaries, and the procedures for terminating or modifying the trust. Additionally, the UTC provides rules for the liability of trustees and beneficiaries and requirements for trust accounting and record-keeping.

Overall, the provisions related to statutory trusts in the UTC provide guidance and rules for establishing and operating statutory trusts like QSFs.

In summary, a QSF is a statutory trust created by a specific law or statute (i.e., §1.468B-1 et seq.), and as such, it differs from other private trusts agreements in that it is established by law rather than through a private trust agreement.

Do Beneficiaries (Claimants) of a QSF Have to Sign the Trust

No, beneficiaries (claimants) of a QSF do not have to sign the trust agreement because a statutory trust can only exist through a formal filing or registration process with a government authority rather than through a traditional private trust agreement.

A QSF, as a statutory trust, is only created by a proper filing with the appropriate governmental authority, which includes information about the QSF’s terms and conditions, the trustee’s identity, the qualification of the QSF, and the rights, limitations, and responsibilities of the beneficiaries. The associated documents are available, and QSF beneficiaries can review them to understand their rights and obligations under the trust.

Finally, per applicable statutes and a wide array of case law, beneficiaries of a statutory trust are not involved in creating or managing the trust, their role is limited to receiving the benefits provided by the trust, and they are bound to the terms of the statutory trust. The trustee is responsible for managing the trust and making decisions regarding the distribution of trust assets to the beneficiaries in accordance with the terms of the trust agreement and the applicable state and federal laws.

Navigating the Complexities of QSFs

While there are many benefits to using a QSF in settlements, complexities exist; one of the most significant complexities is the tax implications of using a QSF. Because the funds in the QSF are a statutory trust, they are subject to specific tax rules and regulations. Working with an experienced tax professional ensures the QSF satisfies all qualification requirements. Another complexity associated with QSFs is the distribution of funds. The QSF administrator is responsible for distributing the funds to the appropriate parties, and this can be a complex process. Working with an experienced administrator familiar with the QSF process, such as UCC and bankruptcy lien identification, is essential.

Tips for Effective Implementation of QSFs

If you are considering using a QSF in a settlement, several tips can help ensure effective implementation. First, it is crucial to work with an experienced QSF administrator who is familiar with the process and can help to navigate the complexities associated with QSFs. Second, it is essential to work with an experienced tax professional who can ensure that the QSF satisfies the qualification requirements of §1.468B-1 et seq. Finally, it is crucial to communicate clearly with all parties involved in the settlement to ensure everyone understands the process and their role in it.

Factors to Consider When Selecting a QSF Administrator

‍When selecting a QSF administrator, there are several factors to consider. First, selecting an administrator who is experienced with QSFs and familiar with the process is essential. Second, selecting an administrator with a demonstrated track record of success is likewise imperative. Finally, as some QSF administrators take weeks or longer to disburse funds, selecting an administrator who disburses funds timely, is responsive, and is easy to work with is crucial.

QSF Tax Considerations

As mentioned earlier, there are several tax considerations associated with QSFs. One of the most significant tax considerations is the deferral of taxes. The tax deferral can benefit plaintiffs, particularly in cases where the settlement amount is significant. Because a QSF holds the funds in trust, they are not subject to tax until distributed.

Another tax consideration is the reporting and payment of taxes. The QSF administrator is responsible for filing tax returns and paying taxes via IRS Form 1120-SF on behalf of the QSF. Working with an experienced tax professional is key to ensuring the QSF satisfies the qualification requirements enumerated in IRC §1.468B-1(c).

QSF vs. Defense Provided Structured Settlements - Which Is Better?

Careful consideration is warranted when deciding between a QSF and a defense-provided structured settlement. Another factor to consider is the flexibility of the settlement. With a QSF, the plaintiff has more flexibility in how the funds are distributed and can use them as needed. Most importantly, with a defense provided structured settlement, the plaintiff is usually locked into a lower payment schedule that can be less than what might be otherwise available in the insurance marketplace.

