Beyond Structured Settlements

2015-2016 Educational Conferences

During a transitional era for both personal injury settlement planning and structured settlements, participating professionals are fortunate to have multiple upcoming educational opportunities to update and expand their knowledge. Here is an overview of recommended upcoming national conferences listed chronologically. Note: some associations restrict conference attendence to association members.

1. NAMSAP 2015 Annual Conference - September 30 - October 2 in New Orleans. The National Alliance of Medicare Set-Aside Professionals (NAMSAP) is "the only non-profit association exclusively addressing the issues and challenges of the Medicare Secondary Payer Statute and its impact on workers’ compensation and liability settlements". Medicare set-aside arrangements (MSAs) represent an increasingly important submarket for structured settlements. One of the innovative features of this conference: NAMSAP has developed an App so attendees can stay connected before, during and following the conference. Among the speakers, S2KM's Managing Director, Patrick Hindert, and Ann Koerner will lead a discussion titled: "How the Affordable Care Act Impacts Medicare, Medicare Compliance and MSAs". For S2KM's most recent NAMSAP reporting, see: NAMSAP 2015 Winter Regional Conference .
2. Stetson 2015 SNT Conference - October 14-16 in St. Petersburg, Florida. Stetson Law School's National Conference on Special Needs Trusts (SNTs) is widely recognized as the preeminent educational forum for this topic. The two-day conference offers one day of "Basics" plus one day of "Advanced" SNT education plus two additional and optional pre-conference half-day programs ("The Tax Intensive" and "Pooled Trusts"). Similar to MSAs, SNTs represent a strategic submarket for structured settlements. Among important recent developments: 1) the impact of the Affordable Care Act (ACA) on existing and prospective SNTs; 2) The Special Needs Trust Fairness Act, recently approved unanimously by the U.S. Senate, would correct a previous legislative error and allow individuals with disabilities, who have capacity to create their own SNTs.
3. NSSTA 2015 Fall Educational Conference - October 28-30 in Phoenix, AZ. The National Structured Settlement Trade Association (NSSTA) is "the leading voice of the structured settlement industry" with nearly 1200 individual members. NSSTA has previously announced an "Industry Growth Initiative" - "designed to identify opportunities to expand the use of structured settlements and bring those opportunities to the structured settlement marketplace" - which appears to focus multiple growth-oriented goals NSSTA president Michael Goodman identified during NSSTA's 2015 Annual Meeting. The first progress report for this Growth Initiative is scheduled to occur during NSSTA's Fall Conference. As a prelude to its Growth Initiative, NSSTA commissioned a three-part survey of traditional structured settlement stakeholders which S2KM reviewed in previous blog posts: senior claims executives (Part 1); front line claims professionals (Part 2); and plaintiff attorneys (Part 3).
4. NASP 2015 Annual Conference - November 10-12 in Las Vegas. The National Association of Settlement Purchasers (NASP), "the only trade association related to the secondary market for structured settlements, ... is dedicated to ensuring the secondary market for [such] transfers remains fair, competitive, and transparent." Following years of conflict between the primary and secondary structured settlement markets, an historic "President's Panel" will highlight NASP's 2015 conference featuring the respective presidents of NSSTA (Michael Goodman) and NASP (Patricia LaBorde). This event was preceded by NSSTA inviting LaBorde to speak at the NSSTA 2014 Fall Educational Conference. and appears to signify increased cooperation between the two associations extending to legislation as well as education. Among other speakers, S2KM's Patrick Hindert will provide "A Primer on Special Needs Trusts and Medicare Set-Asides" for secondary market attendees. For S2KM's most recent NASP reporting, see: NASP 2014 Annual Conference .
5. Evolve 2015 QSF Symposium - November 12-13 in Memphis. Organized "to provide a forum for open dialogue that helps shape industry developments", Evolve Bank and Trust's Annual Qualified Settlement Fund (QSF) Symposium offers a valuable and unique addition to the growing number of personal injury settlement planning conferences and educational resources. Although Rev. Proc. 93-34 permits QSFs to make IRC 130 qualified assignments, and no tax authority exists prohibiting single claimant QSFs, structured settlement annuity providers currently refuse to accept single claimant QSFs which they broadly define to encompass claims by family members, plaintiff attorneys, lien holders and creditors. Evolve's recent symposiums have avoided the single claimant controversy and focused instead on other important QSF and settlement planning issues. For S2KM's most recent Evolve reporting, see: Evolve 2014 QSF Symposium.
