Asbestos trust funds explained

Why trusts exist

GAO, the investigative arm of Congress, explains that asbestos litigation grew out of millions of Americans' long exposure to asbestos at work. By 2011, about 100 companies had declared bankruptcy at least partly because of asbestos-related liability.

In 1994, Congress added section 524(g) to the federal bankruptcy code. GAO describes how it works: a company that reorganizes under Chapter 11 can create an asbestos personal injury trust and transfer assets to it. A court order called a channeling injunction then sends all present and future asbestos claims against that company to the trust instead of to court. The trust's job is to pay people who are sick now and people who will become sick later, fairly and outside the court system.

GAO reported that 60 trusts had been established since 1988. More have been created since that report; check with a lawyer for the current picture.

How a trust reviews a claim

GAO describes trusts as running a non-adversarial administrative process, meaning there is no judge or jury. Each trust has two key documents:

• a trust agreement, which sets up the trust, its trustees, and its oversight bodies, and
• trust distribution procedures (TDPs), which set out which diseases qualify, what evidence is needed, how claims are valued, how disputes are resolved, and what percentage of a claim's value the trust can pay.

In general, a trust will ask for:

1. Medical evidence of an asbestos-related disease, such as the pathology report for mesothelioma.
2. Exposure evidence: proof that the person worked with or around that company's products, or at a site where they were used, during certain years.

GAO notes that trusts prioritize more seriously ill claimants and include procedures for resolving disputes.

Why exposure details matter so much

Because each trust covers a specific company's products, the claim depends on showing exposure to those products. That is why job sites, years, and brand names matter. Lawyers who handle these claims often keep records of which products were used at particular ships, plants, and job sites, which can fill in gaps in a person's memory.

Payment percentages

Most trusts do not have enough money to pay every claim in full. TDPs set a payment percentage, a fraction of a claim's scheduled value that the trust actually pays, and trusts can revise it. We do not publish payment amounts or averages, because they vary by trust and change over time.

Oversight

GAO found that trusts operate without direct judicial or federal government oversight, although they generally file annual financial reports with the bankruptcy court that oversaw the case, under the terms of their trust agreements.

How trusts fit with other claims

A trust claim is one of several possible paths. Others include lawsuits against companies still in business, VA benefits for veterans, and workers' compensation. They can often be pursued together, but each has its own rules and deadlines. See filing a claim for an overview, or send a question through our trust fund question form.