Special Needs Trusts (SNT’s) allow injury victims to retain their need-based governmental benefits (i.e., Medicaid and SSI), the benefits of which cannot be overstated. The proper establishment of a SNT is a critical step in the settlement planning process and is often intertwined with numerous structured settlement considerations, especially when dealing with catastrophically injured claimants. The following example highlights some of those considerations.
Madeline, just 31 years old at the time of injury, suffered serious head and spinal injuries when she dove into a resort’s swimming pool which had incorrect depth markings in the shallow end of the pool. Her medical expenses were quite significant, and she will continue to need ongoing medical care for her injuries. She is also no longer to work in any meaningful fashion. Madeline has qualified for both Medicaid and SSI.
Fortunately, the resort had a reasonable amount of insurance, but liability was a huge issue as Madeline and her friends were trespassing after hours and she was intoxicated. Knowing these issues could have a significant impact at trial, the parties decided to settle for about sixty percent of full value. Preserving Medicaid was critical to improving her quality of life and an elder law attorney drafted a Special Needs Trust.
Prior to mediation, Madeline’s attorney provided summary medical information to her structured settlement specialist for purposes of obtaining rated ages from the annuity markets. Knowing that any net settlement proceeds would be going into the SNT to provide for a variety of qualified expenditures that would improve Madeline’s quality of life, would need to last as long as she should live, and that Madeline had an uncertain life expectancy, structuring lifetime payments using Madeline’s rated age provided the most certain solution.
The trustee of the SNT provided information on what amount of up-front cash should be deposited into the SNT and knew the lifetime monthly payments would be coming from a highly rated life insurance company with an impeccable record. Madeline continues to receive her Medicaid and SSI benefits and thankfully the structured settlement payments paid into her SNT allow her to life more fully and comfortably.