If your family is receiving compensation under the Camp Lejeune Justice Act of 2022, you may be wondering whether settlement funds can be placed in a trust to protect or manage the money after it's distributed. The short answer is yes-once settlement funds are received by the estate or beneficiary, they can be placed into a trust, and in many cases, doing so is an excellent strategy.
At Heritage Law Office, we help families not only obtain the legal authority to accept Camp Lejeune settlements through probate, but also structure those funds wisely through estate planning tools like revocable and irrevocable trusts. Contact us by either calling 414-253-8500 or using our online contact form to explore your legal options.
What Happens to Camp Lejeune Settlement Funds After Probate?
When a wrongful death claim is pursued due to toxic exposure at Camp Lejeune, the settlement is paid to the estate of the deceased. Before any funds can be distributed:
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The estate must be opened through probate
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A personal representative must be appointed
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The court must issue Letters Testamentary or Letters of Administration
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The settlement must be accepted and funds deposited into an estate account
Once those steps are completed, the personal representative can begin paying debts, taxes, and distributing the remainder to heirs or beneficiaries according to the will or applicable state law.
At this point, trust planning becomes relevant-especially when there are minor children, disabled beneficiaries, spendthrift concerns, or large settlement amounts.
Can the Settlement Be Paid Directly into a Trust?
No. The federal government will not make settlement checks payable directly to a trust. The settlement must first be accepted and processed through the estate's probate proceeding. Only after the funds are distributed from the estate can they be transferred into a trust, either for the benefit of heirs or for long-term protection.
However, with proper planning, trusts can still be used immediately after settlement funds are received by the estate or beneficiaries.
When It Makes Sense to Use a Trust for Camp Lejeune Settlement Funds
There are many situations where creating a trust is not only allowed but highly advisable after receiving settlement proceeds:
1. Minor Children as Heirs
If a deceased Camp Lejeune victim left behind children under 18, a trust can:
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Hold funds until the child reaches a specific age
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Appoint a trustee to manage and invest the money
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Prevent court-supervised guardianship accounts
2. Heirs With Disabilities
If a beneficiary is receiving Medicaid, SSI, or other needs-based public benefits, receiving settlement money outright could disqualify them. A special needs trust (SNT) can preserve eligibility while still allowing funds to be used for their benefit.
3. Heirs With Substance Abuse, Financial Instability, or Legal Issues
Trusts provide a controlled way to distribute funds over time and protect assets from creditors, lawsuits, or poor financial decisions.
4. Blended Families and Second Marriages
Trusts can help ensure that the deceased's wishes are honored-such as providing for a current spouse while preserving assets for children from a prior marriage.
5. Protecting Medicaid Eligibility for Surviving Spouses or Elderly Parents
If a surviving spouse or aging parent of the deceased is receiving-or may soon need-long-term care benefits through Medicaid, placing Camp Lejeune settlement funds into a Medicaid Asset Protection Trust (MAPT) can be a critical planning move.
MAPTs help ensure that:
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Settlement proceeds don't count as disqualifying assets for nursing home coverage
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A surviving spouse can continue receiving care without having to spend down the entire inheritance
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The family's remaining wealth is preserved for future generations instead of being consumed by medical expenses
MAPTs are especially valuable when:
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The surviving spouse is elderly or already in assisted living
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A parent of the deceased is named as a beneficiary and needs care
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The family is planning for both financial protection and Medicaid compliance
Because these trusts must be set up in advance and meet strict rules-including the five-year Medicaid lookback period-they should be discussed with an experienced Medicaid planning attorney as soon as settlement funds are available.
What Types of Trusts Can Be Used for Camp Lejeune Settlement Funds?
Depending on your family's needs, several types of trusts may be appropriate for protecting and managing Camp Lejeune settlement proceeds after probate is completed.
Revocable Living Trust
A revocable living trust allows heirs to manage their inheritance with flexibility while avoiding probate on future asset transfers.
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Can be created by a beneficiary or heir after receiving their share of the settlement
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Provides probate avoidance for future distributions
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Allows flexible control during the grantor's lifetime
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Common for adult heirs who want to manage and protect inherited funds
Testamentary Trust
A testamentary trust is established in a will and activated after probate to protect vulnerable heirs.
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Created under the terms of a will and funded after probate
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Often used when the estate plan includes minors or disabled beneficiaries
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Controlled by a trustee named in the will
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Becomes active only after the estate is settled
Special Needs Trust (SNT)
A special needs trust helps beneficiaries preserve eligibility for Medicaid or SSI while still benefiting from the settlement.