6. NSSTA 2015 MSSC Program - November 18-21 at the University of Notre Dame. Complementing and extending its Certified Structured Settlement Consultant (CSSC) Professional Certification Program, NSSTA has added a new Master's Certificate in Structured Settlement Consulting (MSSC). This program is one of multiple new educational initiatives, including Structures 202 (a comprehensive program of case management fundamentals and business development opportunities) and "NSSTA University" (whereby NSSTA will partner with any member to secure CE credits for member-sponsored educational seminars or insurance claims departments or law firms), which NSSTA is offering to attract and train "Next Generation" professionals to grow the structured settlement market.
7. NAELA 2016 Summit - January 28-30 in Newport Beach, CA. The National Academy of Elder Law Attorneys (NAELA) was the first and remains the largest U.S. professional association focused on the needs of elder and special needs law attorneys. NAELA was founded in 1986 and now consists of more than 4300 attorney members. Because NAELA was slow to embrace special needs as a separate strategic market, NAELA members independently formed the Special Needs Alliance (Alliance) and the Academy of Special Needs Planners (ASNP). Most Alliance and ASNP member, however, remain active NAELA members and look to NAELA as their primary political lobbying resource. NAELA member resources include the NAELA Journal which has published a series of excellent articles about the Affordable Care Act.
8. AANLCP 2016 Annual Conference - February 5-8 in San Antonio. The increasing number, importance and roles of life care planners represents one of the most significant developments S2KM has observed while attending recent structured settlement and settlement planning stakeholder educational conferences. Life care planners predominate the membership of NAMSAP and have been featured speakers at other recent structured settlement and settlement planning stakeholder conferences. Multiple life care planners exhibit at American Association for Justice (AAJ) national conferences. The American Association of Nurse Life Care Planners (AANLCP) is one of two national associations of life care planners. During 2014, S2KM published an interview with nurse life care planner Wendie Howland. Patrick Hindert's article "How the Affordable Care Act Impacts Life Care Planners" was featured in the 2014 Winter Issue of the AANLCP Journal.
9. AAJ 2016 Winter Conference - February 27 - March 1 - Boca Raton, FL. The American Association for Justice (AAJ, formerly ATLA) "is the world's largest trial bar" whose mission includes supporting "the work of attorneys in their efforts to insure that any person who is injured by the misconduct or negligence of others can obtain justice in America's courtrooms ..." Plaintiff attorneys, however, also perform essential settlement planning roles which include recommending appropriate product and service providers to their clients. As one result, plaintiff attorneys represent the primary marketing target for companies and professionals offering settlement planning products and services - as well as a logical priority marketing target for growing the structured settlement market. Multiple companies offering structured settlement, lien resolution, MSA compliance, life care planning, legal finance and economic consulting services were among the 141 sponsors and exhibitors at the AAJ 2014 Annual Meeting. NSSTA recently commissioned a Plaintiff Attorney Structured Settlement Survey.
10. ASNP 2016 Annual Conference - March 10-12 in Tucson, AZ. The Academy of Special Needs Planners (ASNP) and the Special Needs Alliance are both national associations of special needs attorneys most of whom are also members of NAELA and many of whom also increasingly specialize in personal injury settlement planning. ASNP recently opened its membership (with a vetting process) to non-legal (finance/insurance) professionals and also sponsored a 12-part Settlement Planning Webinar Series. Unlike educational programs sponsored by NAELA and SNA, ASNP's annual conferences are open to non-members. For S2KM's most recent ASNP reporting, see: ASNP 2015 Annual Conference - which includes a comparison of settlement planning vs. special needs planning.
11. SSP 2016 Annual Conference - March 10-12 - Tucson, AZ. Society of Settlement Planners (SSP) members "work with the injured party to create a comprehensive and integrated settlement plan focused on meeting the needs of the claimant." They also "seek to elevate the profession of settlement planning by promoting ethical industry standards, providing education and certification and knowledge transfer among its members." For the first time, SSP's 2016 conference will feature joint educational sessions and social events with ASNP. For S2KM's most recent ASNP reporting, see: SSP 2015 Annual Conference Part 1 and Part 2.
12. NSSTA (April 6-8 in Palm Springs, FL), NAELA (April 7-9 in Denver) and AAJ (July 23-26 in Los Angeles) have also separately announced their 2016 Annual Meetings.

