Settlement: Strategies & Solutions

Definition of Governmental Authority

According to IRS regulation §1.468B-1(c)(1) and (e), a Qualified Settlement Fund (“QSF”) is a specialized type of statutory trust established by a “governmental authority” to resolve claims arising from specific events such as breaches of contracts, torts, or violations of law pursuant to 26 CFR §1.468B-1. The term governmental authority is defined within the regulations as:

“…the United States, any state (including the District of Columbia), territory, possession, or political subdivision thereof, or any agency or instrumentality (including a court of law) of any of the foregoing…”

Thus, the governmental authority must issue its initial or preliminary approval (or order) to establish the QSF. Often overlooked is that the initial approval or order may be subject to review or revision. However, this does not detract from the validity of the QSF once the governmental authority gives its initial approval.
 
Note: So, called “Firmwide QSFs” mix unrelated claims in violation of the “related claims” requirement of §1.468B-1(c)(2) and therefore do not satisfy the qualification requirements to operate as a Qualified Settlement Fund. (See Firmwide QSFs - What Can Go Wrong? Part 1 and Part 2)

Retroactive Effect

A key provision within §1.468B-1(e) clarifies that the governmental authority’s order or approval has no retroactive effect. This part of the regulation means that a fund, account, or trust cannot be deemed a Qualified Settlement Fund before the date the approval is granted. The regulation ensures that the statutory establishment of a QSF follows a transparent chronological process and maintains accountability for the fund’s activities.
 
However, §1.468B-1(j) (2) provides a method for a QSF to be deemed coming into existence via a “relation-back rule” election as on the later of the date the fund, account, or trust meets the requirements of paragraphs (c)(2) and (c)(3) of 1.468B-1 or January 1 of the calendar year in which all the requirements of paragraph (c) of 1.468B-1 are satisfied:

§1.468B-1(j) (2)
“Relation-back rule—(i) In general. If a fund, account, or trust meets the requirements of paragraphs (c)(2) and (c)(3) of this section prior to the time it meets the requirements of paragraph (c)(1) of this section, the transferor and administrator (as defined in §1.468B–2(k)(3)) may jointly elect (a relation-back election) to treat the fund, account, or trust as coming into existence as a qualified settlement fund on the later of the date the fund, account, or trust meets the requirements of paragraphs (c)(2) and (c)(3) of this section or January 1 of the calendar year in which all the requirements of paragraph (c) of this section are met. If a relation-back election is made, the assets held by the fund, account, or trust on the date the qualified settlement fund is treated as coming into existence are treated as transferred to the qualified settlement fund on that date.”

Conclusion

In conclusion, the governmental authority plays a pivotal role in establishing and regulating a QSF, but the approval can be difficult, costly, and time-consuming. QSF 360 provides a turnkey solution to establish a QSF with the necessary governmental authority approvals in as little as one business day, making the process quick and easy. The order or approval from the governmental authority serves as the definitive starting point for a QSF, ensuring that the Qualified Settlement Fund operates within the established regulatory framework.

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In the intricate world of legal proceedings the Qualified Settlement Fund (QSF) stands out for its distinctiveness. A QSF, although perhaps not widely recognized by the general public and even many lawyers, holds a unique and pivotal role in the resolution of legal cases, particularly those involving multiple claimants such as class-action lawsuits and mass tort litigation. QSFs are also widely used in single event cases and single plaintiff cases. In essence, the QSF serves as a temporary holding ground for settlement funds (in effect, the funding is held in “tax limbo”), offering an array of unusual and beneficial characteristics that make it a crucial instrument in settlements and judicial award distributions.

TIP: There is no IRS restriction regarding a “Single Claimant” QSF – see Actually, Single-Claimant Settlement Funds Are Valid (Wood, Brown - Tax Notes Federal, February 10, 2020).

At its core, a QSF is a legal entity that meets the qualification requirements of §1.468B-1 et seq. The purpose of a QSF is to receive and disburse settlement funds in cases where one or more claims are being satisfied. The nature of QSFs lends itself to certain characteristics that are not only unusual but also vital in modern legal proceedings.

Temporary Financial Reservoir

One of the most remarkable aspects of QSFs is their role as a temporary financial reservoir. In scenarios where one or more claims conclude with a settlement agreement (or judicial award), defendants deposit the associated sums into the QSF. This core feature is the essential facet of a QSF’s function: it is a short-term container that safeguards the settlement funds until properly allocated to the respective claimant(s). Unlike traditional settlements where claimants receive compensation directly from the defendant, a properly constructed QSF introduces a layer of separation that ensures organized and deliberate distribution(s) while triggering no economic benefit or constructive receipt.