Working with an experienced attorney, plaintiff-oriented settlement consultant and tax professional is essential to determine the best option.

Conclusion

Navigating the complexities of QSFs can be challenging, but with the right team in place and platforms like QSF 360, it can be an easy and effective tool for settling single and multi-plaintiff cases. By working with experienced QSF administrators and tax professionals, plaintiffs can defer taxes, simplify the settlement process, and gain more flexibility in disbursing settlement funds. If you are considering using a QSF in a settlement, research and work with a team with the experience and expertise to ensure effective implementation.

As a litigator, one of the most critical aspects of your responsibilities is ensuring that your clients receive the maximum and most flexible settlement benefits possible. One powerful tool that can help you achieve this goal is Qualified Settlement Funds (QSFs). This paper explains QSFs, their advantages, the legal framework governing them, and how they can maximize settlement benefits. We shall also discuss common misconceptions about QSFs and how to choose a QSF administrator.

Understanding QSF and Its Benefits for Litigators

What Is a Qualified Settlement Fund (QSF)?

A Qualified Settlement Fund (QSF) is a tax arrangement created under IRC §1.148B-1 et seq. that allows litigants to set aside settlement funds in a trust. This arrangement enables the parties involved to resolve legal disputes without distributing the settlement funds immediately. Instead, the QSF’s funds are held, tax-deferred, within the QSF until disbursed to the intended recipients.

A QSF Is Not an IOLTA

A welcome benefit of a QSF is that you, as the attorney, never receive client funds. As such, a QSF is not an IOLTA and is not reportable to your state Bar. The QSF administrator manages the funds, eliminating the burden and risks that would ordinarily be associated with funds in your firm’s IOLTA.

Advantages of Using a QSF for Settlement Funds

There are several additional advantages to using a QSF for settlement funds. First and foremost, a QSF allows the parties involved to settle a case without immediately disbursing the settlement funds to the plaintiffs. This flexibility and tax defer treatment can be particularly beneficial in cases where there are multiple plaintiffs or uncertainty about the final amount of the settlement due to liens or other issues. Also, by using a QSF, the parties involved can avoid negotiating separate settlement agreements and instead focus on resolving the underlying legal dispute.‍

Another advantage of using a QSF is that it can help to simplify the settlement process. Instead of having to negotiate separate agreements with each plaintiff, the parties involved can negotiate a single settlement agreement outlining the method of allocation and distribution from the QSF. This advantage helps to streamline the settlement process and reduce the administrative burden on all parties involved.

468B: The Legal Framework of a Qualified Settlement Fund

The legal framework governing QSFs is in IRC §1.468B-1 et seq. of the Internal Revenue Code. This section provides the requirements for a QSF to be established, qualified and maintained. These requirements include:

• The QSF must be established pursuant to the approval of a governmental authority
• (Note: there is no requirement that a court approve a QSF see §1.468B-1(c)(1))
• The QSF must be established for the primary purpose of resolving one or more claims or disputes
• The QSF must be subject to the supervision of a governmental authority that approved the QSF
• The QSF must have a TIN (tax identification number) and file annual tax returns

Additionally, a QSF can be invested (usually in a FDIC insured money market account). However, any interest income generated by the QSF (less allowable deductible expenses) is subject to income tax.

How QSF Works in Settlement Negotiations

Maximizing Settlement Benefits Through a QSF

Another of the key benefits of using a QSF is that it allows litigators to offer settlement flexibility to their clients. When utilizing a QSF, litigators empower the plaintiff with the flexibility to choose their payment options (i.e., lump sum, third-party assignment, structured settlement annuity, or any combination thereof) and payment timing.¹
‍
A QSF also allows the plaintiff to choose their financial advisor(s) and removes the limitations associated with a defense-provided annuity.
‍
QSFs also provide similar benefits for you as the lawyer by providing you and your firm the flexibility to choose fee payment options (i.e., lump sum, third-party assignment, fee structure, or any combination thereof) and payment timing.

