Qualified Settlement Funds: An Essential Tool for Strategic Settlement Planning
When settlements involve multiple plaintiffs, outstanding liens, or complicated financial circumstances, law firms need a reliable structure to manage the process efficiently. A Qualified Settlement Fund (QSF) offers just that: flexibility, control, and tax advantages that simplify post-settlement logistics for both plaintiffs and attorneys.
At Mirena and Company, we provide comprehensive QSF administration and settlement planning services to help firms and families resolve cases with clarity and confidence.
What Is a Qualified Settlement Fund?
A QSF, also referred to as a 468B Trust, is a court-approved trust or account designed to hold settlement proceeds from litigation until funds are ready to be distributed.
The defendant pays settlement dollars into the QSF in exchange for a full release of all claims. Once established, the QSF assumes responsibility for managing and disbursing the funds, giving law firms and claimants time and flexibility to make informed decisions.
How Does a QSF Work?
Court Approval: The QSF is created by court order and governed under IRS regulations (26 C.F.R. §1.468B-1).
Defendant Funding: Defendants fund the QSF, and once payment is made, they are dismissed from the case with prejudice.
Administration: The QSF administrator manages the funds, resolves liens, and oversees disbursements.
Distribution: Claimants receive their allocations once liens are cleared and settlement structures are finalized.
This structure removes pressure to rush distributions and ensures each party’s needs are addressed properly.
Benefits of Using a QSF
Qualified Settlement Funds provide a wide range of advantages:
Immediate Tax Deduction for Defendants
Defendants can take a tax deduction for their payment as soon as the QSF is funded.Tax Planning for Attorneys and Claimants
Attorneys can defer fees, and plaintiffs can structure settlements to reduce tax burdens and align with long-term financial goals.Simplified Administration
A professional QSF administrator streamlines the process, reducing compliance risks and saving law firms valuable time.Lien Resolution and Flexibility
Extra time within the QSF allows for the proper resolution of liens, bankruptcies, or probate issues before funds are distributed.
Fair and Timely Distribution
Claimants with no outstanding issues can be paid immediately, while others can wait until liens or disputes are resolved.
QSF Services from Mirena and Company
Our team provides end-to-end administration and support for Qualified Settlement Funds, including:
Establishing and administering QSFs (including mini- or sub-QSFs)
Preparing all required court orders and motions
Obtaining a QSF Tax ID and setting up certified FDIC-insured bank accounts
Managing lien payments and issuing settlement disbursements
Coordinating structured settlement consultations
Direct funding of structured settlements and Special Needs Trusts
Monthly accounting, reporting, and fraud protection measures
Filing QSF tax returns and issuing IRS Form 1099
Each settlement is unique, and we tailor our services to meet the specific needs of your firm and your clients.
Take the Next Step
If your firm is navigating complex settlements, a Qualified Settlement Fund could provide the flexibility and tax advantages you need.
Disclaimer: This article is for informational purposes only and does not constitute legal or tax advice. Please consult a qualified professional before taking any action.
About Mirena and Company:
We are a nationally recognized advisory firm helping plaintiff attorneys and their clients maximize recoveries through strategic tax planning, litigation finance expertise, and operational insights.