A construction worker from Queens falls from a scaffold. After months of litigation, he receives a seven-figure settlement. To his family, it feels like they’ve won the lottery—a sudden end to financial worry. But I have seen this story play out too many times. Without a deliberate plan, that money, meant to replace a lifetime of lost earnings and cover decades of care, can vanish in a few short years.
The moment a personal injury settlement is awarded is not an end. It is a beginning. It marks the start of a profound responsibility—the stewardship of resources that must last a lifetime, and perhaps for generations to come.
The Settlement Is Not a Lottery Ticket
When a client receives a significant award, my first piece of counsel is always the same: this is not a windfall. This is a replacement. It is a calculated sum intended to compensate for tangible and intangible losses—lost wages, future medical bills, permanent disability, and pain and suffering. Treating it like a sudden jackpot is the fastest path to financial ruin.
The temptations are immediate. New cars, expensive vacations, gifts to family and friends. But this capital has a job to do. It needs to be invested prudently, shielded from creditors, and structured to provide steady, long-term support. The mindset must shift from winning a case to preserving a legacy. This is the work of asset protection and estate planning.
When Wrongful Death Intersects with Estate Law
The connection between personal injury and estate law is most stark in wrongful death cases. When an accident is fatal, the legal action is not brought by the victim, but by their estate. Under New York’s Estates, Powers and Trusts Law (EPTL) § 5-4.1, the personal representative of the decedent’s estate—the executor or administrator—files the claim on behalf of the surviving family members.
The proceeds from a wrongful death settlement are then distributed to the decedent’s distributees, which usually means their spouse and children. But what if the children are minors? Without a trust in place, that money may be paid into a court-supervised guardianship account, a restrictive and often inefficient structure. A well-drafted will or trust could have established a more flexible framework, appointing a trusted individual to manage the funds for the children’s health, education, and welfare until they are mature enough to handle the inheritance themselves.
In these cases, the failure to plan does not just complicate matters—it can compromise the financial security of the very people the lawsuit was intended to protect.
The Trust: A Shield for Your Settlement
For both injury victims and their families, the most powerful tool for protecting settlement proceeds is a trust. A properly structured trust creates a legal shield around the assets, separating them from the individual’s personal finances and placing them under the management of a chosen trustee.
The type of trust depends on the circumstances:
- A Special Needs Trust is essential for an injured person who is or will be receiving needs-based government benefits like Medicaid or Supplemental Security Income (SSI). Placing the settlement in this type of trust allows them to receive the funds without disqualifying them from these vital programs.
- A Revocable Living Trust can be used for general asset management. It allows the recipient (the grantor) to control the funds during their lifetime, name a successor trustee to take over in case of incapacity, and designate beneficiaries who will inherit the remaining assets outside of the lengthy and public probate process in Surrogate’s Court.
In either case, the trustee has a fiduciary duty—the highest duty of care under the law—to manage the assets prudently and in the best interests of the beneficiary. This introduces a layer of professional oversight and discipline that is essential for long-term preservation.
The legal battle may be over, but the work of protecting your family’s future is just beginning. The discipline of estate planning provides the structure to ensure that a settlement fulfills its true purpose: providing lasting security for the people you love.
If you or a family member anticipates receiving a significant settlement, the most prudent step is to understand the tools available for its protection. We regularly provide a confidential asset protection review to outline how these funds can be structured to support your family for generations.