Common Misconceptions About QSF

Despite the many advantages of using a QSF, some common misconceptions exist about this legal arrangement. One of the most common misconceptions is that a QSF is only available in cases with multiple plaintiffs. In reality, a QSF can be beneficial, even with a single plaintiff.
‍
Another common misconception is that a QSF is too complex and expensive to set up. While it is true that a QSF requires some upfront costs (as low as $500), these costs are typically offset by the long-term benefits that a QSF can provide. Additionally, some QSF administrators specialize in setting up and managing QSFs, which can help simplify the process for litigators. For example, online platforms like QSF 360 offered by Eastern Point Trust Company are low-cost and allow you to create a QSF and receive the necessary governmental approval in as little as one business day.

Choosing the Right QSF Administrator

One of the most important decisions litigators must make when setting up a QSF is choosing the right QSF administrator. The QSF administrator is responsible for managing the funds in the QSF and ensuring that all legal and tax requirements are fulfilled. When choosing a QSF administrator, litigators should consider the administrator’s experience, whether they are licensed fiduciaries, speed of distributions, and fees.

Experience

The QSF administrator should have the necessary trust accounting systems, experience in managing QSFs, and be familiar with the legal and tax requirements governing these arrangements. Additionally, the administrator should have experience working with litigators and be able to provide references from other clients.

License

The QSF administrator’s licensing is also essential. Litigators should research the administrator’s status as a licensed fiduciary (preferably a Trust Company). The administrator should also be able to provide information about the FDIC insurance that applies to the account. Some platforms, such as QSF 360, provide up to $240 million in FDIC coverage; however, these amounts are expandable with the correct structure.

Administration Fees

Finally, litigators should consider the fees that the QSF administrator charges. While choosing an administrator with the experience, systems, and licenses needed to manage the QSF effectively is essential, litigators should also ensure that the fees are reasonable and transparent.

Conclusion

Why QSF Is the Best Option for Litigators and Settlemend Funds

In conclusion, Qualified Settlement Funds (QSFs) are a powerful tool that can help litigators to maximize settlement benefits for their clients and themselves. By using a QSF, litigators can provide your clients (and your firm) with the flexibility that includes a structured, third-party assignment, or a lump-sum payment. Additionally, a QSF can help to simplify the settlement process and reduce the administrative burden on all parties involved.
‍
Despite some common misconceptions, QSFs are not complex or expensive to set up. With the help of a qualified QSF administrator, litigators can establish and manage a QSF that meets all legal and tax requirements in as little as one business day. In summary, when choosing a QSF administrator, litigators should consider the administrator’s experience, systems, licensing, fiduciary, escrow, and ministerial services and fees.
‍
If you are a litigator interested in using a QSF, do your research and speak with a qualified QSF administrator (preferably a Trust Company.) Using a QSF can help ensure your clients, and your firm, receive the flexibility to maximize settlement benefits, fee and financial planning options.

‍

As someone who may receive a pending settlement or judgment in a lawsuit, you may wonder how to manage best and maximize your funds. One option that has gained popularity recently is using a Qualified Settlement Fund (QSF) under IRC Section 1.468B-1. In this article, we shall explore what a QSF is, its advantages, how to set one up, and common misconceptions about them.

Introduction to Qualified Settlement Funds (QSFs)

What Is a QSF? Understanding the Basics

A QSF is a type of trust that is created to hold settlement funds in a legal dispute. They are often used in cases where there are multiple plaintiffs or where the distribution of funds may otherwise be delayed due to ongoing litigation. Essentially, a QSF is a temporary holding account for settlement funds until they can be properly distributed to the intended parties.

IRC Section 1.468B-1: Rules and Regulations

IRC Section 1.468B-1 outlines the rules and regulations governing QSFs. This section of the tax code provides a safe harbor for using QSFs in legal settlements, and it outlines the requirements for establishing and maintaining a QSF and the tax treatment of funds held in a QSF.

