Q: Can my attorney write my personal injury settlement check to my trust?
I have a 1st-party, irrevocable Special Needs Trust. Recently, my personal injury attorney settled on a case, but he says the American Bar Association prohibits him from making my part of the settlement -not the money owed to his firm or the medical professionals who treated me-- to the trust. I have looked through three sources: The Connecticut Practice Book (2022), The Model Rules of Professional Conduct and the Ethical Guidelines for Settlement Negotiations and not one of them has any such rule barring my attorney from writing the check in the name of my trust. In fact when the trust was created, my Estate Attorney made it clear that any money, including any future settlements should be made to the trust, otherwise my disability and medical benefits could be impacted. Is my attorney allowed to make my portion of the settlement money in the name of my Special Needs Trust?
A: It sounds like YOU (not your trust) was the plaintiff/injured party in the case. Therefore, YOU are the one settling with the defendant's insurance company. Therefore, the settlement is payable to YOU, not your trust. After you deposit the check, you can then write another check to your trust if you wish, and there are likely good reasons to do that. The timing of the receipt of the settlement proceeds and the transfer of those funds to your trust matters, so you should consult with the attorney that helped you prepare the first party Special Needs Trust about that. You might find that there are other options for handling the settlement proceeds besides or in addition to transferring them to your first party SNT.
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