A Settlement Preservation Trust (“SPT”) is a personal injury settlement management instrument with a financial institution, that has fiduciary responsibility to the trust beneficiary, which can be used alone or in combination with a structured settlement annuity.  A settlement preservation trust is irrevocable grantor trust. A Settlement Preservation Trust may also be referred to as a Personal Injury Settlement Management Trust, also known as a Settlement Planning Trust,  Settlement Management Trust or Personal Injury Settlement Protection Trust.

A settlement preservation trust can provide:

• Space of mind for plaintiffs, guardians of minors, or profoundly injured plaintiffs.
• Relief from the stress of tracking and paying bills for clients in transition. Bills can be sent directly to the trustee who will make payments directly to vendors. A stored value card can be loaded with money each month for day-to-day expenses, for ease of administration and recordkeeping.
• Spendthrift protection.
• An alternative means of generating periodic payments to the tort victim.
• Provides a measure of liquidity to the settlement plan.
• Flexibility to manage future change. It’s possible that a plaintiff will experience a major change in his/her financial position at some point following the settlement of his/her personal injury claim or lawsuit. A Settlement Preservation Trust provides financial flexibility and controlled liquidity when such a change occurs. A Settlement Preservation Trust is a tool that best serves Plaintiffs who have future needs that are uncertain, unpredictable, subject to adjustment and/or event contingent. For example, payments might be increased from the trust during periods of unemployment.
• Can be used with a structured settlement. If used in conjunction with a structured settlement, the trust can serve as a receptacle to receive periodic payments from the structured settlement for further recovery management and measured distribution.
• Can be used to hold and pay premiums on a life insurance policy insuring one or both parents of a disabled minor plaintiff and a caregiver for an adult plaintiff.
• Protection against factoring. On larger settlements, you can put a corporate fiduciary between the plaintiff and a factoring company.
• Can be used to hold acquired assigned structured settlement payment rights (which are factored structured settlement receivables NOT annuities), secondary market/tertiary market income streams or multi-streams by a fiduciary for a plaintiff with suitable risk tolerance and an understanding and acceptance of the strategy. It’s critical to note that acquired structured settlement receivables do not have statutory protections. Fiduciaries contemplating buying such rights with fiduciary funds should familiarize themselves with the 2017 Revisions to the Life & Health Guaranty Association Model Act (#520), which have been adopted by 40 states as of August 2023. See Investing in Structured Settlements A Guide for Unwary Investors (4structures.com).