Advantages of a QSF

The Efficiency

‍One of the most significant advantages of using a QSF is that it allows for a more efficient and organized distribution of settlement funds. Rather than waiting for all parties to agree on a distribution plan, funds can be placed in a QSF and distributed as soon as possible. This advantage can be beneficial in cases with multiple plaintiffs or where some parties may be difficult to locate.

How to Maximize Your Settlement Benefits With a QSF

Another advantage of using a QSF is the tax benefits it can provide. Funds held in a QSF are not subject to income tax until distributed to the intended parties (settlement proceeds for personal injury are never taxable). Additionally, funds held in a QSF can be invested, potentially increasing the overall value of the settlement, and are usually held in FDIC-insured bank deposits. Some QSF administrators have custodial platforms that provide up to $240 million in FDIC coverage. These advantages allow for more flexibility in financial planning and reducing the tax consequences of a settlement payment.

Common Misconceptions About QSFs

Choosing the Right QSF Administrator

One common misconception about QSFs is that they are challenging to set up and manage. While it is true that specific requirements must be met, such as having a qualified administrator, the process is not overly complicated. However, choosing the right QSF administrator is essential to ensure that the funds are properly managed and distributed. Platforms like QSF 360 offered by Eastern Point Trust Company are low-cost and allow you to create a QSF in as little as one business day.

QSF vs. Other Settlement Options

Another misconception is that QSFs can only be used in certain types of legal disputes. While QSFs are more commonly used in cases with multiple plaintiffs or complex distribution issues, they can be a valuable tool in any settlement, including those with only one plaintiff. Compared to other options, such as a defense-provided structured settlement or a lump-sum payment, a QSF offers more flexibility, better financial outcomes and tax benefits.

Conclusion

In conclusion, a Qualified Settlement Fund under IRC Section 1.468B-1 is a valuable tool for managing and maximizing settlement funds. By understanding the basics of what a QSF is, its advantages, and the misconceptions surrounding it, you can make an informed decision about whether it is the right option for your situation. To ensure your QSF is appropriately managed, choose a qualified administrator who can guide you through the process and help you make the most of your settlement.

Qualified Settlement Funds (QSF) – Listicle of 12 Things to Know:

FOR IMMEDIATE RELEASE

[7/8/24] Joe Sharpe, ETPC President, explained, “QSFs are powerful financial tools to streamline and manage settlements, especially in complex cases. They provide tax benefits, flexibility, and efficient administration for all parties involved. With platforms like QSF 360™, creating and managing a QSF is quick, easy, and fully compliant. From establishing a QSF to understanding the roles of administrators, tax implications, and investment options, our comprehensive listicle covers all you need to know about these financial mechanisms.”

Learn the advantages of QSFs over other settlement structures, QSF regulatory oversight, and best practices for effective management. Make the most of your settlements with QSFs and ensure a smooth, compliant, and beneficial process.

Eastern Point Trust Company invites legal professionals, plaintiffs, and all interested parties to explore more and discover the transformative potential of QSFs in post-settlement dispute resolution. To read the complete listicle and learn more about the advantages of QSFs, visit https://www.easternpointtrust.com/articles/qualified-settlement-funds-listicle-of-12-things-to-know.

PRESS Contact
www.EasternPointTrust.com

[email protected]
Phone: 855-222-7513

###

The co-designer of the Plaintiff Recovery Trust, Lawrence Eisenberg, a tax attorney and founder of Forward Giving, Inc., a 501(c)(3) charity, publishes in Tax Notes an article addressing the double taxation of settlements.

