It may be appropriate for a claimant to place all or a portion of his or her settlement proceeds in a trust. There are many different types of trusts to consider, each with its own set of requirements. Sage Settlement Consulting offers assistance with every step of establishing and managing a trust, from providing access to a national network of trust attorneys who can draft trust documents to connect claimants with reputable nationally chartered corporate trustees.

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Sage Settlement Consulting is your single best resource for comprehensive settlement planning. Call (855) 288-7243 to learn more.

Special Needs Trusts

Injured claimants who currently receive needs-based government benefits (e.g., Medicaid, SSI, etc.) will likely lose benefits eligibility if they accept their proceeds as a lump sum cash payment. Unfortunately, those same injured claimants may then face insurmountable medical costs. Even a six-figure settlement can be quickly depleted by doctor bills, surgeries, medications, and home modifications to accommodate a disability.

A Special Needs Trust (SNT) may prevent any interruption in needs-based government benefit eligibility if it is set up and managed in accordance with Medicaid (or Medi-Cal) law in the beneficiary’s resident state. When settlement proceeds are placed in an SNT, the funds can be used to purchase approved goods and services for the beneficiary that are not covered by government benefits.

Who is eligible for a Special Needs Trust?

Generally speaking, eligibility for First-Party Special Needs Trusts (sometimes referred to as (d)(4)(A) trusts) is restricted to individuals under age 65 who meet government guidelines that qualify them as disabled and are currently receiving needs-based government benefits.

Individuals who do not qualify for a First-Party SNT due to the age restriction may want to consider a Pooled Trust (sometimes referred to as a (d)(4)(C) trust.

Managing a Special Needs Trust

The trustee of an SNT may be a family member, an attorney, or a corporate trustee. The trustee must possess the knowledge and experience to comply with the rules and requirements of an SNT; failure to do so may put benefit eligibility in jeopardy. Regulations for Special Needs Trusts may vary by state, so it is vitally important to work with an experienced team to draft the trust documents.

Our experts can help with matters involving and not limited to:

• The “Spend Down” Approach In some instances, “spending down” smaller settlements may be encouraged to avoid the cost of setting up a Special Needs Trust. However, the spend down must be handled appropriately to avoid financial penalties and the potential loss of benefits.
• Minors’ TrustsCourts typically favor a conservative approach when it comes to minors’ settlements. Depending on the jurisdiction and the discretion of the judge, settlement options may include a trust account, a structured settlement annuity, a guardianship account, or a registry of the court.
• Settlement Preservation TrustsThese binding trusts protect the claimant’s settlement from irresponsible spending, while still providing funds for life’s necessities. Settlement Preservation Trusts typically include a termination date, at which time the funds become available to the beneficiary. Funds within a Settlement Preservation Trust can be managed by an individual trustee or a corporate trustee.
• Reversionary TrustsWith this provisional trust available in certain jurisdictions, the plaintiff draws the funds necessary to cover lifetime medical expenses. When the plaintiff dies, the remaining funds revert to the defendant.
• Medical Custodial AccountsIf a client requires medical services not covered by insurance or Medicare, a Medical Custodial Account may be used to collect and dispense settlement funds to cover medical expenses. Many Medicare Set-Asides utilize this type of professionally administered trust account.
• Qualified Settlement Funds (468B Trusts) for Multi-Claimant Settlements

To learn more about our Trust Services, call (855) 288-7243 today.

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