A family in Queens receives a call. After years of litigation following a devastating construction accident, the case has settled. The amount is significant—enough to provide a lifetime of care and financial stability. The relief is immense. In my experience, this is the moment a new and critical form of planning must begin. The settlement check is not an endpoint; it is a new asset that, without a deliberate plan, can be mismanaged, lost, or become a source of conflict.
The work of the personal injury attorney is to secure that recovery. My work—our work at Morgan Legal Group—is to ensure that recovery serves its intended purpose for generations. This is not about paperwork. It is about stewardship.
The Settlement Check is Just the Beginning
When a significant sum of money enters a family’s life unexpectedly, it brings both opportunity and vulnerability. The first challenge is managing the funds. For someone unaccustomed to handling a large principal, the risk of poor investments or excessive spending is real. But the greater risks are often external.
Without a proper structure, settlement funds can be exposed to future creditors, claims in a divorce proceeding, or the financial missteps of a beneficiary. Furthermore, for an individual who relies on means-tested government benefits like Medicaid or Supplemental Security Income (SSI), receiving a lump-sum settlement can immediately disqualify them from the programs they need for ongoing medical care. The award meant to enhance their life could, ironically, disrupt their access to essential support.
This is why we treat a settlement not as a simple windfall, but as the foundation of a new legacy. The goal is to build a fortress around those funds—one that protects them from external threats and internal mismanagement, while still allowing the beneficiary to live with dignity and security.
Trusts: A Shield for Your Recovery
The primary tool we use to protect settlement proceeds is a trust. A trust is a legal structure that holds assets for the benefit of a person or group. A trustee, who has a strict fiduciary duty to act in the beneficiary’s best interest, manages the assets according to the instructions laid out in the trust document.
The type of trust we establish depends entirely on the family’s specific circumstances.
- Supplemental Needs Trusts (SNTs): For a person with a disability who needs to maintain eligibility for government benefits, a Supplemental Needs Trust is essential. Funds in a properly drafted SNT are not considered a countable resource for Medicaid or SSI purposes. This allows the settlement money to pay for expenses that enhance the beneficiary’s quality of life—like accessible transportation, home modifications, education, and recreation—without jeopardizing their core medical coverage.
- Spendthrift Trusts: If the primary concern is protecting the funds from a beneficiary’s potential creditors or their own imprudence, a spendthrift trust is often the answer. This structure restricts a beneficiary’s ability to transfer their interest in the trust and shields the assets from their creditors’ claims. It ensures the funds are used for their intended purpose over the long term, managed by a trustee who can make distributions according to a prudent, predetermined schedule.
- Revocable Living Trusts: In simpler cases, placing the settlement into a revocable trust can be a prudent step for asset management and probate avoidance. It allows the beneficiary to maintain control as trustee during their lifetime while naming a successor trustee to take over seamlessly if they become incapacitated or pass away.
Creating these structures requires more than filling out a form. It demands a deep understanding of the family’s dynamics, the beneficiary’s long-term needs, and the intricate rules governing public benefits and asset protection in New York.
When an Injury Becomes a Wrongful Death Case
The most tragic cases are those where an injury proves fatal. When this happens, a personal injury claim becomes a wrongful death action. The lawsuit is brought not by the individual, but by the personal representative of their estate—the executor or administrator.
Here, the intersection of litigation and estate law is direct. Any recovery from the wrongful death lawsuit becomes an asset of the estate. How those funds are distributed is a matter for the Surrogate’s Court. If the person who passed away had a valid will, the will dictates who receives the assets. If they died without a will, their estate is distributed according to New York’s intestacy laws.
Specifically, New York’s Estates, Powers and Trusts Law (EPTL) § 5-4.4 governs how damages from a wrongful death action are distributed among the decedent’s family members who suffered financial loss. The court must approve not only the settlement amount but also its allocation. This process underscores the importance of having an estate plan in place. A will provides clarity and ensures your intentions are honored. Without one, state law—not your wishes—will decide the ultimate destination of the recovery.
The legal process does not end when the settlement is agreed upon. True success is measured by how well that recovery serves the family for the rest of their lives. It requires foresight, careful planning, and a commitment to responsible stewardship.
If you or a family member is anticipating a significant legal settlement, the most important next step is to plan for its arrival. I invite you to schedule a confidential meeting with our firm to discuss how a trust structure can be designed to protect those funds and secure your family’s future.