[7/16/2024] — In a thought-provoking article published in Tax Notes* Lawrence J. Eisenberg, an experienced tax attorney, describes the perplexing issues affecting individual plaintiffs in litigation recoveries and considers how those issues can be addressed, including by using a charitably-based trust-based solution. The article “The Individual Plaintiff Tax Trap — A Conundrum and a Solution” delves into the intricacies of the taxation of litigation recoveries and addresses methods to mitigate the adverse tax consequences some individual plaintiffs face.

Background

Eisenberg’s article highlights the strange and often inconsistent tax treatment of individual plaintiff litigation recoveries under the Internal Revenue Code. Despite the Supreme Court’s 2005 decision in “Commissioner v. Banks”, which held that plaintiffs must report the entire recovery as taxable income—including the portion payable to attorneys—many plaintiffs (and their attorneys and advisors) remain unaware of the potential tax pitfalls when such recoveries do not fall under tax-free categories, e.g., damages for physical injuries.

The Individual Plaintiff Tax Trap

The crux of the issue lies in the deductibility of attorney’s fees. Some recoveries are tax-free, so attorney fee deductibility is not relevant, or allow for an above-the-line deduction of these fees. Other recoveries can result a “double tax”, because in those situations, the attorney fee portion of the recovery is taxable, but the attorney fee itself is not deductible. This leads to significantly diminished net recoveries. Eisenberg’s article includes a detailed example demonstrating how a plaintiff’s net recovery can be less than 10% of the total amount, with the government and attorneys each receiving several times more than the plaintiff!

A Trust-Based Solution

To address this inequity, Eisenberg proposes that a plaintiff affected by the double tax create a Plaintiff Recovery Trust (PRT). A PRT allows plaintiffs to transfer their litigation claims to a specially designed split-interest charitable trust. By doing so, the litigation claim becomes an asset of the trust, and any recovery is received by the trust, which then pays the net recovery to the trust beneficiaries, including the plaintiff. The PRT uses ordinary trust law principles and aims to achieve fairer tax treatment by separating the ownership of the litigation claim from the individual plaintiff.

Key Benefits of the Plaintiff Recovery Trust

- Equitable Tax Treatment: By treating the litigation claim as a trust asset, a Plaintiff Recovery Trust results in the plaintiff not being taxed on the portion of the recovery paid to their attorneys.

- Structured recovery: The PRT trust structure allows for a more organized and potentially tax-efficient distribution of recoveries. (It also permits the use of structured settlements as part of the solution.)

- Charitable Component: The PRT includes a charitable beneficiary, adding a philanthropic dimension to the solution.

Conclusion

Eisenberg’s article is a call to action for tax professionals and litigation attorneys to recognize and address the unfair tax treatment many individual plaintiffs face. The PRT trust-based solution offers a way to alleviate the financial burden imposed by current tax law, so that plaintiffs retain a fair share of their recoveries.

See the full article on the taxation of settlement proceeds.

PRESS Contact
www.EasternPointTrust.com

[email protected]
Phone: 855-222-7513

###

‍

Eastern Point Trust Company Unveils Comprehensive Guide on Navigating Post-Settlement Disputes and Complexities with Qualified Settlement Funds

[5/17/2024] — Eastern Point Trust Company is pleased to announce the release of a new guide designed to address the challenging intricacies of post-settlement litigation disputes. The guide focuses on utilizing Qualified Settlement Funds (QSFs), also known as 468B trusts, as a streamlined solution for efficient settlement fund management and dispute resolution.

It is not uncommon for secondary disputes to arise following a litigation settlement or court award. These disputes can range from family disagreements over their "fair share" to lawyers disputing fee splits, plaintiffs contesting attorney fees, and third-party lien holders emerging to stake claims against the litigation proceeds. Such complexities often hinder the settlement process and prolong the resolution.

Eastern Point Trust Company's newly released guide provides detailed insights into how QSFs can be employed to manage these disputes effectively. By offering a structured approach to fund management and tax compliance and providing the necessary time for informed decision-making, QSFs present a viable solution to post-settlement challenges.

