What is a qualified settlement fund (QSF) and how is it created?

What is a qualified settlement fund (QSF) and how is it created?

The enactment of 26 U.S.C. § 468B created special rules for designated settlement funds, which the Secretary of the Treasury, through statutory and inherent authority, broadened in concept through the issuance of Treasury Regulations § 1.468B-1, creating the QSF to "resolve or satisfy one or more contested or uncontested claims that have resulted or may result from an event (or related series of events) that has occurred and that has given rise to at least one claim asserting liability...(ii) Arising out of a tort...." [26 C.F.R. § 1.468B-1(c)(2).]

The authority of the court to create and oversee the QSF is absolute:
"A fund, account, or trust satisfies the requirements of this paragraph (c) [defining a qualified settlement fund] if...it is established pursuant to an order of, or is approved by, the United States, any state (including the District of Columbia), territory, possession, or political subdivision thereof, or any agency or instrumentality (including a court of law) of any of the foregoing and is subject to the continuing jurisdiction of that governmental authority." [26 C.F.R. § 1.468B-1(c)(1).]