Special Needs Trusts Can Preserve Personal Injury Settlements & Awards

Individuals should work with an attorney to determine any potential personal injury (PI) or medical malpractice action.  However, if you’re already disabled and receive money from an action, you could lose your asset-dependent public benefits if you don’t plan properly.

Eligibility for public benefits, such as Supplemental Security Income, Medicaid, and Waivers, has a $2,000 asset limit.  If you’re in a PI or medical malpractice matter you’re likely to have enormous medical bills for the remainder of your life.  If you receive a settlement outright, you’ll lose your public benefits, and the settlement money will quickly be exhausted to pay for medical expenses.  Often, Medicaid is the only form of medical insurance that will cover conditions requiring long term care. Insurance from the marketplace likely won’t provide Medicaid’s broad range of coverage and services.

A Self-Funded Special Needs Trust (SNT) helps you preserve the PI money for your use while allowing you to maintain eligibility for public benefits.  Medicaid pays the medical bills, and the settlement proceeds can be used to enrich your quality of life.  There are elements an SNT must satisfy, including, but not limited to: The Trustee, who manages and administers it, must have complete discretion to make distributions; it must be used for the sole benefit of the beneficiary; and upon the beneficiary’s death, an SNT must reimburse Medicaid agencies an amount equal to the Medicaid benefits provided during the beneficiary’s lifetime, limited to the amount of the Trust’s remaining assets.  While some believe that SNTs are restrictive, the SNT can purchase virtually anything; however, payment of food and shelter expenses may negatively impact the receipt of some public benefits.

If there’s a PI action, consider an SNT as soon as possible.  An SNT can also be created after the signing of a release to resolve the case or the transferring of settlement monies to the PI attorney.  SNTs can hold a lump sum award or be used in conjunction with a structured settlement.  There’s no specific amount that must fund an SNT because any amount exceeding $2,000 will cause ineligibility for public benefits; however, a larger initial funding amount provides a greater selection of corporate fiduciaries willing to serve as Trustee.

If you need help with a PI action, or if you receive public benefits and may receive money from a potential PI action, contact the experienced personal injury and special needs planning attorneys at Weaver, Bennett & Bland, P.A. at (704) 844-1400 to discuss your specific situation.

Crystal L. Welton is an estate planning, estate administration, elder law, and special needs planning attorney at Weaver, Bennett & Bland, P.A.  Contact Crystal at Weaver, Bennett & Bland, P.A. at (704) 844-1400.  The information contained in this article is general in nature and not to be taken as legal advice, nor to establish an attorney-client relationship between the reader and Crystal L. Welton or the law firm of Weaver, Bennett & Bland, P.A.

Learn more about Special Needs Planning 

Learn more about Personal Injury 

Supporting your goals.  Creating peace of mind. 

Trusted since 1982, Weaver, Bennett & Bland, P.A. serves clients in North Carolina and South Carolina. Located in the town of Matthews between Mecklenburg and Union Counties in North Carolina, we’ve proudly provided legal services throughout Charlotte, Matthews, Mint Hill, Stallings, Indian Trail, Monroe, Marvin, Wesley Chapel, Weddington, Waxhaw, the Ballantyne area, and other surrounding communities in the Greater Charlotte region.  Our clients range from national corporations and major banking institutions to individuals and local companies.  We provide the best possible legal representation and advocacy, upholding our main client-focused cornerstones:  Helping. Planning. Protecting.