When a person with special needs receives a personal injury award, it is important to consider whether the creation of a Supplement (Special) Needs Trust will benefit the individual.
Consider the case of John, a 53-year-old who was seriously injured in a car accident leaving him permanently disabled. After filing a lawsuit, John obtained a $900,000 settlement. After the payment of John’s past medical expenses and legal fees, about $550,000 remained. Presently, John receives Supplemental Security Income (SSI), food stamps, and Medicaid.
The obvious question that must be asked is what to do with the settlement funds to provide the best financial plan for John.
Giving the settlement proceeds directly to John (or his conservator) will impact the important need based benefits that John depends on.
A Supplemental Needs Trust is a Trust that is designed to hold the individual assets of a person with special needs. The Probate Pro regularly creates these Trusts for settlement of personal injury actions and inheritances for persons with special needs. If properly drafted, the funds held in a Supplemental Needs Trust will not disqualify a person with special needs from receiving these government benefits. The funds are that are held in a Supplemental Needs Trust can be in the form of bank accounts, investment accounts, annuities, vehicles, and real estate.
The value in creating a Supplemental Needs Trust for a person with special needs should be obvious. Essentially, the person gets the best of both worlds…the government benefits and the benefits held in the Trust.
The funds in the Trust can be used to supplement John’s financial needs that are not otherwise being provided by the government benefits. By properly creating, funding, and managing a Supplemental Needs Trust, John will be able to save thousands of dollars.
Supplemental Needs Trusts are not appropriate in all situations, but if you have been injured and are preparing to resolve a case, please give The Probate Pro call to determine the most suitable plan.