What Is a Qualified Settlement Account

  • Oct 14, 2022

If you have a lawsuit that has been ongoing for some time, your attorney may come to you and say that the other party is willing to settle the case. Still, they want the money placed into a qualified settlement account, also referred to as a qualified settlement fund (QSF).

Most people are unfamiliar with this type of fund and may ask how it benefits them and why the case would settle this way.

Here at Falcon Law Group, an estate planning attorney in New Jersey, we are committed to helping with a wide array of lawsuits and settlements. Feel free to get in touch if you have questions about qualified settlement planning and funding.

Qualified Settlement Account

A qualified settlement account is where the money for a settlement is placed. There are several reasons why money can be placed into these accounts.

First, the money may be placed into a qualified settlement account if the lawsuit was a class action lawsuit. The money is placed into this type of account until it can be disbursed to all claimants, giving lawyers time to determine which claimants are entitled to what money and then disperse the money accordingly.

A qualified settlement account may also be used if there are concerns the party may not have the money to pay the lawsuit. If the terms of a settlement are reached but not yet signed by a judge, your attorney may request the money be placed into a QSF until a judge signs, ensuring the money is there once the case has been settled.

Lastly, a qualified settlement account may be used if the defendant is under 18 or is otherwise incapacitated in some way. The money is placed into a fund that can be accessed once the individual has recovered or reached adulthood.

Some claimants also decide to place the money into a QSF because it gives them time to get their taxes in order and investment accounts ready for such a large sum of money.

Many different case types can have awards that go into qualified settlement accounts. It includes car accident cases, product liability cases, slip and fall cases, wrongful death cases, truck accident cases, and medical malpractice lawsuits.

Benefits of a Qualified Settlement Account

benefits of a qualified settlement accountThe first benefit of using a qualified settlement account is that the money is held safely. Whether the money is sitting to be disbursed or waiting to place such a large sum of money and what the tax implications are, you and your attorney know that the money is sitting somewhere safe. It gives attorneys and claimants time to process after a settlement has been reached.

Another benefit associated with a qualified settlement fund is that the money is placed in an interest-bearing account. It means that the money in the account is making you money as it sits there. As such, it is not just sitting there idly.

One of the lesser-known benefits of a settlement fund is that the money is tax-free. You are not taxed on the money as long as it sits in the fund. It gives you time to talk to an estate planning attorney in New Jersey.

You can devise the best strategy to maximize the money without heavily taxing it. It can be a huge benefit, especially if you receive a large settlement that may otherwise be heavily taxed.

Seek Legal Help for Qualified Settlement Account

Here at Falcon Law Group, we are a team of estate litigation lawyers in New Jersey and special needs settlement planning attorneys.

If offered a QSF for a lawsuit, our team can help advise you on how this type of settlement works and how to make this type of settlement function for you. Call us today to begin the process of getting help with a qualified settlement account.

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