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Protects settlement proceeds from affecting needs-based public benefits
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Must be carefully drafted to meet federal and state compliance rules
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Can be funded after probate by a parent, grandparent, legal guardian, or court
Spendthrift Trust
Spendthrift trusts are ideal for beneficiaries who may need asset protection due to financial instability, legal risks, or creditor exposure.
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Designed to protect assets from creditors or personal mismanagement
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Distributions are controlled by the trustee
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Commonly used for heirs with unstable financial or legal circumstances
Medicaid Asset Protection Trust (MAPT)
A Medicaid Asset Protection Trust (MAPT) is useful when families want to preserve settlement funds while preparing for future long-term care needs.
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Shields assets from Medicaid spend-down requirements
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Helps avoid disqualification from nursing home or assisted living benefits
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Preserves wealth for future generations while maintaining Medicaid access
Key Features of a MAPT:
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Must be irrevocable to be effective
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The grantor cannot have direct access to the trust funds
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A trustee-often a family member-manages distributions
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Transfers into a MAPT are subject to a five-year lookback period
MAPTs are especially helpful for families balancing long-term health care planning with the desire to protect large Camp Lejeune settlements from being depleted.
Can a Trust Be Created Before Probate Is Complete?
A trust can be created at any time-but it cannot receive Camp Lejeune funds directly from the government. The estate must first go through probate. After the personal representative accepts the settlement and distributes the funds, trust planning can be implemented quickly and efficiently.
In some cases, especially where a surviving spouse or adult child is also the estate representative and a beneficiary, this transition is seamless. Our firm helps families position assets correctly so that trust funding happens immediately upon distribution.
Benefits of Placing Camp Lejeune Settlement Funds in a Trust
Placing settlement proceeds in a trust offers numerous benefits:
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Asset protection from creditors or lawsuits
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Ongoing management for minors or vulnerable adults
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Privacy, since trusts are not public records like probate proceedings
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Tax planning opportunities, especially in large estates
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Peace of mind knowing the funds will be managed according to your wishes
These advantages are particularly valuable in wrongful death settlements where families may be navigating grief, financial instability, or legal uncertainty.
Why Work With a Probate and Trust Attorney?
Camp Lejeune claims are already complex, and integrating trust planning into the settlement process adds another layer of legal considerations. At Heritage Law Office, we assist with:
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Opening probate and securing Letters Testamentary or Administration
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Accepting and documenting Camp Lejeune settlement payments
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Drafting and funding appropriate trusts
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Coordinating with Camp Lejeune claim attorneys, family members, and courts
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Creating long-term estate plans tailored to your family's needs
Contact an Attorney About Trusts and Camp Lejeune Settlements
If your family is receiving compensation from a Camp Lejeune wrongful death or survivor claim, you have options for how to manage those funds. A trust may help protect your loved one's legacy, provide financial security, and ensure the money is used wisely over time.
At Heritage Law Office, we assist families with probate, trust creation, and post-settlement planning. Whether you're managing funds for a minor, protecting public benefits, or creating a long-term legacy, we're here to help.
Call us today at 414-253-8500 or contact us online to discuss how a trust could support your family's future.
Frequently Asked Questions (FAQs)
1. Can Camp Lejeune settlement funds be deposited directly into a trust?
No. Federal agencies issue settlement payments to the estate of the deceased, not to a trust. Only after probate is completed and funds are distributed to beneficiaries can those funds be placed into a trust for protection or management.
2. Is it a good idea to place Camp Lejeune funds in a trust for a child?
Yes. If a minor child is a beneficiary, using a trust is highly recommended. It avoids court-ordered guardianship of the funds and ensures that a responsible adult (the trustee) manages the money until the child reaches an appropriate age.
3. Will putting settlement funds into a trust help protect government benefits?
Yes. If a beneficiary receives needs-based benefits like Medicaid or SSI, a special needs trust or a Medicaid asset protection trust can be used to hold the funds without affecting eligibility. This must be carefully structured and drafted to comply with both federal and state rules.
4. What is the difference between a revocable trust and a testamentary trust?
A revocable trust is created during a person's lifetime and can be changed or revoked. A testamentary trust is created through a will and only takes effect after probate. Both can be used to hold Camp Lejeune settlement proceeds once they're distributed.
5. Do I need a lawyer to set up a trust for Camp Lejeune settlement funds?
Yes, it's strongly advised. Trusts must be carefully drafted to meet legal requirements and align with your family's financial and estate planning goals. A lawyer ensures the trust is valid, properly funded, and coordinated with your probate and settlement documents.