A Special Needs Trust Can Be Ideal for a Disabled Child’s Personal Injury Settlement

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If your child is wrongfully injured and fortunate enough to receive a jury award or financial settlement, chances are it won’t be enough to provide meaningful lifelong care. Even in cases where a settlement makes a child “rich” on paper, health care costs alone can run into the millions of dollars over the course of a lifetime.


That’s why it important to approach a settlement with the idea that it needs to last as long as possible, and that its purpose is to provide financial support for essential needs. Installing a new swimming pool with settlement funds, for example, pales in comparison to an out-of-network surgery your child may need 20 years from now.


In many cases, the best option is a Special Needs Trust. A Special Needs Trust is a legal arrangement that is set up for the benefit of a disabled child or adult, while protecting him or her from losing access to valuable government benefit programs.  What typically happens after a settlement is reached, is that proceeds are distributed through some type of “structure.” A structured settlement is paid in defined amounts and intervals in order to establish a regular income stream over a long period of time or through a selected trustee with the discretion to make distributions under specific circumstances.


There are a number of reasons for this type of planning which your attorney will work with you to better understand. It guarantees a source of long-term income, it avoids certain tax liabilities that would eat into the size of the settlement if it were distributed as one large payment, and it protects against upfront overspending.


It also is crucial to ensure that the disabled person will not lose access to critical government benefits programs. This is an important consideration not only for now but for the future as many programs that are not available now will be available later in life. Without Special Needs Trust protections, even meager structured payments would likely disqualify a disabled person from the low-income criteria associated with most public benefit programs.


Further, over the course of many years, disabled people are bound to encounter circumstances requiring financial resources in excess of their regular monthly or annual settlement distributions. A Special Needs Trust would solve these scenarios by allowing for discretionary access to settlement trust funds.


No matter the size of a jury award or settlement, in many cases it may be the only income a disabled person ever receives, outside of public assistance. With a Special Needs Trust, these two forms of support can work together to create a best-case scenario. The key to utilizing this solution is to work with your local attorney to determine what you need based on your own unique circumstances. We are here to answer these questions and advocate you throughout your case. Do not wait to contact us to us about your case.