Qualified Settlement Fund (QSF)

A Qualified Settlement Fund (QSF) is a court-supervised escrow entity established under IRC Section 468B that allows a defendant to transfer settlement proceeds before individual plaintiff allocations are finalized, extinguishing the defendant's liability at the time of deposit. In mass tort litigation, QSFs are commonly used to hold aggregate settlement funds while the plaintiff law firm and any appointed allocation counsel work through individual claimant valuations, lien resolution, and disbursement logistics across potentially thousands of clients. The structure gives defendants a clean exit and gives plaintiff firms the administrative runway needed to complete lien negotiation—particularly with Medicare, Medicaid, and private insurers—without delaying the defendant's tax treatment of the payment.