Sam Kott, Vice President of Eastern Point Trust Company, emphasized the significance of the guide, stating, "This guide explores the advantages of QSFs, specifically their ability to address complex issues such as post-settlement disputes, secondary litigation, and lien resolution. The guide also provides direction on navigating post-settlement challenges and highlights the benefits of QSFs in achieving the best possible outcomes for all parties involved."

The guide delves into the various advantages of utilizing QSFs, including:

• Efficient Fund Management: QSFs ensure that settlement funds are FDIC-insured, reduce misallocation risks, and ensure fair distribution.
• Tax Compliance: QSFs help maintain compliance with tax regulations, thereby minimizing potential tax liabilities for the parties involved.
• Informed Decision-Making: By providing time and space for thoughtful decision-making, QSFs help to resolve disputes amicably and equitably.

Eastern Point Trust Company invites legal professionals, plaintiffs, and all interested parties to explore the guide and discover the transformative potential of QSFs in post-settlement dispute resolution. To read the complete guide and learn more about the advantages of QSFs, visit here.

PRESS Contact
www.EasternPointTrust.com

[email protected]
Phone: 855-222-7513

###

Eastern Point is proud to announce the release of its latest publication, Unveiling the Complex World of Taxable and Tax-Free Settlements.

FOR IMMEDIATE RELEASE

[5/17/2024] — Eastern Point is proud to announce the release of its latest publication, Unveiling the Complex World of Taxable and Tax-Free Settlements. This comprehensive guide delves into the intricate workings of taxable and non-taxable settlements, offering invaluable insights into compensatory damages, punitive damages, and the tax treatment of various settlement types.

Ms. Rachel McCrocklin, Eastern Point’s Chief Trust Officer, commented, “The guide provides a detailed understanding of the pivotal role of IRS Section 104 and the taxability of various settlement types. Our goal is to equip readers with the knowledge to make informed decisions and minimize potential tax liabilities.”

The guide explores strategic methods to minimize tax obligations on settlements, including leveraging structured settlement annuities, Plaintiff Recovery Trusts, and proper allocation in settlement agreements. It is an essential resource for individuals and businesses navigating the complex landscape of settlement taxation.

Arm yourself with knowledge, make informed decisions, and minimize potential tax liabilities with Eastern Point's newest guide.

For more information on Unveiling the Complex World of Taxable and Tax-Free Settlements, please visit https://www.easternpointtrust.com/articles/unveiling-tax-free-settlements-what-you-need-to-know or contact 855-222-7513.

CTRO

PRESS Contact
www.EasternPointTrust.com

[email protected]

Phone: 855-222-7513

###

‍

A new comprehensive guide has emerged catering to those seeking to conduct private placements. This guide outlines the pivotal role of escrow accounts in private placements, providing a secure, regulated structure that safeguards investor assets and boosts investor confidence.

FOR IMMEDIATE RELEASE

[5/2/2024] — A new comprehensive guide has emerged catering to those seeking to conduct private placements. This guide outlines the pivotal role of escrow accounts in private placements, providing a secure, regulated structure that safeguards investor assets and boosts investor confidence.

It reviews the advantages of choosing a trust company over a traditional bank account for escrow services, emphasizing active independent oversight that enhances transaction security and integrity.

Ned Armand, CEO, noted, “The guide also highlights the critical role of an escrow agent in managing funds prudently, ensuring a smooth progression of transactions under the regulatory frameworks.” Offerors of private equity and Reg D, Reg A, Reg A+, Reg CF, and Reg S offerings are encouraged to explore this guide, available on Eastern Point Trust Company.

PRESS Contact
www.EasternPointTrust.com

[email protected]
Phone: 855-222-7513

###

‍

In today's dynamic business landscape, where environmental liabilities pose significant challenges, the Qualified Settlement Fund (QSF) emerges as a beacon of efficiency and reliability. Contrasting against traditional Environmental Remediation Trusts (ERT), Eastern Point’s QSF offers unparalleled advantages, revolutionizing the approach towards environmental liability management.