Evolve 2014 QSF Symposium

Despite unresolved issues, utilization of IRC 468B Qualified Settlement Funds (QSFs) in "single event" cases, as well as class action and mass tort cases, is expanding, and increasingly represents the preferred method for resolving complex personal injury claims, according to participants at the Third Annual QSF Symposium sponsored by Evolve Bank and Trust on November 14, 2014 in Memphis, Tennessee.

Various speakers estimated the number of QSF cases annually currently exceeds 2500, equally split between single event cases and class action/mass tort cases, increasing by 25% per year. This expansion has occurred as more settlement planning stakeholders learn about the advantages of QSFs - and despite single claimant QSF tax uncertainty.

Although Rev. Proc. 93-34 permits QSFs to make IRC 130 qualified assignments, and no tax authority exists prohibiting single claimant QSFs, structured settlement annuity providers currently refuse to accept single claimant QSFs which they broadly define to encompass claims by family members, plaintiff attorneys, lien holders and creditors.

Organized "to provide a forum for open dialogue that helps shape industry developments", the 2014 QSF Symposium completely avoided the single claimant controversy and focused instead on other important QSF and settlement planning issues.

Topics and Speakers

• Introduction and Welcome - Andrew Cook
• QSF Administrator Control Systems and Fraud Protection - Brian Berning
• QSF State Tax Issues - Mike May
• Tax Issues for Foreign Structured Settlement Assignment Companies - Jeremy Babener
• Calculating Settlement Awards - Chris Lordan
• QSF Settlement Planning Panel - Patrick Hindert (Moderator), Andrew Cook, Wendie Howland, Pi-Yi Mayo, Bryn Poland, Joseph Tombs.
• How New SEC Rules Impact QSF Money Market Fund Investments - John Rush.
• How Plaintiff Attorneys View QSFs - William Burns
• QSF Administrator Compensation Issues - Paige Balnum; Pi-Yi Mayo; Bryn Poland.
• QSF Attorney Fee Programs - Chris Shumate.

QSF Objectives and Benefits

In his legal treatise, "Qualified Settlement Funds and Section 468B", published in 2009, Robert Wood explains QSFs as follows: "Their primary objective is to gather and administer cash or assets and determine the amounts and exact nature of payments that the plaintiffs, attorneys, and other claimants will receive..... QSFs benefit both plaintiffs and defendants alike. They are separate entities for federal income tax purposes and are flexible and easy to establish."

Section 3.08B of "Structured Settlements and Periodic Payment Judgments" (S2P2J) summarizes the benefits of QSFs in more detail: "defendants obtain a binding release from liability by making a currently-deductible payment into a court or government-approved Fund; while claimants, who have no tax consequence as a result of this payment into a Fund, are then afforded as much time as they need to sort out important issues of their own, such as allocating settlement shares, obtaining court approvals for minors or other legally-disabled claimants, resolving liens (which sometimes involve complex pay-back and set-aside issues as to Medicaid and Medicare), and deciding on forms of distribution (whether cash, structured settlements, or special needs trusts that may be used to preserve eligibility for certain government benefits)."

