Checkbook Control Litigation Finance: QRP, SDIRA, Solo 401k, HSA

Your self-directed retirement accountCheckbook IRA, Checkbook 401k, QRP, Checkbook HSA, or Checkbook DB Plan – can invest in lawsuits and other legal actions. If you’d like to set-up a Litigation Finance IRA, Litigation Finance Solo 401k, Litigation Finance Defined Benefit Plan, Litigation Finance QRP, or Litigation Finance HSA – this page provides the instructions for doing so compliantly.

What is Litigation Finance?

Litigation finance, otherwise known as pre-settlement funding and legal finance, is one of the most rapidly growing sectors in finance.

  • Investors provide non-recourse cash-advances to plaintiffs in exchange for a portion of settlement proceeds.
  • Both commercial litigation finance and personal injury pre-settlement funding provide plaintiffs the ability to advance cases through the court system even when faced with well-capitalized adversaries.
  • Such advances are not loans, as investors are paid only from settlements or court awards.
  • Returns on this alternative investment class have been far superior to returns in the traditional market.
  • Use your CheckBook Retirement Account to level the playing field for plaintiffs pursuing justice against better-capitalized opponents – while earning tax free ROI on your investment.
  • Litigation finance is well-matched to self-directed retirement account investing as the amount of time to settlement of cases may not be predictable, requiring a longer-term investment.

Checkbook Litigation Finance Compliance

  • The investor is the Checkbook Retirement Account. All paperwork and documentation are done in the name of the investing entity, which may be your IRA-LLC, Solo 401k, QRP, HSA, or Defined Benefit Plan.
  • All expenses and revenue must flow through the Retirement Account. All investment-related expenses should be paid from retirement funds.
  • Be aware of prohibited transactions. Don’t purchase an interest in the lawsuits of family members that are disqualified persons as defined in Section 4975 of the Tax Code.
  • Be aware of UBIT, UBTI, UDFI: While this should not present an issue for purchasers of litigation finance portfolios, an awareness of UBIT considerations, tactics, & strategies is important for all tax-exempt investors. Depending on how the litigation finance investment is structured, UBIT may-or-may-not present itself.
  • Be aware of state laws that impact litigation finance. Litigation finance is a great investment in most states. A handful of jurisdictions may apply laws governing usury and champerty & maintenance to litigation finance agreements.