Information to Insurance Companies and their Attorneys

Why Do Insurance Carriers and Defendants Favor it?

Qualified Settlement Funds can allow a defendant to pay its policy limits or negotiate a settlement while other defendants remain in litigation. It gives the defendant a simple and complete release in multi party litigation.

 

What Steps Must be Taken to set up a Qualified Settlement Fund?

The plaintiff or defense needs to have a simple release and check made payable to the (name of client) Qualified Settlement Fund.

One: A decision is made to set up a Qualified Settlement Fund. The administrator and an agency bank account is established.

Two: A petition, order and Qualified Settlement Fund are presented to a governmental entity so that the entity establishes the fund.

Three: Upon settlement of a claim, the defendant pays a lump sum to the fund in return for a release and discharge of the claim. While all other matters are being decided, the lump sum earns interest while it is in the trust.

Four: While the claim is being negotiated and settled, the administrator sets up a tax identification number for the fund.

Five: Once the settlement and allocation is agreed upon, the administrator gets court approval for minors and incompetents, arranges for payment of the attorneys and expenses, then meets with the claimants to discuss options such as structured settlements, special needs trusts, preserving government benefits and investments.

Six: Once all the financial decisions are decided and implemented, the administrator gets court approvals for the minors and incompetents, executes settlement agreements between the parties and the fund, prepares a tax return and closes the fund.

Is a Qualified Settlement Fund Right for Your Clients?
January, 2002 Trial Magazine