Evolve Bank and Trust will host the first Annual Qualified Settlement Fund Symposium September 27-28, 2012 in Memphis, Tennessee. Dedicated exclusively to the advancement of qualified settlement fund (QSF) professionals, the purposes of the Symposium are to stimulate dialogue among QSF industry leaders and experts and to help shape industry thinking on QSF issues.
QSF Symposium Speakers and Topics
- Sylvius von Saucken - "Establishing the QSF: Account, Fund or Trust / Drafting Considerations"
- Kevin Urbatsch - "Petitioning the Court for Approval"
- Andy Cook - "Investment Policy and Fiduciary Investment Options"
- Peter Wayne - "QSFs and Government Benefits Preservation"
- Will Shapiro - "Lien Holdbacks and Claimant Distributions"
- Jeremy Babener - "QSF Taxation: Filing, Payments, Withholding and Reporting"
- Chris Lordan - "Accounting and Reporting Best Practices"
- Patrick Hindert - "How Structured Settlement Transfers Impact QSF Planning"
- Roundtable Discussion - moderated by Pi-Yi Mayo and Bryn Poland
Defined in Treasury Regulation 1.468B-1(c), QSFs represent an important settlement planning tool and provide benefits for both defendants and plaintiffs.
Defendants can use QSFs to resolve complex claims in exchange for a
release and immediate tax deduction. Plaintiffs and their advisers can
use QSFs to marshall assets, determine which plaintiffs and counsel
receive which amounts, satisfy government benefits and other lien
obligations and engage in thoughtful settlement planning without the
pressures that accompany negotiations, mediations and litigation.
Revenue Procedure 93-34
One QSF advantage is the unlimited time QSFs allow for claimants to consider multiple investment options - including structured settlements provided the QSF satisfies rules set forth in Revenue Procedure 93-34 to qualify as a "party to a suit or agreement":
- Claimants must agree in writing to the assumption by a IRC 130 qualified assignee of the QSF's obligation to make periodic payments.
- Each qualified assignment must relate to a claim “on account of personal injury or sickness (in a case involving physical injury or sickness)”.
- Each qualified funding asset purchased by each qualified assignee must relate to a liability to make periodic payments for damages to a single claimant.
- No qualified assignee can be “related” to the QSF.
- No qualified assignee can be controlled by nor control, directly or indirectly, the QSF.
- Each transaction must meet all other section 130 requirements.
Single Claimant QSF Controversy
Whether a QSF can be established for a single claimant remains controversial - especially among structured settlement and settlement planning stakeholders.
The arguments in favor of allowing single claimant QSFs include the language in IRC section 468B and, more specifically, in the 468B regulations. These regulations, which also define a QSF (see above), allow a QSF to be “established to resolve or satisfy one or more contested or uncontested claims that have resulted or may result from an event (or related series of events) that has occurred and that has given rise to at least one claim asserting liability". (emphasis added)
The Society of Settlement Planners (SSP) requested a ruling from the U.S. Department of Treasury on this single claimant issue in 2004. To date, however, the Treasury has not provided definitive tax authority for the single claimant QSF issue.
The National Structured Settlement Trade Association (NSSTA) historically opposes the issuance of guidance by the Treasury Department or the Internal Revenue Service on the single claimant QSF issue. NSSTA’s position appears to be that broad approval of single-claimant 468B funds would undermine and diminish the use of structured settlements. NSSTA maintains structured settlements are best created when both plaintiffs and defendants actively participate.
For more detailed information about QSFs, see:
- Robert Wood, "Qualified Settlement Funds and Section 468B"
- Hindert, Dehner and Hindert, "Structured Settlements and Periodic Payment Judgments" - Section 3.08B
- Jeremy Babener, "Structured Settlements and Single Claimant Qualified Settlement Funds"