UFS has extensive experience and expertise in the use of 468(b) trusts. A 468(b) trust is created by court order and is used to facilitate the creation of a qualified settlement fund (QSF). This mechanism is used to help resolve complex cases were issues such as lien resolution, allocation and investment decisions have not been finalized. It allows the plaintiff attorney to completely remove the defendant from the process as these issues are handled. In the interim, the funds from the settlement are in a trust account earning interest that will ultimately benefit the plaintiff.
Alternatively, in these cases, if the attorney were to receive the agreed upon funds and put those in a client trust account, the client would be charged with constructive receipt. This would in turn forfeit the favored tax treatment available under a structured settlement. By utilizing a separate entity (the 468(b) trust) to receive funds from a settlement, a QSF prevents the client from being charged with constructive receipt. At the same time, it enables the court and attorney to control the structuring of any settlement and to seek the most favorable terms.
UFS can help attorneys determine early in the process whether a 468(b) trust is likely to come into play, and can help facilitate the process.