Disability Law

IRC Section 468B Funds Revisited

By Patrick Hindert

S2KM previously has published online learning resources about Internal Revenue Code Section 468B Funds:

• S2KM Blog Posts
  • Definitions of Designated Settlement Funds (DSF) and Qualified Settlement Funds (QSF);
  • Single Claimant 468B Funds
  • Robert Wood Podcast
  • SSP Annual Meetings featuring 468B discussions:
    • 2008 SSP Annual Meeting
    • 2006 SSP Annual Meeting
• S2KM Wikis
  • Structured Settlement Wiki
  • Structured Settlement Public Policy Wiki

In addition, hardcopy legal textbook "Structured Settlements and Periodic Payment Judgments" (Table of Contents), co-authored by Daniel Hindert, Joseph Dehner and Patrick Hindert, S2KM's blog author, features Section 3.08B titled "Section 468B Settlement Funds".

Because of the strategic importance of IRC 468B for the structured settlement and settlement planning industries, S2KM will revisit 468B Funds during 2008. As a preliminary focus, John J. Campbell, a leading elder law and special needs attorney, has published a new article titled "The Use of Qualified Settlement Funds, Qualified Assignments and Special Needs Trusts in Physical Injury Settlements" in the most recent issue of the NAELA Journal .

The NAELA Journal is one of many valuable educational resources offered by the National Academy of Elder Law Attorneys (NAELA). Published twice a year, the NAELA Journal features scholarly legal articles many of which address topics of interest for settlement planners and structured settlement professionals. As an association policy, however, NAELA currently limits distribution of the NAELA Journal to NAELA members and law schools.  For additional S2KM blog posts about NAELA, see 2008 NAELA Symposium.

In addition to Campbell's 468B article, the current NAELA Journal (Volume 4; 2008; Number 1) includes articles addressing:

• Monitoring guardianships
• Long-term care admissions contracts
• Transfer-on-death deeds
• Medicaid fair hearing decisions
• Psychology of mediation

Campbell is a frequent contributor to the NAELA Journal including earlier articles titled "Basic Strategies for SSI Planning" and "Preserving Public Benefits in Physical Injury Settlements: Special-Needs Trusts and Beyond". In 2007, Campbell was a featured presenter at the First Annual ASNP Conference. He spoke about the growing interaction between Medicaid and Medicare in personal injury settlements - creating the potential for what Campbell termed "Medicare Set-aside Special Needs Trusts".

Campbell's most recent NAELA Journal article highlights the complex interaction of IRC section 468B, IRC section 130 and 42 U.S.C.A section 1396p(d)(4)(A).

To better understand IRC 468B and evaluate Campbell article, S2KM recommends that settlement planners and structured settlement professionals also review online 468B legal analysis and commentary by Richard B. Risk, Jr and Robert W. Wood.

Risk's 2004 article, titled "A Case for the Urgent Need to Clarify Tax Treatment for a Qualified Settlement Fund Created for a Single Claimant", is a settlement planning classic. Risk's article was first published in the Virginia Tax Review and now appears on Risk's website. Risk's thesis: Congress did not intend for the judicial doctrine of economic benefit to apply to a DSF (Designated Settlement Fund) or a QSF (Qualified Settlement Fund) created for the benefit of a single claimant. Risk's article supports a June 19, 2003 letter written by partners at Skadden, Arps, Slate, Meagher & Flom to the Department of Treasury and Internal Revenue Service on behalf of the Society of Settlement Planners (SSP). Risk's article urges Treasury to issue favorable 468B guidance. Risk also moderates the tax panels at SSP's Annual Meetings (see links above) which feature and address 468B Funds.

Wood is the preeminent structured settlement and settlement planning tax attorney in the United States as well as a prolific tax writer and commentator. Wood's most recent 468B article titled "Electing Code Section 468B Trust Treatment for Lawyers Trust Accounts After Receiving Settlement Proceeds" appeared in the February-March 2008 issue of the Journal of Tax Practice and Procedure. Wood's online commentary about 468B Funds is accessible at:

• Wood and Porter website
• This S2KM blog post
• S2KM's structured settlement public policy wiki
• The Settlement Channel

Future S2KM blog posts will summarize and analyze John Campbell's NAELA article about 468B Funds.

Full post as published by Beyond Structured Settlements on June 07, 2008 (boomark / email).