A few years ago, the wife of a Brooklyn construction worker came to my office. Her husband had survived a catastrophic fall, but his life—and their family’s—was permanently altered. Their personal injury attorney had done a remarkable job, securing a seven-figure settlement to cover a lifetime of medical care and lost income. But now they faced a new, paralyzing question: what do we do with the money? It had to last for decades, and they were terrified of mismanaging it. Even worse, they had just learned that the settlement itself could disqualify him from the very government benefits he relied on.
This is a situation I see often. The personal injury lawsuit concludes, and the family believes their fight is over. In reality, a new responsibility has just begun. A settlement or jury award is not a lottery win. It is a recovery—a calculated sum designed to replace what was taken. It is a tool for rebuilding a life. The work of the trial lawyer is to secure that tool; my work is to ensure it lasts a lifetime and beyond.
The Settlement Is Just the Beginning
When a significant sum of money enters a family’s life unexpectedly, the first impulse can be relief, followed quickly by uncertainty. The personal injury attorney’s role is to prove liability and quantify damages. My role as an estate planning attorney begins when that check is cut. We have to shift the thinking from winning a case to managing a legacy.
This money is not just an asset; it is a substitute for a person’s health, their ability to earn a living, and their future security. It must be treated with intention and discipline. We immediately begin asking the critical questions. Who will manage these funds if the injured person cannot? How will the money be invested for prudent, long-term growth? How do we protect it from creditors or future claims? And most importantly, how do we structure it so that it doesn’t prevent access to essential public assistance?
Answering these questions is the first step in converting a legal victory into lasting financial stability. Without a deliberate plan, a settlement meant to provide for 40 years of care can be exhausted in less than a decade.
Preserving Both Your Award and Your Benefits
Perhaps the most immediate challenge for many recipients of a personal injury award is the impact on their eligibility for means-tested government benefits. Programs like Medicaid and Supplemental Security Income (SSI) have strict asset and income limits. A multi-million-dollar settlement, paid directly to an individual, will almost certainly terminate their eligibility.
This creates a cruel paradox—the money intended to pay for medical needs can eliminate the very health insurance that covers them. Fortunately, New York law provides a powerful instrument for this exact situation: the Supplemental Needs Trust, or SNT. Governed by New York Estates, Powers and Trusts Law (EPTL) § 7-1.12, an SNT is a specific type of trust designed to hold the settlement proceeds for the benefit of a person with a disability.
Here’s how it works: the settlement funds are paid into the trust, not to the individual directly. A trustee—who can be a family member or a professional fiduciary—is appointed to manage and disburse the funds. The money in the trust can then be used to pay for a wide array of expenses that government benefits do not cover, such as specialized therapies, accessible housing modifications, transportation, and education. Because the assets are owned by the trust, not the individual, they do not count against the recipient for Medicaid or SSI eligibility. This allows the settlement to supplement, rather than replace, the public benefits safety net.
When a Lawsuit Outlives the Plaintiff
Tragically, not every personal injury victim survives to see their case resolved. When a personal injury claim becomes a wrongful death action, the estate plan—or lack thereof—becomes central to the entire process. The legal right to pursue the lawsuit passes to the personal representative of the decedent’s estate, who is either the Executor named in a will or an Administrator appointed by the Surrogate’s Court.
Any proceeds recovered are then allocated in two parts. First, damages for the decedent’s conscious pain and suffering before death become an asset of the estate, distributed according to the will or, without one, to their heirs under New York’s intestacy laws. Second, damages for wrongful death itself—meant to compensate the surviving family members for their financial losses—are distributed directly to those dependents as determined by the court.
This is where the lack of a will can create profound complications. Without clear instructions, the Surrogate’s Court must step in, and the outcome may not align with the decedent’s wishes. A well-drafted will and a clear estate plan remove ambiguity and ensure the stewardship of the case and its proceeds rests in trusted hands.
Contingency Planning for Incapacity
A serious injury can leave a person unable to make their own financial and medical decisions, sometimes long before a lawsuit is even filed. Without proper planning, this incapacitation can force a family into a difficult legal process. If you have not designated agents to act on your behalf, your loved ones may have to petition the court to have a guardian appointed under Article 81 of the Mental Hygiene Law.
A guardianship proceeding is public, can be expensive, and cedes control to a judge. It is the option of last resort. The proactive approach involves two key documents: a Durable Power of Attorney, which appoints a trusted agent to manage your financial affairs, and a Health Care Proxy, which appoints someone to make medical decisions on your behalf. With these documents in place, your chosen agent can manage your affairs, pay your bills, and interact with your legal and medical teams while you focus on recovery. It is the most direct way to ensure your wishes are honored and your life remains as private as possible during a vulnerable time.
A personal injury settlement is the end of one chapter and the beginning of another. The second chapter—the one about stewardship and long-term security—requires just as much careful legal guidance as the first. It is about ensuring a legal victory translates into a life of dignity and stability for the person who was harmed and the family that supports them.
If your family is pursuing a personal injury claim and anticipates a significant award, I invite you to schedule a consultation. We can discuss the long-term stewardship of the settlement and create a structure to protect it for the road ahead.
