A settlement protection trust, often referred to as a spendthrift trust, helps provide financial flexibility and controlled liquidity to a plaintiff who experiences a major change in his or her financial position following the settlement of a personal injury claim. This alternative funding device to periodic payments can be used alone or in combination with an annuity. It can help provide spendthrift protection, liquidity and flexibility.
The trust best serves plaintiffs who have future needs that are uncertain, unpredictable, subject to adjustment and/or are event contingent. A settlement protection trust can:
- Help prohibit the sale of payments to settlement discounters, meaning more protection of the funds.
- Produce more income as interest rates rise.
- Supplement periodic payments during unemployment or other added need.
- Be combined with annuities for a more balanced structure.
- Avoid approval or involvement of the defendant to establish.
- Limit personal discretion to protect the injured party.
Funding for a settlement protection trust can come from any source, such as from the plaintiff via cash settlement or payments from a structured settlement annuity. Distributions may be for many things a beneficiary needs including health, welfare, education and emergency needs.
NFP Structured Settlements works with partners who provide the services required to establish and maintain settlement protection trusts.
Learn more about these common types of trusts: