A jury in Manhattan has just delivered a verdict. After a grueling civil trial, your family member has been awarded a substantial judgment for a personal assault they endured years ago. The first feeling is relief—a sense of justice finally served. But as the headlines fade, a new reality sets in. A large sum of money is coming, and with it, a host of questions that have nothing to do with the courtroom and everything to do with the future.
I’ve seen this scenario play out. The legal battle ends, but the responsibility of stewardship begins. A significant financial award, especially one born from trauma, is not like a lottery win. It carries weight. The core challenge is to transform this monetary award from a constant reminder of the past into a stable foundation for the future. This requires a deliberate, intentional plan.
The Verdict Is In. The Work Is Not Over.
Receiving a large, lump-sum settlement can create immediate and complex financial challenges. The first impulse might be to simply deposit it into a savings account, but that approach is rarely prudent. Without a proper structure, the funds can be exposed to future creditors, opportunistic claims, or simply mismanagement during a time of emotional vulnerability.
More pressingly, for many New Yorkers, a sudden influx of assets can jeopardize eligibility for critical means-tested government benefits like Medicaid or Supplemental Security Income (SSI). These programs have strict asset limits. A settlement intended to provide long-term care and security could, ironically, disqualify the recipient from the very programs they rely on for healthcare and basic support.
Beyond the practicalities, there is the human element. Managing a large portfolio is a demanding job, one that a survivor of trauma should not have to take on alone. A proper plan insulates them from the day-to-day burdens of financial management, allowing them to focus on their well-being.
A Trust as a Shield and a Vehicle for Stewardship
For these situations, a well-structured trust is the primary tool we use. A trust is not merely a legal document; it is a private, protective entity designed to hold and manage assets on behalf of a beneficiary. It creates a critical separation between the individual and the assets, which is the key to both protection and professional management.
The structure is straightforward. The person receiving the settlement—the grantor—places the funds into a trust. They appoint a trustee—a person or financial institution with a strict fiduciary duty to act in the best interests of the beneficiary. The beneficiary is, of course, the survivor themselves.
This arrangement accomplishes several things at once. First, the trustee handles the investments, the accounting, and the distributions. This provides a professional buffer, removing the burden from the beneficiary. Second, a properly drafted trust can contain what is known as a “spendthrift provision.” Under New York’s Estates, Powers and Trusts Law (EPTL) §7-1.5, this clause generally prevents creditors of the beneficiary from making a claim against the assets held in the trust. It builds a legal wall around the settlement, preserving it for its intended purpose.
Different Trusts for Different Contingencies
Not all trusts are the same. The right structure depends entirely on the individual’s circumstances, particularly their reliance on public benefits.
First-Party Special Needs Trust (SNT)
If the beneficiary is receiving or may ever need to receive benefits like Medicaid, an SNT is essential. This specific type of trust is authorized by federal law to hold a disabled individual’s own assets without counting against the resource limits of benefit programs. The funds in the SNT are used to pay for supplemental needs—things that government benefits do not cover—such as therapy, education, transportation, and quality-of-life improvements. It ensures the settlement enhances their life rather than disrupting their essential care.
Revocable or Irrevocable Trusts
If public benefits are not a concern, other types of trusts offer powerful advantages. A revocable trust provides for management by a chosen trustee and ensures the assets avoid the public process of Surrogate’s Court upon the beneficiary’s death. An irrevocable trust can offer an even higher level of asset protection from future claims. The choice between them is a matter of balancing control, protection, and long-term goals. In either case, the core function remains the same: to place the stewardship of the funds in capable, fiduciary hands.
The path to justice can be long and arduous. When it concludes with a financial award, the journey isn’t over. The final, critical step is to put a structure in place that honors the fight by protecting its outcome. It is an act of foresight that secures a future of stability and care.
If your family anticipates receiving a significant civil award, the prudent first step is to design the framework for managing it before the funds arrive. I invite you to schedule a confidential consultation with our firm to discuss a trust structure that can serve as a durable shield for the assets and a source of support for years to come.