Deferred Taxation Benefits

Perhaps one of the most advantageous features of the QSF is its capacity to defer taxation. When deposited into the QSF, the settlement funds assume a “contingent liability” status, effectively postponing the recognition of income and taxation for the claimant(s). This unique attribute can have substantial financial implications. The claimant(s) can strategize and plan for the tax consequences of their settlements, a luxury not commonly afforded in other settlement frameworks. The deferral of taxation can prove invaluable, especially for a claimant who might otherwise face immediate and potentially burdensome tax liabilities.

Controlled Distribution Mechanism

The QSF introduces a controlled distribution mechanism that minimizes potential accelerated taxation, chaos, and confusion in cases involving several claimants, liens, secondary claims, or the desire to preserve other beneficial tax treatments. Often, in class-action or mass tort litigation, the number of individuals seeking compensation can be substantial, with varying degrees of damages or injuries. The QSF administrator or trustee plays a pivotal role in overseeing the distribution process, ensuring the disbursement of funds per the terms outlined in the settlement agreement. This controlled distribution mechanism safeguards against potential misallocation and promotes equity and transparency in the compensation process.

A Haven for Complex Cases

The realm of complex litigation, which encompasses cases with numerous claimants or intricate legal dynamics, finds a haven in the QSF structure. Its versatility makes it particularly suitable for these complex scenarios. As a QSF allows for a more flexible and accommodating approach, a QSF may be necessary when determining eligibility, appropriate allocation, lien resolution, and resolving other secondary matters that demand meticulous scrutiny and time. Also, the claimant(s) benefits from additional time to exercise due diligence in reviewing and approving the intricacies of the settlement distribution plan.

Varied State Taxation

One must bear in mind that the state tax landscape surrounding QSFs can vary significantly based on jurisdiction. Some states like California apply high state income tax rates on the QSFs “Modified Gross Income,” as defined by 1.468B-2 et seq. Therefore, legal professionals and stakeholders must consider levels of state taxation when selecting the situs of a QSF. Platforms such as QSF 360 utilize low or zero state tax jurisdictions thereby reducing state tax burdens.

Conclusion

In conclusion, a QSF is a unique and valuable tool.  A QSF’s unusual characteristics, ranging from serving as a temporary financial reservoir to deferring taxation, make it a vital tool in legal professionals’ and claimants’ arsenal. The controlled distribution mechanism ensures fairness and transparency, while its adaptability renders it well-suited for the complexities of modern litigation. As legal frameworks and practices evolve, the QSF’s solutions, such as QSF 360, continue to provide the state of the art in settlement administration.

To learn more about Qualified Settlement Funds – click here.

Qualified Settlement Funds (QSFs), or 468B Trusts, are tax-qualified trusts designed to manage the proceeds from litigation settlements and judicial awards. These unique financial tools offer many advantages for plaintiffs, defendants, lawyers, and settlement administrators but also have tax implications. Here, we review the Taxation and Benefits of Qualified Settlement Funds.

What Is a Qualified Settlement Fund?

As per Section 1.468B-1 et seq. of the Internal Revenue Code (IRC), Qualified Settlement Funds operate solely to resolve certain types of litigation, allowing the defendant to deposit funds into a trust and receive a full release of liability. They first arose from class action lawsuits and are now commonly used in various cases, including personal injury actions and other cases involving multiple plaintiffs.

The fund may be a trust, an account, or even a segregated portion of the transferor’s assets. Although a written trust agreement is generally a good practice, an attorney’s trust account could theoretically serve as a QSF. However, particular rules apply to the fund’s establishment and operation.

Key Features of a QSF

1. Easy: With QSF 360, Qualified Settlement Funds are quick, easy, and straightforward to establish and maintain.
2. Tax Benefits: Defendants can get an immediate tax deduction, while Plaintiffs can defer their income.
3. Flexibility: Plaintiffs can plan when and how to be paid.
4. Release of Liability: Defendants receive a full release of liability once they deposit the funds into the QSF.
5. Orderly Administration: § 468B Trusts also offer an orderly way to manage and distribute settlement proceeds.
6. Advantages of Qualified Settlement Funds: a win-win solution for all parties involved in litigation; they provide defendants with a quick exit strategy, plaintiffs with financial control, attorneys with flexible fee structures, and even help settlement administrators by simplifying the process.

Advantages for Defendants

Defendants can benefit from Qualified Settlement Funds in several ways:

• Immediate Release from Litigation: Defendants can extricate themselves from litigation by depositing the agreed settlement amount into the § 468B trust. The plaintiffs can then take their time in allocating the settlement among themselves and dealing with various liens.
• Immediate Tax Deduction: Instead of waiting for “economic performance” to occur, defendants and their insurers can obtain immediate tax deductions.