QSFs reconfigure the traditional (ready; shoot; aim) settlement planning process:

1. Needs assessment
2. Design
3. Negotiation
4. Implementation
5. Monitoring

so that needs assessment and settlement design follow the negotiation (and funding) steps rather than precede them.

Highlighted Issues

• QSF Administrator - The QSF Symposium emphasized the important role of the QSF administrator as well as the services he or she may provide and/or require including: investment, expense and distribution management; tax reporting and filing; legal and regulatory compliance; and fraud control. The QSF administer appears best positioned to quarterback the QSF settlement planning team. An apparent need exists for more (and better qualified) QSF administrators.
• Life Care Planners and Case Managers - Life care planners and case managers are frequently overlooked in traditional settlement planning. Life care planners are rarely asked to revise their pre-trial and trial-focused life care plans to account for collateral sources or the actual amount of settlement funding. Case managers (who are separately certified) increasingly are retained to "monitor" settlement plans by providing post-settlement medical advice and services for serious personal injury victims.
• Compensation Issues - For QSFs to achieve their potential improvements for single event settlement planning, multiple compensation issues must still be addressed and resolved:
  • Administrators - The QSF Symposium devoted one of its panels to administrator compensation issues, including: who pays their fee? what fee is appropriate for what services? and how should the fee be calculated (flat fee; per claimant fee; or fee based on QSF earnings)? Complicating these issues, many attorney QSF administrators play multiple roles (trustee; administrator) in addition to drafting QSF documents and making court appearances.
  • Structured settlement brokers - In many single event QSFs, the plaintiff structured settlement broker plays key roles: 1) selecting and paying the QSF administrator; 2) performing "value added" settlement planning services as part of his/her contingent commission compensation. Not only do these arrangements create potential conflicts of interest ("needs based" selling determined by the needs of the broker and administrator), they also increase a broker's risk of loss in the the event of an unsuccessful structured settlement sale.
  • Additional compensation issues arise when: 1) a case settles with no allowance for QSF expenses; 2) a case involves minors or incompetents requiring a guardian and court to approve QSF expenses; and also because 3) in the current low interest rate environment, QSF fees often exceed investment yields. Although not discussed during the Symposium, defense structured settlement brokers have opposed QSFs fearing a reduction or the elimination of their contingent commission compensation.
• Tax topics - The QSF Symposium featured three tax topics:
  • State taxation - State taxation of QSFs is inconsistent with little guidance. Many states have not yet addressed QSF taxation. Potential penalties exist for failure to file including interest on any unpaid liability without any statute of limitations. QSF administrators are advised to follow a two step analysis: 1) can a specific state tax a QSF based upon the situs of the court or the administrator or the bank where funds are deposited? 2) assuming a filing obligation exists, how will a state tax a QSF - as a corporation or a trust?
  • Foreign structured settlement assignment companies - Potential tax issues exist for defendants, plaintiffs and the foreign assignment company. Can a defendant deduct its payment to a foreign assignment company? When does a plaintiff receive payments for tax purposes and what is the character of those payments? Does the foreign assignment company recognize income when it receives an assignment payment? If yes, will it be considered active or passive income or does a treaty override exist?
  • Structured attorney fees - When properly arranged, structured attorney fees allow a contingently-compensated attorney to defer portions of his or her compensation and pay tax upon receipt regardless of the type of case or whether the client receives a lump sum or periodic payments.
• Education issues - Single event QSF education is needed for plaintiff attorneys and judges who are still unfamiliar with the QSF concept. Among the most likely education providers are special needs attorneys who serve as QSF administrators or trustees and structured settlement brokers. In addition to litigating attorneys and judges, QSF educational targets should include other settlement planning stakeholders such as: liability insurers; settlement trustees, guardians; mediators; and life care planners.

