A Settlement Protection Trust is created to provide for a beneficiary’s health, maintenance, education, and support. The support offered by the trust usually includes buying a car or home, getting appropriate modifications for the car or home, medical equipment, and other concerns people have when receiving a settlement. One of the main objectives of a Settlement Protection Trust is to make money last as long as possible. A trustee holds the funds and professionally manages them to maximize them. The beneficiary has to go through the trustee to access the funds.
Distribution
Settlement Protection Trust distributions can be flexible. Injury victims tend to have needs that are unpredictable, uncertain, or subject to change. As a result, having access to a flexible pool of money can help cover those needs better than receiving a settlement, such as a car accident settlement, outright.
In many cases, once a budget is prepared, the trustee writes a check each month to cover the payment of the trust beneficiary’s monthly bills. In other instances, the trust beneficiaries submit their bills to trustees. The trustees then pay the third-party goods and services providers directly.
A Settlement Protection Trust can be designed to benefit the injured parties and their family members. Beneficiaries may have annual withdrawal rights. The rights can be limited to a particular percentage of the trust assets.
Advantages of a Settlement Protection Trust
Some of the advantages that placing funds in a Settlement Protection Trust has over the injured party receiving the settlement outright include:
Protection of Assets From Being Squandered
Personal injury settlements usually do not last beyond five years. Additionally, many injured plaintiffs are not well acquainted with money management and preservation. They may also face pressure from significant others, friends, and family members who want to get a piece of their award or settlement.
A Settlement Protection Trust protects assets from being utilized for unintended behavior, claims on divorce, and creditors. It ensures the money is used wisely and hopefully lasts for an injured plaintiff’s lifetime.
Expert Money Management
A Settlement Protection Trust can have an arrangement for professional money management.
Medical Insurance
Many instances allow for a person to hire a spouse, domestic partner, parent, or any other family member as a caregiver and pay him or her from the Settlement Protection Trust. The caregiver and his or her family, including the injured person, can be enrolled in a health plan.
Tax Preparation
The trustee can supervise or prepare an injured party’s tax returns.
Structured Settlement
Payments from a structured settlement can go into a Settlement Protection Trust. The trust prevents the structured settlement from being sold at a large discount.
System Navigation
Trustees can help with building, modifying, or purchasing a home, buying a car, and getting quality care management. They can also assist with obtaining government benefits that save the beneficiary and trustee money, making trust dollars stretch further.
Circumstances in Which a Settlement Protection Trust May Be Appropriate
Some of the circumstances where using a Settlement Protection Trust may be ideal include:
- A minor getting a recovery
- A person is incapacitated
- A competent adult is not getting public benefits
- Large settlements involving clients receiving SSI (Supplemental Security Income) and Medicaid
A Settlement Protection Trust can be designed to address a person’s current concern and adapt to his or her future needs.