A construction worker from Queens falls from a scaffold. After a long legal battle, his attorney secures a seven-figure settlement. The check clears. For the first time in months, his family can breathe. The immediate medical bills are covered. But a new reality sets in—this money is not a windfall. It is a recovery meant to last a lifetime, replace lost income, and pay for future care. The question shifts from winning the case to protecting the award for the rest of their lives.
Over my career, I have seen families receive life-altering settlements only to find the funds subject to new and unexpected risks. A financial recovery meant for security can be lost to creditors, mismanaged, or become a source of conflict if not properly structured. A personal injury attorney’s work is to secure the award. Our work is to ensure it becomes a stable foundation for your family’s future.
Your Settlement is a Critical Estate Asset
When you receive a settlement, it is easy to view it as a simple cash deposit. Legally, it becomes a major asset within your estate, and it behaves like any other. It is subject to claims, can impact eligibility for certain benefits, and will be part of the legacy you one day leave behind.
Without a formal plan, these funds are exposed. They can be targeted in an unrelated lawsuit or a divorce proceeding. If the injury requires long-term care, holding a large cash sum in your own name could disqualify you from means-tested government benefits like Medicaid. This forces you to spend down the settlement on medical costs that public benefits would have otherwise covered. The recovery meant to enhance your life is instead consumed by basic expenses. Stewardship of these funds is an absolute necessity.
Using Trusts as a Shield and a Vehicle
The most effective tool for protecting a personal injury award is a trust. A trust creates a legal distinction between you, personally, and the settlement funds. Instead of holding the money directly, a trustee—a person or institution you choose—manages the funds on your behalf according to the rules you establish.
For those who rely on government benefits, a Supplemental Needs Trust (SNT) is the correct instrument. Governed by New York’s Estates, Powers and Trusts Law—specifically EPTL § 7-1.12—an SNT holds settlement funds in a way that allows the beneficiary to receive support from the trust without jeopardizing eligibility for programs like Medicaid or Supplemental Security Income. The trust can pay for things that enhance quality of life—like accessible transportation, home modifications, or education—while public benefits cover core medical and living expenses.
For others, an asset protection trust may be more appropriate. By placing the settlement in an irrevocable trust, you can shield it from future creditors and legal judgments. This is not about evading current obligations. It is about prudently walling off the funds meant for your lifelong care from future, unforeseen risks.
Integrating the Award into Your Legacy
A significant settlement does not just impact your life; it reshapes your family’s financial future. It requires a deliberate update to your entire estate plan. Your will or living trust must be reviewed to account for this new asset, ensuring it is distributed according to your wishes and not left to the default rules of the state.
Choosing a trustee becomes one of the most important decisions you will make. This individual or corporate entity has a fiduciary duty to manage the funds responsibly and solely in your interest. They will be the custodian of your financial security. Who has the financial acumen and integrity to handle that responsibility? Who can make impartial decisions under pressure? Answering these questions is central to building a plan that lasts.
Without this intentional planning, a settlement intended to provide security for one generation can be quickly exhausted. With a plan, it can become a source of generational stability—a true legacy.
If you or a family member expects a significant personal injury settlement, the first step is to plan for its integration into your estate. Before the award is finalized, we can schedule a confidential session to review the structures available to protect it for your lifetime and beyond.
