In a Settlement Protection Trust (SPT), funds are placed in a trust that will provide for the health, education, maintenance, support, and maintenance of beneficiaries.  The support includes the process of purchasing a home, a vehicle, and, if needed, arranging for the service of a case manager.  SPTs are usually for people who aren’t getting means-tested public benefits, which include SSI, many Medicaid Waiver Programs, Medicaid, LIHEAP(energy assistance), SNAP (Food Stamps), and housing subsidies.

Benefits Of A Settlement Protection Trust

Establishing an SPT rather than paying money outright for an injury has several advantages.

Coverage Of Medical Expenses

In the wake of Obamacare, individuals with pre-existing conditions are now able to qualify for private health insurance from as many companies as they wish at market prices.  Many times it is possible for SPT, to hire a family member to act as a caregiver and to reap the benefits of the trust. This option is available under certain circumstances.  An arrangement in the trust allows the caregiver and their dependents (which includes injured plaintiffs) to enroll in a large group health insurance plan. Outside caregivers can also be hired by the trust.

Squandering/Protecting Assets

Regardless of the amount of the settlement or award, personal injury settlements typically last only three to five years on average.  There are many injured persons who do not know how to deal with money or are under the influence of spouses, family, and friends.  The SPT will ensure that the funds are used wisely and, hopefully, will last the entire lifetime of the injured party who has been awarded the compensation.

Tax Preparation

A trustee generally prepares or supervises the injured party’s tax returns at the request of the injured party.

Structured Settlement

Structured Settlement Trusts can be constructed so that payments from a structured settlement flow into the trust, which is very useful if a structured settlement is involved.  The beneficiary cannot sell the structure at a steep discount if the trust is in place.

Management Of Money

The SPT can arrange for expert money management.

Care Management

The care management of the patient can be arranged.

How Do Settlement Protection Trusts Help You?

Settlement assistance is needed by many people. For instance, one may not be used to managing money, may not feel safe from others taking advantage of it, or might feel as though they require assistance when buying a home or a car, in addition to obtaining appropriate modifications of a home or car, or might need help with caregivers, medical equipment, or any other concerns one may have the following recovery.

Below are some examples of situations where an SPT might be appropriate:

  • Individuals who are not currently receiving government assistance but may be eligible for it in the future
  • A minor recovering from an injury
  • The protection of wrongful death recovery and ensuring that it is successful
  • An individual is receiving a recovery that may be wasted or abused
  • A person is concerned that family or friends may request money from them
  • Outright distribution of funds may be dangerous for the recipient because of addiction or mental health issues
  • Money and budgeting aren’t familiar to the recipient, and he or she doesn’t have any experience with large purchases, such as a house, truck, or car


You can create a Settlement Protection Trust in a number of ways. It can be used to grow and protect a minor’s funds until he or she turns 18 or beyond. Survivors can use it to rebuild their life after a surviving spouse passes away. To ensure their intended use, structured settlement annuity payments can be received by a Settlement Protection Trust.

Settlement Protection Trusts provide a mechanism to keep assets from enabling unintended behavior such as substance abuse or protecting them from disgruntled ex-spouses. Creating a plan that provides maximum flexibility is important since the future is unknowable. Creating a Settlement Protection Trust allows you to adapt to what the future holds while still addressing your concerns today.

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