Settlement Asset Management Trusts

Some personal injury victims do not need public benefit preservation, but need to have someone assist in managing their financial affairs. A Settlement Asset Management Trust or investment trust, a technical term for a revocable or irrevocable trust funded with personal injury proceeds, can address these clients' needs. Typically, these trusts contain spendthrift provisions to protect the personal injury victim from himself or herself. Ninety percent of personal injury victims have nothing left of their settlement five years after settlement. Accordingly, spendthrift provisions are important for preservation of the settlement proceeds. Having a professional trustee with a fiduciary duty managing the money gives the client added protection and makes a lot of sense for most injury victims.

You may ask yourself; why not just use a structured settlement if the client needs spendthrift protection? The answer is liquidity and flexibility. The trust can provide for things that are unplanned and payments can be made real financial needs arise. This is not to say the structured settlement option is not a good one. To the contrary, it usually makes a lot of sense to create a structured settlement in tandem with a trust. The structure can provide a guaranteed fixed income stream, which is a valuable part of anyone's portfolio particularly personal injury victims. The structure payments can flow into the trust. The money held in the trust can be professionally managed by a corporate trustee. The corporate trustee can pay bills for the client and generally manage their financial affairs. This type of arrangement is flexible enough to accommodate virtually any important change in the plaintiff's future financial situation.

 

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