A construction worker in Brooklyn falls from a scaffold. After two years of litigation, he receives a seven-figure settlement. His family breathes a sigh of relief, believing their financial worries are over. In my experience, this is often when the most significant challenges begin.
A personal injury award isn’t a lottery win. It is a calculated replacement for what was lost—a lifetime of earnings, the ability to live without pain, future medical needs. The settlement check represents a tremendous responsibility. It must last for decades, often for the remainder of a person’s life. Viewing it as a simple windfall is the first, and most critical, mistake a family can make.
The moment those funds land in a personal bank account, they are exposed. They can be reached by creditors, become marital property in a future divorce, or disqualify the injured person from essential government benefits like Medicaid or Supplemental Security Income (SSI). The stewardship of these funds requires a deliberate plan.
The Settlement as a Lifeline, Not a Luxury
When we represent families in this situation, our first conversation is about mindset. We shift the focus from the “win” to the work ahead. The personal injury attorney’s job was to secure the recovery. Our job is to build the vessel that will carry it safely through the years.
Without a formal structure, a large sum of money can evaporate with surprising speed. It can also create unintended consequences. A well-meaning parent might use settlement funds to help a child, only to find they’ve accidentally disqualified that child from receiving financial aid for college. Or the recipient, overwhelmed by a large balance, might make imprudent financial decisions that deplete the funds meant for their long-term care.
The goal is not to lock the money away. It is to create an intentional framework for its use—one that honors its purpose. This framework keeps funds available for medical care, housing modifications, and daily needs while shielding them from threats and poor management.
Using Trusts to Preserve Your Award
The most powerful tool for protecting a settlement is a trust. A trust is a legal entity that holds assets on behalf of a beneficiary. Instead of the settlement being paid directly to the injured person, it is paid to the trust, which is managed by a person or institution called a trustee.
For personal injury recipients, the most critical type is often a Supplemental Needs Trust, sometimes called a Special Needs Trust (SNT). These are specifically designed to hold assets for a person with disabilities without compromising their eligibility for means-tested government programs. New York law is very clear on this. EPTL § 7-1.12 provides the statutory framework for these trusts, allowing them to supplement—not replace—the benefits provided by public assistance.
Here’s how it works in practice. The trustee can use the trust funds to pay for things government benefits do not cover: a wheelchair-accessible van, physical therapy, a home health aide, or even a vacation. Because the beneficiary does not own the assets directly, the funds are not counted when Medicaid or SSI assesses their financial eligibility. The trust acts as a protected source of funding to improve their quality of life.
Choosing a trustee is one of the most important decisions in this process. A trustee has a fiduciary duty—the highest standard of care under the law—to manage the assets prudently and in the beneficiary’s best interests. This can be a family member, but for large, complex settlements, a professional or corporate trustee is often a more prudent choice.
A Coordinated Plan for the Future
A trust is the cornerstone, but it is not the entire plan. The arrival of a significant settlement is a moment to review—or create—a complete estate plan.
This means drafting a will to direct where any remaining trust assets should go upon the beneficiary’s death. It requires appointing a Power of Attorney and a Health Care Proxy—naming trusted individuals to make financial and medical decisions if the injured person becomes unable to do so. For families with minor children, a guardian must be nominated.
These documents work together to create a contingency plan for every stage of life. The settlement is meant to provide security. A well-drafted estate plan makes that security endure, no matter what the future holds. It transforms a legal victory into a lasting legacy of care.
If you or a family member in New York is anticipating a significant settlement, the recovery of the funds is only the first step. The next is to preserve them. The prudent time to act is before the check is cut. We can schedule a consultation to review the specifics of your situation and discuss the design of a protective trust structure for the future.
