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Usually a voluntary arrangement to pay a lump sum and periodic payments
Full value of payments tax-free to physical injury plaintiff
Bridges gap in negotiating by offering tax-free benefits to fund life care plans, economist reports
Defense controls funding and form of offer, negotiation
Background on 468(B) Settlement Funds
Designed to permit defendants and their insurers in mass tort actions and other multiple plaintiff cases to fund (and take tax deductions for contributions to) “designated settlement funds” and “qualified settlement funds” (hereinafter collectively “468B Funds”) while the actions continue against other defendants or while the claimants determine an appropriate allocation method.
The guiding principles
Internal Revenue Code Sec. 468(B) – 1986
Associated Treasury Regulations – 1993
Revenue Procedure Ruling 93-94 (which had the effect of making structured settlements available to claimants to a 468B Fund)
The issue is whether the advantages of 468B Funds apply in a single-claimant case, or whether application is confined to the mass tort scenarios intended to be addressed.
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