Conclusion - Evolve's QSF Symposium offers a valuable and unique addition to the growing number of personal injury settlement planning conferences and educational resources. When Robert Wood's QSF legal treatise was published in 2009, he acknowledged his analysis "clearly enters unchartered ground". Congratulations to Chairman Andy Cook and Evolve Bank and Trust for helping to survey this unchartered QSF terrain by sponsoring an educational event specifically designed to promote discussion and exchange of ideas about QSF issues, standards and best practices.

For S2KM's complete coverage of 2014 structured settlement and settlement planning conferences, see the structured settlement wiki.

Fall 2014 Educational Resources

During this transitional era for both settlement planning and the primary and secondary structured settlement markets, participating professionals are fortunate to have multiple educational opportunities this Fall to update and expand their knowledge.

Conferences

• Stetson SNT Conference - October 15-17 in St. Petersburg, Florida.
• AANLCP Annual Conference - October 24-27 in Atlanta.
• NSSTA Fall Meeting - October 28-30 - La Jolla, California.
• NASP Annual Conference - November 4-6 in San Antonio, Texas.
• Evolve QSF Symposium - November 13-14 in Memphis.

Webinar - ASNP's 12-part Settlement Planning webinar series beginning October 1 and ending March 18, 2015.

Certification Program - NSSTA's 2014 Certified Structured Settlement Consultant (CSSC) Professional Certification Program - October 15-19 at the University of Notre Dame.

ACA Seminar - NBI's Affordable Care Act (ACA): Impact on Injury Settlements seminar - offered in multiple cities on alternative dates.

Journals

• NAELA Journal Fall 2014 - focuses on Guardianship issues.
• AANLCP Journal Fall 2014 - includes a survey and study of nurse life care planner roles.

Book Update - Release 56 of "Structured Settlements and Periodic Payment Judgments" (S2P2J) will be published latter this Fall.

S2KM will provide subsequent blog reports summarizing many of these programs and written materials.

For past S2KM reporting about professional educational conferences, see the structured settlement wiki.

QSF Symposium 2012 - 3

Writing publicly about conferences you have not personally attended can be dangerous and unprofessional. So also is quoting, and/or misquoting, portions of copyrighted presentations out of context - especially when you rely on unnamed sources for your material.

Professional protocols, however, have not prevented John Darer (in this blog post) from mischaracterizing my presentation at the QSF Symposium sponsored by Evolve Bank and Trust on September 27-28, 2012.

In his blog post, Darer falsely accuses me of highlighting the following "points" related to "[p]romises to pay periodic payments acquired in the secondary market":

• "No tax authority
• "No regulatory oversight
• "No credit/performance enhancements
• "No state ‘guarantee fund’ protection
• "No liquidity
• "Many risks associated with enforcing and monitoring receivables acquired through structured settlement payment rights ‘transfers’
• "An unrated (‘naked’) promise by delegee/obligor (i.e. ‘general unsecured creditor’)
• "Non-transferable"

I did no such thing.

The "points" John attributes to me did appear in the larger context of two copyrighted slides I presented and discussed at the QSF Symposium. They did not, however, apply to "promises to pay periodic payments acquired in the structured settlement market" - whatever that means. Nor did they apply generally to "structured settlement payment rights" purchased in the secondary market.

Instead, the "points" John has lifted (out of context and without proper attribution or permission) from two copyrighted slides refer to one specific type of transaction that might indirectly utilize structured settlement payment rights. And the purpose of the discussion, as I stated during my presentation, was to highlight issues that need to be addressed before this specific type of transaction will satisfy marketplace due diligence.

Of course, John actually would have had to attend the QSF Symposium - and to have heard my presentation - to understand these nuances.

