What is a personal injury trust?

Personal Injury - November 11, 2025

When you’re recovering from an injury, managing a settlement can feel like you’re being pulled in every direction, especially when you’re suddenly responsible for managing more money than you’ve ever handled at once. Many injured people worry about losing benefits or not having enough to cover future medical needs. If you’re in that position, it’s smart to look at the different ways to protect your settlement and make it last.

There’s no single “right” choice for everyone. Injured people in the United States can use several types of trusts and financial tools to control how their settlement is handled, depending on their needs. Each route works differently, and choosing the right one can make a big difference in your stability going forward.

But what exactly is a personal injury trust, and how does it fit into U.S. injury settlements, where similar tools often go by different names? If you’re not sure which option makes sense for your circumstances, a Chicago personal injury attorney at Horwitz, Horwitz & Associates can walk you through your choices.

man reading paperwork and checking phone - what is a personal injury trust??

1. What is a First-party Special Needs Trust (SNT)?

A First-Party Special Needs Trust, also called a (d)(4)(A) trust, is the closest U.S. equivalent to what other countries call a “personal injury trust.” These trusts help someone keep means-tested benefits like SSI and Medicaid while still using their settlement money for approved expenses.

To qualify for this type of trust, the injured person must:

  • Meet Social Security’s definition of disability, and
  • Receive or be eligible for benefits like SSI or Medicaid

Here’s how it works:

  • The settlement funds go into the trust, not the person’s own account.
  • A trustee manages the money and makes payments for allowed needs.
  • The funds don’t count toward SSI or Medicaid resource limits.
  • The money can be used for things like medical care, therapy, transportation, and certain household needs.

This type of trust is irrevocable, which means the injured person can’t change or dissolve it once it’s created. After the person passes away, any remaining money may need to be reimbursed to Medicaid. This option is often ideal for workers with life-changing injuries who rely on public benefits for long-term care.

2. What is a Pooled Trust?

A Pooled Special Needs Trust, also called a (d)(4)(C) trust, serves a similar purpose but is run by a nonprofit organization. Because pooled trusts accept beneficiaries of any age, they’re especially helpful for people over 65 who can’t set up an individual SNT.

Key points:

  • A nonprofit manages the trust.
  • Each person has their own account, but funds are pooled for investment purposes.
  • The trust protects SSI and Medicaid in the same way an individual SNT does.
  • The trustee handles spending and paperwork.

This structure offers strong protection for adults who need long-term support or medical care.

3. What are revocable or irrevocable trusts

Even if you don’t rely on needs-based government benefits, it can still make sense to put your settlement into a trust. Many injured people use a revocable living trust or an irrevocable trust for financial management, especially when the settlement is large.

These trusts don’t protect SSI or Medicaid, but they can:

  • Help manage the settlement over time
  • Protect the funds from creditors in certain cases
  • Ensure responsible spending
  • Provide for family members
  • Avoid probate

A trustee can help make sure the money is used wisely and lasts as long as possible.

4. What are structured settlement annuities?

A trust isn’t the only way to protect a settlement. Some injured people choose a structured settlement annuity, which spreads payments out over time instead of receiving everything at once.

Benefits include:

  • Steady income over many years
  • Reduced risk of overspending
  • Potential tax advantages
  • Predictable financial support for long-term needs

Structured settlements can be combined with trusts for even more protection.

How Horwitz, Horwitz & Associates can help

After everything you’ve been through, managing a settlement shouldn’t be another source of stress. Our team can help you understand your options and choose the path that protects your health, your benefits, and your long-term security. Call Horwitz & Associates at (800) 985-1819 or contact us online for a free consultation.