As early as possible. A PRT must be in place before the case is resolved, while the outcome is still contingent and doubtful — meaning the parties have not yet agreed to any binding settlement terms (verbally, by email, or in a binding mediation term sheet). The sooner the PRT is in place, the stronger the tax position: the case then resolves without the plaintiff ever having direct access to the recovery, avoiding what’s known as constructive receipt, which would eliminate the PRT’s tax benefit. Waiting until a settlement or judgment significantly increases that risk and should be avoided.

Yes. The portion of your claims that are tax-free (or for which an ATL deduction is available) stays with the portion of your claims that is subject to the plaintiff double tax. The PRT avoids the plaintiff double tax but does not affect the rest of your recovery. This is especially helpful when it isn’t yet clear which parts of your recovery will be taxable.

When it’s uncertain whether a recovery will be subject to the attorney fee double tax, using a PRT is still worth considering — it secures the tax benefit if the double tax ends up applying to some or all of the eventual recovery (for example, if a compensatory recovery turns out to include punitive damages). Where it is not yet clear whether a recovery will be subject to the attorney fee double tax, establishing the trust early preserves the option. If the double tax does not ultimately apply, the trust still operates and the plaintiff still receives the recovery, less the $5,000 per plaintiff minimum.

The PRT is irrevocable — it has to be, to deliver the tax benefit. Once a claim is contributed, it cannot be undone. This does not work against the plaintiff: they still receive the same recovery they would have received without the PRT, less the charitable contribution, but with substantially less tax if the recovery is subject to the attorney fee double tax. If the recovery turns out to be entirely tax-free or ATL-eligible, the plaintiff receives the full benefit they would have had without the PRT, less the $5,000 per plaintiff minimum.

The trust must remain genuinely independent from the plaintiff and follow certain procedures. That independence comes from having a trustee independent of the plaintiff and a second beneficiary (the charity). Without that independence, the plaintiff would be taxed on the entire recovery and could not deduct the attorney fees — meaning the double tax would still apply.

Forward Giving, Inc. (FGI), a 501(c)(3) charity, is the PRT trustee. As trustee, FGI is a fiduciary (i.e., legally obligated to act in the beneficiaries' best interests) for both beneficiaries — the plaintiff (or whomever they designate) as primary beneficiary, and itself as the charitable beneficiary. That independence is what allows the trust to deliver its tax benefit.

No. The attorney continues to represent the plaintiff and prosecute the case as before, except that the PRT is now a co-client. Case strategy does not change.

The PRT applies charitable trust and estate-planning principles that have been part of U.S. trust and tax law for decades — it is not a new concept, but an established framework adapted for the litigation context. A nationally recognized law firm has issued a formal tax opinion addressing PRT tax treatment, and the underlying problem it solves — the attorney fee double tax — has drawn growing attention from respected outlets, including Bloomberg Tax, Tax Notes Federal, and Finance Digest, especially since Pub. L. No. 119-21 (the One Big Beautiful Bill) made the disallowance of plaintiffs’ attorney fee deductions permanent in 2025. As with any sophisticated tax position, no IRS ruling has addressed the PRT by name, so it remains subject to IRS review — which is why a formal tax opinion is recommended, particularly for larger cases.

Yes. A qualified settlement fund (QSF) can provide additional time to finalize how a recovery is distributed, and a structured settlement allows further deferral of a recovery for an additional potential tax benefit. Both can be used in conjunction with a PRT. How a PRT interacts with a Qualified Settlement Fund or a structured settlement is fact-specific and should be reviewed for the particular matter before either is used together with a trust.

Yes. The PRT does not prohibit an attorney from entering into traditional or alternative fee arrangements, including a structured attorney fee.

Then nothing changes for the plaintiff. If the case does not produce a recovery, nothing is owed to the trust — the same outcome as if the claim had never been contributed. The PRT adds no cost in that situation.

As soon as practical after the trust receives and approves the recovery. In general, and subject to applicable banking rules and regulations, funds paid by wire from the defendant or its insurer are available within a day or two; payment by check is subject to a 10-business-day hold. All valid liens and statutory reimbursement obligations, including Medicare and Medicaid claims, are satisfied before distribution. For tax reasons, the distribution is made in the same year the PRT receives the recovery. In limited circumstances a plaintiff may request a distribution schedule other than a single payment; any delay may produce additional tax and reduce the amount ultimately received.

If the trust holds assets other than the contributed legal claim, income from those assets is generally split 90% to the plaintiff and 10% to Forward Giving, Inc., similar to other charitable trusts. Unless property beyond the legal claim is contributed, it is unlikely the trust will have any such income.

No. There is no charitable deduction for contributing a claim to a PRT. The benefit comes from how the income is recognized: the trust receives the recovery, pays the attorney fees, costs, any liens, and the required charitable contribution, then distributes the remaining amount to the plaintiff. The plaintiff is taxed on the distribution from the trust.

PRT income is reported on IRS Form K-1 (rather than the Form 1099 many plaintiffs are used to). A K-1 works much like a 1099 — it reports the income that is taxable to the recipient and provides other relevant information for their return.

PRT.tax and its service providers — including Eastern Point — do not provide legal or tax advice; we recommend working with a qualified professional advisor to decide whether a PRT is a fit. If you’re interested in a formal written tax opinion, we’re happy to connect you with a tax professional who can provide one at a reduced fee, assuming standard facts and circumstances. A tax opinion is optional, but it can be helpful in protecting against IRS underpayment penalties, especially in larger cases.