A construction worker falls from scaffolding in Queens. After a long fight, the case settles for a seven-figure sum. The family is relieved; their financial worries seem to be over. But two years later, the money is nearly gone—spent without a plan, lost to creditors, or disqualifying the injured person from necessary government benefits. The settlement, meant to provide a lifetime of security, instead created a new set of problems.
In my practice, I have seen this happen too many times. The focus of a personal injury case is almost always on winning the maximum compensation. And rightly so. But that is only half the battle. The other half—the part often overlooked—is the stewardship of those funds. A settlement isn’t a lottery ticket. It is a replacement for what was lost: future wages, the cost of a lifetime of medical care, and quality of life. It must be managed with intention and foresight.
What Happens After the Check Arrives
When a significant settlement is awarded, the first impulse is often relief, followed by a desire to fix immediate financial pressures. This is understandable. But without a structure in place, those funds are exposed. They can be reached by creditors, spent unwisely, and jeopardize eligibility for critical needs-based government programs like Medicaid and Supplemental Security Income (SSI).
The risk is acute for individuals requiring long-term medical care. Receiving a lump-sum settlement can instantly push their assets above the strict eligibility thresholds for these programs. Suddenly, a family is forced to pay for expensive care out-of-pocket, rapidly depleting the very funds meant to sustain them for decades. The settlement becomes a curse instead of a blessing.
The prudent approach is to treat the settlement as the foundational asset of a new, lifelong financial plan. This requires thinking less like a case winner and more like a custodian of your family’s future.
Structuring a Settlement for Generational Security
The law provides a tool for protecting settlement proceeds—the trust. By placing the funds into a properly structured trust, you insulate them from creditors and preserve eligibility for essential benefits. The most common vehicle for this is a Supplemental Needs Trust, or SNT.
Under New York Estates, Powers and Trusts Law (EPTL) § 7-1.12, an SNT is specifically designed to hold assets for a person with a severe and chronic disability. The funds in the trust are managed by a person you appoint—the trustee—who has a fiduciary duty to act in the beneficiary’s best interests. The money isn’t paid directly to the injured person. Instead, the trustee pays for goods and services that improve their quality of life—things government benefits do not cover. This can include specialized medical equipment, home modifications, therapy, and transportation.
Because the beneficiary doesn’t have direct control over the assets, the funds are not counted for Medicaid or SSI eligibility. This allows the settlement to serve its true purpose: supplementing care, not replacing it. It ensures the life raft remains intact for the entire journey ahead.
Contingency Planning During a Claim
We must also consider a difficult but necessary contingency: What happens if the injured person passes away before their claim is settled or paid? The personal injury claim does not simply disappear. It becomes an asset of their estate.
This means the authority to continue, settle, or abandon the lawsuit passes to the executor or administrator of the estate, who must be formally appointed by the Surrogate’s Court. If the person died without a will, the family must go through a lengthy and often costly administration proceeding just to get someone appointed to act. All the while, the personal injury case is in limbo.
Having a valid will that clearly names an executor removes this uncertainty. It empowers a trusted individual to step in quickly, act on behalf of the estate, and ensure the claim proceeds without unnecessary delay. This is a simple act of planning that can save a family immense stress and expense during an already difficult time.
A personal injury claim is more than just a lawsuit. It is a future asset that demands careful planning. Thinking about the structure for the proceeds is not something to do after the case is won—it is an integral part of securing your family’s future.
If you or a family member are involved in a claim that may result in a significant award, the first step is to understand how those funds should be managed. I invite you to schedule a confidential review with our firm to discuss the trust and estate planning structures that can protect your settlement and provide lasting security.
