A construction worker from Queens falls from a scaffold, and after two years of litigation, he is awarded a seven-figure settlement. The money is meant to cover a lifetime of medical care and lost wages. But the moment it lands in his bank account, it becomes a target—for creditors, for opportunists, and for the kind of poor judgment that can follow a sudden financial windfall. The relief of winning the case is quickly replaced by the immense pressure of managing it.
At our firm, we have seen this scenario play out many times. The legal battle to win a personal injury award is only the first part of the story. The second—and arguably more critical—part is the stewardship of those funds. A settlement isn’t just money; it’s a replacement for a life that was altered, and it must be structured to last. Placing it into a standard savings account is often the worst possible decision.
From Windfall to Lasting Security
A personal injury settlement that arrives as a lump sum is fully exposed. It is vulnerable to claims in a future divorce, to creditors in a financial downturn, or to the simple erosion of undisciplined spending. The goal is to transform that award from a vulnerable pile of cash into a secure asset that can provide for a family’s generational needs.
Asset protection and estate planning are not abstract principles here—they are essential. For many of our clients, we establish an irrevocable trust to hold the settlement proceeds. By placing the funds in a properly structured trust, you are no longer the direct owner. Instead, a trustee—a person or institution you choose—manages the funds according to the rules you set forth. The money is for your benefit, but it is no longer within easy reach of those who might seek to take it.
This isn’t about hiding money. It’s about creating a disciplined, protective framework for a financial resource that has to replace decades of lost income or pay for ongoing medical needs. It is a deliberate act of prudence.
Preserving Benefits with a Supplemental Needs Trust
When an injury results in a permanent disability, the injured person may rely on government benefits like Medicaid and Supplemental Security Income (SSI). These programs are means-tested, meaning a person with assets above a certain threshold—typically just a few thousand dollars—is disqualified from receiving them.
A multi-million-dollar settlement would immediately terminate this vital support. The settlement money would then have to be spent down on medical care until the person was poor enough to qualify for benefits again. This is a catastrophic outcome. The law, however, provides a powerful contingency: the Supplemental Needs Trust (SNT).
Governed by New York’s Estates, Powers and Trusts Law (EPTL) § 7-1.12, an SNT is a specific type of trust designed to hold assets for a disabled individual without disqualifying them from their government benefits. The funds in the trust are not paid directly to the beneficiary. Instead, the trustee uses the money to pay for goods and services that improve the person’s quality of life—things like a handicap-accessible vehicle, physical therapy, education, or a home. The settlement supplements government aid; it doesn’t replace it.
When an Injury Claim Becomes a Legacy
Sometimes, the personal injury is fatal, and the legal action becomes a wrongful death claim. In these cases, any settlement or jury award does not go to the deceased. It flows into their estate, to be distributed by the executor.
If the person had a will, the settlement proceeds are distributed according to its terms. But if they died intestate—without a will—the funds are divided according to a rigid statutory formula, which may not reflect their wishes at all. The entire process is overseen by the New York Surrogate’s Court, which can be a slow and public affair.
A wrongful death settlement underscores the non-negotiable importance of having a will. Without one, you leave the distribution of your most significant assets, including a potential legal award, in the hands of the state. Your legacy is determined by statute, not by your own intentions.
Securing a personal injury settlement must begin before the final check is cut. Responsible planning is built on thinking through the “what if” scenarios. A settlement is a one-time opportunity to provide for a lifetime of need—it must be handled with the gravity it deserves.
If you or a family member is anticipating a significant settlement, the prudent next step is to schedule a confidential pre-settlement planning session. We can review the structure of the potential award and build the legal framework required to protect it for the years and decades to come.
