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What should I do with my settlement money?

Victims of motor vehicle accidents seek compensation for many reasons, such as medical bills and emotional suffering. Often, the amounts settled on or awarded can run into six figures or even the millions.

If you are thinking about filing a lawsuit or have already settled your case, you might wonder what to do about the money. Obviously, an immediate use would be to pay off medical expenses and related expenses so you can continue to receive quality treatment. A top consideration, though, is ensuring the money lasts so you never have to worry again about whether you can afford care.

When it is not enough

Sometimes, the money turns out to not be enough to cover your lost income and medical bills. You do not need the stress of dealing with calls from creditors and worrying about finances, so bankruptcy is one option that may make sense. Your medical debts are discharged under Chapter 7 and reorganized under Chapter 13.

If you are only dealing with an insurance company and have not yet officially agreed to any settlement, it is often worth your while to consult with a lawyer. Insurers try to lowball you with early offers, and it could be that a lawsuit is necessary to get the compensation you deserve. Attorneys can take as much as a third of your settlement, but the remaining two-thirds is likely to be a lot more than your insurance company's best offer.

Special needs trust

One option in the case of excess money is a special needs trust, which the court might order. A trustee manages it and distributes funds as necessary for your care (or your loved one's care). If you want to retain Medicaid eligibility, which is usually a smart move, there are some strategies you can use to keep assets while staying eligible.


You can choose to invest your settlement or to put it in a retirement account or CD. Whatever the case, remember your tax obligations.

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