A Settlement Trust is a repository for settlement funds, whether those funds are received as a lump sum or as periodic annuity payments. These funds are dispersed by a trustee in accordance with the terms of the trust.
Settlement Trusts offer management and oversight of the incapacitated person’s funds, which satisfies the same goals sought in establishing a guardianship: protection, preservation, and prudent decision making.
Settlement Trusts are irrevocable trusts that protect the claimant’s settlement funds from being overspent while still providing funds for their needs.
A Settlement Trust can take several forms. A Minor’s Settlement Trust includes a termination date, at which time the funds become available to the beneficiary. A Preservation Settlement Trust is usually (but not solely) set up for adults, and can help protect assets from from being rapidly depleted by ill-informed advice, or overspending.