Advantages for Plaintiffs

Plaintiffs also stand to gain from the use of Qualified Settlement Funds:

1. Control Over Settlement Allocation: With the defendant out of the picture, the plaintiff has greater flexibility in dividing the settlement among injured parties, often leading to more advantageous outcomes.
2. Immediate Income from Settlement: The plaintiff may start immediately receiving income from the settlement once received by the § 468B trust.
3. Time for Negotiations: A § 468B settlement trust gives the plaintiff extra time to negotiate and satisfy liens from Medicare, Medicaid, ERISA, and third-party insurers.
4. Choice of Distribution Methods: The plaintiff can decide how much of the settlement to take as a lump sum and how much to structure.
5. Resolution of Conflicts Among Plaintiffs: If a lawsuit involves multiple plaintiffs with conflicting interests, a Qualified Settlement Fund can provide time to resolve these conflicts.

The low cost of QSF 360 to establish a QSF is typically overwhelmingly outweighed by the added benefits gained through vastly improved financial returns.

Taxation of Qualified Settlement Funds

Since QSFs are separate tax entities, they are required to pay tax on any interest and dividend income. The tax rate is equal to the maximum rate in effect for trusts, which is currently 39.6%. Remember that the tax is a self-financing tax resulting solely from the interest earned on the QSF.

Several other income tax considerations must be taken into account when dealing with QSFs:

• Economic Performance: The defendant receives an immediate tax deduction upon depositing the funds in the § 468B settlement fund.
• Constructive Receipt: The deposit of the funds in the QSF is not “constructive receipt,” as the taxpayer’s (Claimant’s) receipt of income is subject to substantial limitations.
• Economic Benefit: The deposit of the funds in the QSF is not “Economic Benefit,” as the taxpayer’s (Claimant’s) receipt of income is (i) not fixed nor vested, (ii) subject to the claims of other Claimants, and (iii) is subject to the QSF’s creditors.
• Gross Settlement Proceeds: The transfer of settlement proceeds into a QSF does not represent gross income to the § 468B settlement fund, and when the fund pays them, they do not represent a tax deduction to the QSF. The QSF administrator/trustee must determine whether disbursements are subject to withholding requirements (such as backup withholding or, in the case of wage cases - wage-based withholding). Disbursements of attorneys’ fees in the underlying litigation are always reportable as taxable income.

It’s crucial to note that the tax implications of Qualified Settlement Funds can be complex, and working with an experienced QSF administrator, such as Eastern Point Trust Company, can assist you in navigating potential pitfalls.

The Role of the QSF Trustee/Administrator

The Regulations require a 468B Trust to have a “QSF Administrator.” If the fund is a trust, the same person can serve as both Trustee and Administrator, or there can be a separate trustee and a separate Administrator. The Trustee/Administrator is responsible for making distributions from the QSF to claimants, State Medicaid Agencies to satisfy liens, CMS to satisfy Medicare liens, ERISA Plans to satisfy ERISA liens, and any other lien holders that require satisfaction from the settlement fund.

The Trustee/Administrator also assists with the proper funding process of structured settlements, including making a § 130 Qualified Assignment to a third-party assignee who shall make the periodic payments.

The QSF Administrator additionally oversees the QSF’s KYC/AML process.

Taxability of Settlement Funds

The general rule for the taxability of amounts received from the settlement of lawsuits and other legal remedies is within IRC Section 61 and dictates that all income is taxable from whatever source derived unless exempted by another code section. However, the facts and circumstances surrounding each settlement payment are essential to determine the purpose of the underlying settlement or judicial award because not all amounts received from a settlement are exempt from taxes.

Awards and settlements can be divided into generally distinct groups to determine whether the payments are taxable or non-taxable. The most common are claims relating to physical injuries, and the other is for legal claims relating to non-physical injuries but other damages, as shown below, which may apply:

• Actual Damages: resulting from physical or non-physical injury;
• Emotional Distress Damages: arising from the actual physical or non-physical injury;
• Punitive, Statutory, or Penalty Damages: awarded in addition to actual damages in certain circumstances. Punitive, Statutory, or Penalty damages are considered punishment and typically awarded at the court’s discretion.
• Interest on the Judgement Damages: in such events, the interest compensates the plaintiff for the lost time value of money.

Conclusion

In conclusion, Qualified Settlement Funds offer a unique solution for managing and distributing litigation settlement proceeds. QSFs provide significant tax and other benefits for all parties involved but also have complex tax regulations that require careful management. Working with experienced professionals, with no conflicts of interest, when dealing with QSFs is crucial to ensure compliance with all tax and regulatory requirements.