FOR IMMEDIATE RELEASE

[2/27/2024] — In today's dynamic business landscape, where environmental liabilities pose significant challenges, the Qualified Settlement Fund (QSF) emerges as a beacon of efficiency and reliability. Contrasting against traditional Environmental Remediation Trusts (ERT), Eastern Point’s QSF offers unparalleled advantages, revolutionizing the approach towards environmental liability management.

The Qualified Settlement Fund stands as a testament to expediency, with the capability to be established and funded within a mere business day, a stark contrast to the lengthy processes associated with ERTs. By swiftly assuming environmental liabilities from present and future claims under CERCLA, state, and local law, QSF ensures immediate action and resolution.

One of the most compelling aspects of QSF is its affordability, with establishment costs as low as $500. This cost-effectiveness, coupled with the tax advantages it provides over ERTs, makes QSF an attractive proposition for businesses seeking prudent financial solutions.

Flexibility is another hallmark of QSF, allowing for single-year or multi-year funding without any maximum duration constraints, ensuring adaptability to diverse business needs. Furthermore, the ability to hold real estate expands the horizons of asset management within the fund.

The benefits extend to tax optimization, with QSF accelerating the transferor's tax deduction for funds transferred to the current tax year, thereby enhancing financial planning and efficiency. Moreover, by shifting liability and associated funding transfers irrevocably to the QSF, businesses can streamline their balance sheets, mitigating risks and enhancing transparency.

In addition to these financial advantages, QSF facilitates seamless settlement agreements to capitate and resolve environmental liabilities, assuring regulators and interested parties of the irrevocable availability of funds for amelioration.

The transition to QSF not only eliminates future administrative burdens but also entrusts the fund's administration to a dedicated trustee, relieving businesses of operational complexities and enhancing focus on core activities.

In conclusion, the Qualified Settlement Fund stands as a beacon of innovation in environmental liability management, offering unmatched advantages over traditional Environmental Remediation Trusts. Its expediency, affordability, flexibility, and tax optimization capabilities redefine the landscape, empowering businesses to navigate environmental challenges with confidence and efficiency.

PRESS Contact
www.EasternPointTrust.com

[email protected]
Phone: 855-222-7513

###

Eastern Point Trust Company Announces Sponsorship Grants to National Forest Foundation

FOR IMMEDIATE RELEASE

[10/13/2022] — Eastern Point Trust Company (“EPTC”) announced that it entered into a sponsorship with the National Forest Foundation (“NFF”) to provide grant funding in support of NFF’s mission to restore and enhance our National Forests and Grasslands.

Working on behalf of the American public, the NFF leads forest conservation efforts and promotes responsible recreation. Its mission is founded on the belief that these lands, and all they provide, are an American treasure and vital to our communities’ health.

Rachel McCrocklin, Eastern Point’s Chief Client Officer, stated, “Eastern Point welcomes the opportunity to partner with the National Forest Foundation in support of its mission to improve and protect our national lands. A portion of Eastern Point’s revenue is dedicated to funding priority reforestation and enhanced wildlife habitat by supporting the National Forest Foundation’s 50 million for Forrest campaign.”

About Eastern Point Trust CompanyWith over three decades of trustee and trust administration experience, Eastern Point is a world leader in trust innovation that provides fiduciary services to individuals, courts, and institutional clients.

Eastern Point has the benefit of practical experience and industry-leading technology, providing services to over 6,000 trusts with more than 20,000 users across the U.S. and internationally.

About The National Forest FoundationThe National Forest Foundation is the leading organization inspiring personal and meaningful connections to our National Forests, the centerpiece of America’s public lands.

PRESS Contact
www.EasternPointTrust.com

[email protected]
Phone: 855-222-7513

###

Eastern Point Trust provides services across the U.S. and internationally.

