About Special Needs Trusts
After a birth injury settlement or favorable verdict is reached, and after any appeals are concluded, the parents of a child with a birth injury will have a sum of money. In some cases this can be an extremely large amount of money—millions of dollars.
Depending on the exact nature of the settlement or verdict (and the rules in the state in which the lawsuit is filed), some of the money may be for the parents for past medical expenses or emotional distress related to seeing their child in pain. However, the bulk of the money is likely to be intended for the lifetime future care of the child. One way to safely invest and protect that money, as well as to preserve any governmental benefits the child is entitled to, is through a special needs trust (sometimes called a supplemental needs trust). A trust will help to ensure that the child is taken care of through adulthood, even if he outlives his parents.
Special Needs Trust: A Primer
A special needs trust (SNT) is a mechanism to protect a large amount of money so that it is available for its intended purpose—to be used for a beneficiary. A child with disabilities who receives money from a birth injury lawsuit will need to make that money last for his entire life—he cannot petition the court for more money if his condition worsens, or if the money is wasted. The trust will also protect the money from other creditors, including lawsuits against the beneficiary.
In many ways, the special needs trust is the tool by which a child’s life care plan is funded. Of course, any differences between the amount of the settlement or verdict and the amount established in the life care plan will need to be taken into account. Sometimes they are set up with the cooperation of a structured settlement coordinator if a birth injury settlement provides for periodic payments over the course of the child’s life.
A trustee or, in some cases a family member, will be hired by the trust to administer the money, and ensure that all proper forms are filled out. These include federal and state taxes, year-end accountings, and regular reports to the Social Security Administration.
Protecting Governmental Benefits
Importantly, distributions from the trust must be made carefully to protect the governmental benefits that the child is entitled to—these include Supplemental Security Income (SSI) and medical assistance (Medicaid). Social Security Income and Medicaid are intended to provide for the food and shelter of the beneficiary. There is an income requirement—too high an income will cause loss of benefits. The trust must be established in such a way as to prevent money going directly to the child.
How Your Lawyers Will Help With A Special Needs Trust
At the conclusion of your child’s lawsuit, your attorneys will help you to set up a special needs trust. They may enlist the help of other lawyers who specialize in these trusts, as well as bankers, accountants or other professionals.
If your child has been injured because negligence and has cerebral palsy, brachial plexus injuries, or other types of developmental disabilities, contact our medical malpractice attorneys at (440) 252-4399.