FATCA stands for the Foreign Account Tax Compliance Act. FATCA is an information-sharing agreement, created via a 2010 U.S. federal law, between the United States and more than 100 foreign countries. The goal of FATCA is to identify non-U.S. financial accounts opened or controlled by U.S. citizens or businesses for the purpose of avoiding U.S. taxes—for instance, in tax havens, tax-free countries, or countries with lower corporate tax rates to avoid taxation.

FATCA does not require reporting related to non-U.S. citizens. So, if you are not a U.S. Citizen (or company) and have an account in one or more U.S. financial institutions, FATCA does NOT apply. However, foreign companies controlled by U.S. citizens are subject to FATCA reporting.

FATCA Objective

The objective of FATCA is to identify U.S. persons who may evade U.S. taxes by placing assets in foreign (non-U.S.) accounts -- either directly or indirectly through certain foreign entities such as corporations or trusts.

Who or What Is a U.S. Person for U.S. Tax Purposes?

• A citizen of the U.S., including an individual who was born in the U.S. but resides in another country, who has not renounced U.S. citizenship
  
• A lawful resident of the U.S., including a U.S. green card holder
  
• A person residing in the U.S.
  
• Certain persons who spend a significant number of days in the U.S. each year. (For example, some Canadian "snowbirds" may be considered U.S. persons. However, the Canada-U.S. tax treaty allows them to claim benefits to be treated as Canadian rather than U.S. taxpayers. Similar relief is provided under many other treaties with the U.S.)
  
• U.S. corporations, U.S. estates, and U.S. trusts

FATCA Fundamentals and International Tax Compliance

For foreign (non-U.S.) financial institutions (FFIs) in countries that have not entered into an intergovernmental agreement with the U.S., FATCA requires FFIs to either:

• Enter into agreements with the United States' Internal Revenue Service (IRS) and report information about financial accounts held by U.S. taxpayers -- or held by foreign entities in which U.S. taxpayers hold an ownership interest -- directly to the IRS, or
  
• Face punitive U.S. withholding tax on U.S.-source payments
  

To address privacy and regulatory concerns related to FATCA, many countries negotiated intergovernmental agreements (IGAs) with the U.S. These IGA "partner countries" entered into one of two standard model agreements, and implemented laws to require financial institutions to collect and report information required by FATCA.

FFIs comply with FATCA in one of three ways:

1. In countries with Model 1 IGA, FFIs comply under local legislation and report to their local tax authority; in turn, the local tax authority exchanges information with the IRS
   
2. In countries with a Model 2 IGA, FFIs comply with local legislation to enter into agreements with, and report directly to, the IRS
   
3. In countries without an IGA, FFIs enter into agreements with, and report directly to the IRS. (A 30% withholding tax will be deducted from U.S. source payments received by FFIs in non-IGA countries if they do not enter into agreements with the IRS.)
   

U.S. financial institutions are automatically required to comply with FATCA.

Note: the term U.S. Reportable Account is an account owned by a U.S. individual (person), U.S. entity, or a non-U.S. entity that has U.S. controlling persons -- regardless of the currency of the account itself. FATCA applies to all types of financial accounts, including insurance, investments, trust, assignment, escrow, and other business accounts.

EPTC complies with FATCA regulations in all jurisdictions in which it operates.

What Is the Difference Between a FATCA Model 1 Country and a Model 2 Country?

In general, the countries that are included in FATCA have entered into either a Model 1 or Model 2 agreement. In a Model 1 country, financial data about United States citizens is collected by the partner country's various financial institutions and sent to that country's governmental tax authority. That authority then passes the information on to the IRS, which uses it to ensure the person is paying the amount of tax they legally owe. A total of 94 countries fall under the Model 1 agreement.

In a Model 2 country, the partner government's tax authority is removed from the transfer chain and information is passed directly from the country's financial institutions to the IRS. 14 countries have entered into a Model 2 agreement. Both models also include variants in which the US would reciprocate by providing similar information about any of the partner country's citizens residing in the U.S.

What Countries Are FATCA Model 1 Countries?

Note: Countries marked with ** have a signed agreement or an agreement in substance, but the agreement has not yet entered into force.

What Countries Are FATCA Model 2 Countries?

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Note: Countries marked with ** have a signed agreement or an agreement in substance, but the agreement has not yet entered into force.

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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.

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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.

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Phone: 855-222-7513

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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

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Phone: 855-222-7513

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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

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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
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Phone: 855-222-7513

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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
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[email protected]
Phone: 855-222-7513

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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.

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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

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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.