FOR IMMEDIATE RELEASE

[11/21/2022] — Eastern Point Trust Company (“EPTC”) announced recent successes of the Plaintiff Recovery Trust (“PRT”) solution in solving the Plaintiff Double Tax, which is the unfair result of 2017 legislation that can cut plaintiff recoveries in half.

Glen Armand, Eastern Point’s CEO, expressed, “Eastern Point’s gratitude for the testimonials of Mirena Umizaj, Joseph Di Gangi, Rebekah Reedy Miller, Susan Gleason, Jennifer White, Andy Rubenstein, and Zane Aubert. By utilizing the PRT, you are the catalyst for saving plaintiffs over $30 million of federal and state taxation.”

Mr. Armand also announced Joseph Tombs as Director of Plaintiff Recovery Trusts (PRT). Mr. Armand also noted, “The contributions of Lawrence Eisenberg and Jeremy Babener for partnering on our newest settlement solution.”

Settlement and financial planners and CPAs can learn and access resources on Eastern Point’s PRT Planner Page here: https://www.easternpointtrust.com/plaintiff-recovery-trust-for-planners

About Eastern Point Trust Company
Eastern Point is a world leader in trust innovation that provides fiduciary services to individuals, courts, and institutional clients across the U.S. and internationally.

With over three decades of trustee and trust administration experience, Eastern Point provides the benefits of practical experience, industry-leading technology, and innovation. Eastern Point Trust provides services across the U.S. and internationally.

About The Plaintiff Recovery Trust
The Plaintiff Recovery Trust is the proven solution to increase the amount plaintiffs keep in taxable cases. Without it, plaintiffs are taxed on the settlement proceeds paid to their lawyers. https://www.easternpointtrust.com/plaintiff-recovery-trust

PRESS Contact
www.EasternPointTrust.com

[email protected]
Phone: 855-222-7513

###

Qualified Settlement Funds (QSFs), a 468B trust, are valuable and crucial in managing litigation settlements efficiently and effectively. "QSF", which stands for "Qualified Settlement Fund", is a fund established as a trust or account established to hold settlement proceeds from litigation. According to the definition under Treasury Regulations, it is an escrow account, trust, or fund established according to an order of or approved by a government authority to resolve or satisfy claims.

This comprehensive infographic guide explains the essential aspects of Qualified Settlement Funds:

• What is a Qualified Settlement Fund and its purpose
• Key benefits
• Eligibility requirements
• The approval process
• How to create a Qualified Settlement Fund
• Qualified Settlement Fund tax treatment and tax reporting
• Investment options
• QSF administration process
• Qualified Settlement Fund Administrator role and responsibilities
• Procedures for making distributions
• Compliance and regulatory matters
• Complex cases
• Minor's Settlements

The guide provides valuable insights, tips, and rules of thumb for legal professionals, claimants, and other stakeholders about how a QSF account benefits the settlement process. A QSF offers many advantages, including immediate tax deduction for defendants, tax deferral for claimants, and efficient management of settlement proceeds. QSFs are commonly used in class action lawsuits, mass tort litigation, and cases with multiple claimants, but can also provide benefits in single claimant cases.

Setting up a QSF involves petitioning a government authority and appointing a QSF Administrator to oversee the fund. The QSF Administrator, often a platform like QSF 360, is responsible for obtaining an EIN, handling tax reporting, overseeing QSF administration, and making distributions to claimants. Online QSF portals streamline the Qualified Settlement Fund administration process.

Partnering with an experienced QSF Administrator is essential. Services like QSF 360 from specialize in QSFs for both large and small cases and can help ensure compliance with IRC § 1.468B-1 and other regulations.

In summary, Qualified Settlement Funds are a powerful tool for managing settlement proceeds. With proper planning and administration, QSFs provide significant tax benefits, enable efficient distribution of litigation proceeds, and help bring litigation closure. Understanding what is QSF and how to leverage QSFs is invaluable for any legal professional involved in today's settlements.