In many legal cases, there will be an eventual distribution of money from one party to the other. While some settlements can be just a few hundred dollars, the average class-action lawsuit payout tops $50 million. Whether it is a large cash settlement, or the tax-advantaged but complex Qualified Settlement Fund [QSF], ADM has the tools to simplify the management and administration of these funds for law firms of any size.
What is Settlement Fund Management?
Settlement funds are the sums of money paid by the defendants in a legal case that are to be distributed to the plaintiffs and their legal team. Some minor civil cases or injury cases may result in small settlements, and the management of these funds is relatively easy. However, in larger cases, like class-action suits or cases involving large corporations, the management of these funds can become complex.
A popular settlement tool is the Qualified Settlement Fund [QSF]. This type of fund provides tax benefits for both plaintiffs and defendants because it is classified as a trust. One key benefit is that defendants can deduct their costs in the year of transfer, while income for the plaintiffs can remain unrealized until distribution. However, to take advantage of all the benefits, the fund administrator must meet many regulatory requirements, including keeping the funds safe.
An FDIC member bank can be a safe place to store these funds, but the limitations on coverage at a single institution can create complications. With many settlements exceeding the $250k threshold, law firms managing these funds would need to shop around for multiple banks just to keep the full balance protected by the FDIC.
ADM Simplifies Safety for Settlement Fund Management
Our company, the American Deposit Management Co. [ADM], offers a suite of services to manage, protect and administer settlement funds. First, our proprietary fintech provides liquidity and safety for your settlement fund, in addition to competitive returns. Next, our team has experience with everything from traditional financial cases to digitized gold claims. And lastly, our system for dispersal of claims includes the necessary fraud protections to make sure that the money is making it into the right hands.
We also simplify the complexity of QSF administration to ensure that both parties can reap the tax advantaged rewards of this structure. Our team ensures that legal compliance with governments and other regulatory bodies is met and that all the accounting work, like bookkeeping, tax reporting for 1099 issuances, and TIN registrations, is handled appropriately.
Additional Advantages of ADM Settlement Fund Management
At ADM, we offer unmatched benefits to fund administrators that set us apart from the competition. Our exclusive network of financial institutions provides nationally competitive rates, and if safety is a priority, we can provide access to extended FDIC / NCUA insurance to cover your needs. Beyond our highly competitive returns, the absence of branch and network fees with our service means that ADM costs less, adding further to your bottom line.
We also develop cash management strategies that focus on preserving principle while providing proper liquidity. That means that when it comes time for payout, ADM will have those funds and your returns available for a timely distribution. And last, but certainly not least, our greatest asset it our team.
Earn More, Risk Less™ with ADM.
At ADM, our team is our secret sauce, and we are always working hard to ensure your money is being managed efficiently. If you’re interested in the extended protection and the competitive returns for settlement funds, don’t hesitate to contact a member of our team today.
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