This information on QSF’s is in addition to our page on Assignments. As a buyer of an existing payment stream, this info is not really relevant to your specific case, however the info is here for your general knowledge about the Structured Settlement Annuity marketplace.
A qualified settlement fund is sometimes referred to as a 468B fund or a QSF. This is a flexible tool that facilitates the settlement of a lawsuit and encourages the parties to settle. A QSF is often found in a class-action lawsuit but it can be used to settle a wide variety of suits.
A 468b QSF Fund is a trust authorized by Treasury Regulation 1.468B-1(c). Under these regulations, a QSF must:
- Be created by a court, and be subject to continuing court supervision;
- Resolve claims related to the subject of the lawsuit; and
- Qualify as a trust under state law.
A QSF or qualified settlement fund allows the losing party in a lawsuit, the defendant, to finalize litigation and to also receive immediate tax benefits. It also allows the winning party, or the plaintiffs, to gain immediate and flexible control of their funds.
When the QSF is created, the defendants put their share of the settlement into the fund. IRS regulations allow them to take a tax deduction immediately on the day of payment, and they are fully released from the litigation. Importantly, they cannot participate in the trust administration.
Once it is established, an independent, qualified trustee, who is often an accountant or a lawyer, is appointed to handle the trust. The trustee manages the funds, handles ongoing claim resolution, and works with the plaintiffs to determine the trust’s payout structure.
The trustee also assures strict compliance with the Treasury Regulation section 468b and other regulations: these specialized financial vehicles must have constant and careful oversight, and if they do not, the benefits of the qualified settlement fund may not be fully realized or may even be disallowed.
Utilizing the money in a QSF for asset allocation is flexible and may be structured to meet each plaintiff’s unique needs. Final lawsuit settlements can include cash, annuities, trusts, and other forms of structured settlement.
QSF’s are often the vehicles that purchase annuities from top-rated carriers to fund future payment obligations of the plaintiffs. The plaintiffs become payees under the annuity, and because people circumstances change, sometimes they wish to sell their future payment streams for cash today. That is where you come in, as the buyer of a secondary market annuity.
Be sure to sign up to this website to see the world’s largest available inventory of Secondary Market Annuities and protect yourself or your clients with the best buyer focused purchase process in the industry.