Concerning this same presentation John did not actually attend, he also writes: "This represents one of the few occasions in over 8 years that Hindert has highlighted anything substantially negative associated with structured settlement transfers or investing in structured settlement payment rights."

Having previously addressed this canard about S2KM's biased reporting, I refer readers, including John, to this blog post for S2KM's response.

For additional S2KM reporting about the QSF Symposium, see the structured settlement wiki.

Patrick Hindert, Author

"Beyond Structured Settlements"

QSF Symposium 2012 - 2

Will Qualified Settlement Funds (QSFs) eventually replace structured settlements as the standard business model for resolving complex personal injury claims?

QSFs already represent the standard resolution technique for class action lawsuits - and provide advantages for both defendants and plaintiffs:

• Defendants not only obtain an immediate tax deduction and release, they also can reduce their settlement planning costs and risks.
• Plaintiffs can conduct their settlement planning with a sum certain, using their own advisers, free from the pressures of litigation, with unlimited time to analyze and address tax, investment and government benefit issues.
• QSFs can also be utilized to purchase tax-free structured settlements without any direct involvement by defendants.

The only opponents of QSFs, for becoming the settlement planning standard for all complex personal injury cases, appear to be advocates for the traditional claim management structured settlement business model. These advocates include liability insurers who attempt to direct claim dollars to their affiliate life companies and defense brokers who fear the loss or reduction of their annuity commissions.

Together, with political support from the National Structured Settlement Trade Association (NSSTA), these QSF opponents have spent hundreds of thousands of dollars attempting to limit both the scope of QSFs and the expanded utilization of QSFs. Maintaining that structured settlements are best created when both plaintiffs and defendants actively participate, the QSF opponents argue that broad approval of single-claimant 468B funds would undermine and diminish the use of structured settlements.

To sustain their argument, QSF opponents have organized and promoted a marketing and lobbying strategy that:

• Ignores the IRC section 468B regulations that 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)
• Expands their own definition of single claimant to encompass multiple single event claims by family members, their attorneys and lien holders including Medicare and Medicaid.
• Promises defendants questionable structured settlement advantages (e.g. cost savings in a low-interest rate environment) without fully informing defendants of their potential costs and risks using traditional structured settlement business practices.

Fortunately for defendants and plaintiffs, utilization of QSFs (including single claimant QSFs) appears to be expanding as more settlement planning stakeholders learn about the advantages of QSFs and the professional QSF community of practice continues to grow.

That conclusion was S2KM's most important take away from the first QSF Symposium sponsored by Evolve Bank and Trust in Memphis, Tennessee on September 27-28, 2012.

Organized to stimulate dialogue among QSF industry leaders and experts and to help shape industry thinking on QSF issues, the first QSF Symposium was restricted the 20 participants and included the following 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.

The first QSF Symposium provided several benefits in addition to the presentations:

• Networking with QSF experts and hearing multiple QSF professional perspectives.
• Detailed discussions focused on a single (QSF-only) settlement planning topic.
• Open dialogue that encouraged entrepreneurial and collaborative "out-of-the box" thinking.
• Meeting Evolve's officers, shareholders and technology providers.
• Learning how a bank views settlement planning, settlement trusts and QSFs.

For additional 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"

For additional S2KM analysis of the structured settlement and settlement planning markets, see the structured settlement wiki.

QSF Symposium 2012 - 1

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":

1. Claimants must agree in writing to the assumption by a IRC 130 qualified assignee of the QSF's obligation to make periodic payments.
2. Each qualified assignment must relate to a claim “on account of personal injury or sickness (in a case involving physical injury or sickness)”.
3. Each qualified funding asset purchased by each qualified assignee must relate to a liability to make periodic payments for damages to a single claimant.
4. No qualified assignee can be “related” to the QSF.
5. No qualified assignee can be controlled by nor control, directly or indirectly, the QSF.
6. 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"