Marla Eskin, an accomplished Delaware attorney, has been with the Wilmington law firm Campbell & Levine since 2002. Her legal career spans commercial bankruptcy, business law, and related litigation, with experience that includes serving as counsel to several Section 524(g) Asbestos Settlement Trusts and acting as a trustee for the Catholic Diocese of Wilmington, Inc., Qualified Settlement Fund. A graduate of Temple University with a juris doctor degree, Marla Eskin also volunteers as a mediator for landlord-tenant disputes in the Justice of the Peace Court. Drawing on her deep knowledge of trust and settlement administration, she provides insight into how Settlement Protection Trusts function—highlighting their purpose, flexibility, and advantages for individuals managing settlement awards.
How Settlement Protection Trusts Function
Settlement trusts protect funds from legal settlements, often involving medical malpractice, product liability, or personal injury, and help manage large amounts of money. A trustee oversees the holding and distribution of the money. They provide professional money management services and help ensure that friends and family do not take advantage of the client, particularly if they have disabilities or are financially inexperienced.
In many cases, settlement trusts offer tax efficiency benefits, as professionals manage the money, allowing for capital growth without the tax burden of immediate distribution. Trusts often include a medical insurance component, which facilitates healthcare for beneficiaries. They help preserve eligibility for public benefits the person already receives or is due to receive. Beneficiaries often have considerable input into the management of the funds, including the size of distributions and the specific asset allocation strategy.
Several basic scenarios trigger the use of a settlement trust. For example, a worker, David, sustains injuries on the construction site and obtains a third-party liability settlement for $5 million. David is already receiving several hundred dollars in Social Security Insurance (SSI), as well as certain Medicaid medical benefits. If David accesses the settlement money, he will lose access to his Medicaid and SSI distributions. One option is a special needs trust, but this contains restrictions that the more flexible settlement protection trust doesn’t.
In a similar yet distinct case, Eve lives with Down Syndrome and experiences a car accident that yields a $400,000 settlement. While she doesn’t receive SSI, Medicaid, or another means-tested public benefit, the state court considers incapacitated by her neurological condition. Eve cannot manage money, and the law requires the placement of the funds in a Probate Court or some other type of restricted savings account. This pathway necessitates receiving funds according to a court-approved budget (or on an “as needed” basis with court approval). The settlement protection trust offers greater flexibility than probate court or other available options.
A similar situation involves a child aged seven, Injured at birth, the child recovered $200,000 as part of a medical malpractice settlement. The settlement trust is more flexible than other options for the minor, such as the surrogate’s office of the probate court or the orphans’ court.
In a final example, Bob, a competent adult, receives a $1 million settlement. While Bob does have the option of simply receiving the money outright, distributions in such cases are typically over a three- to five-year span. One option involves establishing a settlement protection trust that extends the distribution period, preventing the funds from depleting too rapidly. Bob works in tandem with the trustee to develop a realistic budget, with distributions spanning his lifetime, and reserves maintained for use in emergencies.
A key element of this last scenario is that Bob has had an active role in designing the trust. Competent adults who do not access means-tested public benefits have significant autonomy in deciding how and under what timeline to receive their money. They can tailor their distributions to meet specific life needs and expectations, such as having a financial buffer in case of a medical emergency.
About Marla Eskin
Marla Eskin is a Delaware attorney with extensive experience in commercial bankruptcy, litigation, and business law. Since joining Campbell & Levine in Wilmington in 2002, she has served as counsel to multiple Section 524(g) Asbestos Settlement Trusts and as a trustee for the Catholic Diocese of Wilmington, Inc., Qualified Settlement Fund. A Temple University law graduate, she volunteers as a mediator for landlord-tenant cases and participates in professional organizations including the Delaware and American Bar Associations. Outside her legal work, she enjoys running, reading, and cooking.