by Structured Settlement Watchdog
QSF fans and curious onlookers should stay tuned to the unfolding events in Wyoming. The situation was kindled in 2023, then sparked by an intellectual property dispute earlier this year, has generated plenty of buzz and controversy. But as the lyrics to the old song go “You Can’t Judge a Book By Looking at The Cover”**. It just might cost you. 
Continuing Jurisdiction in Connection with Qualified Settlement Funds (QSFs)
Under the regulations, approval of the QSF is conditional upon the fund being under the governmental authority’s continuing jurisdiction to oversee operations and ensure compliance with the terms of the settlement agreement and relevant regulations.
[See Treasury 1-468B-1(c)], which states:
A fund, account or trust satisfies the requirements of this paragraph (c) if— (1) 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.
This ongoing oversight ensures proper management and distribution of the fund’s assets.
Continuing jurisdiction doesn’t necessarily mean constant, direct involvement but rather a standing authority to step in if needed to address issues or concerns related to the QSF’s administration and distribution. The fund’s administrator must grant the governmental authority access to reports, tax filings, payment records, and other relevant documents, along with audit rights as necessary.
What are the Consequences if a QSF Administrator does not meet the Conditions?
If these conditions are not met—whether through willful misconduct or gross negligence—the QSF would no longer comply with § 468B as of the date of noncompliance. As a result, the fund could lose its qualified status and thereby trigger actual income recognition by the claimants, among other consequences to the annuity issuers and qualified assignment companies. Who is going to pay then?
Lawyers for injured parties should be mindful of the paragraph in ALL qualified assignments which permits the qualified assignment company to UNWIND the qualified assignment if IRC 130(c) is not satisfied. How can a qualified assignment be valid if the qualified settlement fund fails to meet its requirements to exist as a qualfied settlement fund?
A reasonable expectation would be for a person to exercise a great deal of caution before proceeding down a road that leads to the above. But there’s more.
What is Dillon’s Rule?
Dillon’s Rule is a legal principle that limits the powers of local governments, including town courts, to only those explicitly granted by the state, necessarily implied by those grants, or essential to the municipality’s purpose. Any doubt about a power’s existence is resolved against the local government.
Who Really Runs Your Town: The Hidden Rules That Control Local Government | GovFacts
Wyoming is a Dillon’s Rule State
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Violations of municipal ordinances (e.g., local traffic rules, noise complaints, or zoning infractions).
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Certain state misdemeanors, such as minor traffic offenses, petty theft, or simple assault if adopted by the municipality.
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Civil matters like small claims or forfeitures, but only up to specified limits (e.g., fines not exceeding $750 for most violations, or up to 6 months imprisonment for misdemeanors).
Does Wyoming’s adherence to Dillon’s Rule mean that towns like Lovell, Glenrock and others “can’t assume powers not expressly delegated”?
How about a Wyoming town delegating a power, that may not be “expressly granted by the state of Wyoming”, to a third party, say perhaps the power to enter into a qualified assignment?
** You Can’t Judge a Book by the Cover” (alternatively “You Can’t Judge a Book by Its Cover“) is a 1962 song by rock and roll pioneer Bo Diddley. Written by Willie Dixon