Protecting a Personal Injury Settlement With a Special Needs Trust (SNT)

A Special Needs Trust in New Jersey Created to Receive a Personal Injury Settlement is a Terrific Benefit for a Qualifying Disabled Person

How Do Special Needs Trusts Protect Personal Injury Settlements?


Personal Injury Settlements, Public Benefits and Disabled Individuals Video

A personal injury attorney should avoid depositing a settlement made by a defendant or the defendant’s insurance company into his or her attorney trust account for any funds that are intended to be placed into a Special Needs Trust for the benefit of their client, the disabled plaintiff.  Payment of settlement/jury verdicts by the defendant to the plaintiff’s personal injury attorney may constitute constructive receipt by the person with a disability and cause of loss of public benefits can be problematic.

How Should a Plaintiff’s Attorney Receive a Check Made Payable to Their Disabled Client?

Checks from a defendant should (ideally) be made payable directly to the trustee of the Special Needs Trust for deposit into the trust.  Payments from a structured settlement should also be made payable directly to the trustee of the Special Needs Trust.  Actual or constructive receipt by the client (or his/her agent, i.e., the personal injury attorney), may cause a loss of public benefits because the income and resource rules have been violated if the funds are held by the personal injury attorney in escrow for a long period of time.  If the funds are disbursed by the personal injury attorney to the client outright, there is also a violation of SSI rules and real problems can result.

In situations where there is a lump sum settlement and the defendant insists on paying the plaintiff’s attorney quickly, the trial court can enter an order that the monies be held in the attorney’s trust account subject to conditions, such as satisfaction of Medicare and Medicaid liens and the creation of a valid Special Needs Trust.  This should limit the constructive receipt argument by the federal government.  The trial attorney then makes the plaintiff’s check payable to the trustee of the special needs trust at such time as all the conditions imposed by the court order are satisfied.

Fredrick P. Niemann Esq.

Involved in a lawsuit where a plaintiff is a person with a disability receiving or possibly receiving public benefits in the future?  Are you a plaintiff’s personal injury attorney?  If so and you have questions about whether a Special Needs Trust is the right trust for you or your client, then call my office today.

Ask for me to personally discuss the details of a New Jersey Special Needs Trust.  Call me toll-free at (855) 376-5291 or e-mail me at





Written by Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a New Jersey Special Needs Trust Attorney