Qualified Settlement Fund

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Qualified Settlement Fund

A fund into which a defendant in a lawsuit may deposit assets to pay multiple plaintiffs. Under a qualified settlement fund, the plaintiffs may not have agreed how to distribute the assets among themselves, but they have agreed that the defendant has no further liability to pay beyond what is in the qualified settlement fund. This means that the defendant cannot be forced to pay any more to settle the claim with the plaintiffs. The amount the defendant puts into a qualified settlement fund is tax deductible. Qualified settlement funds are also called 468B settlement funds or 468b settlement trusts.
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To date, the company has paid approximately $200 million into qualified settlement funds pursuant to the terms of previously announced agreements.
Only the net amount of damages received from qualified settlement funds is included in gross income.
The large majority of securities and other class-action cases result in the establishment of a qualified settlement fund from which legal fees are paid directly.
Qualified settlement funds include the designated settlement fund plus liabilities under tort, environmental, breach-of-contract, violation-of-law, and other claims as designated by the IRS.
A qualified settlement fund (QSF) allows claimants to set up structured settlements without defendants' participation, so plaintiffs can receive the tax advantages of these settlements on terms, that best meet their needs.
July 12, 2011 /PRNewswire-USNewswire/ -- Due to the expansion of qualified settlement funds regulations, dispute resolution mechanisms have grown exponentially and a new BNA Tax and Accounting Portfolio, Qualified Settlement Funds and Section 468B, written by Robert Wood of Wood & Porter, considers all aspects of the QSF maintenance process and gives guidance through the complex policies.
lump-sum payout considerations, taxation issues, 468b qualified settlement funds, and mass-tort settlement issues.
IRS guidance: In a series of letter rulings, (16) the Service ruled that contingent attorneys' fees paid from qualified settlement funds, as defined by Sec.
pension plans and bankrupt estates) and (4) administrators of qualified settlement funds.
Qualified settlement funds are established under a governmental authority (but not necessarily under a court order) to resolve or satisfy a taxpayer's liabilities for certain claims arising out of environmental law; a tort, breach of contract or violation of laws; or designated in a revenue ruling or revenue procedure.
468B dealing with qualified settlement funds did not provide guidance for accounts and funds governed by Sec.
468B trust, also known as a qualified settlement fund (QSF), is often set up to be the repository of moneys in settlement of a case.

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