No one expects a preventable birth injury to happen. Now, as a parent, you’re in the middle of a medical malpractice lawsuit to obtain the compensation your child will need as he or she lives with that injury. But what’s the best method of creating a lifetime of financial stability with that settlement once it comes in?
As a settlement planner, I often come across parents of children with special needs that have stemmed from a birth injury. And, not surprisingly, a study found that the greatest concern for parents of children with special needs is financial well-being. I have that conversation with clients just about every day.
It can take a tremendous effort on the part of the entire family to provide for a child with special needs. If the finances aren’t there, the family may need to rely on government benefits to provide the necessary medications and equipment to support the child’s needs. That’s why for many families approaching a personal injury settlement for a child, establishing a special needs trust is the planning method of choice. It can protect the family from disqualification of government benefits while making sure that the child’s needs are taken care of in the long term.
What a Special Needs Trust Does
A special needs trust is designed to allow an individual under the age of 65 to have access to property while protecting their present and future eligibility for needs-based government benefits like Supplemental Security Income (SSI) and Medicaid. The fund can be set up privately or by court order. In either scenario, a trustee must be appointed to administer the trust.
What a Special Needs Trust Covers
Special needs trusts are not meant to provide everyday support. Rather, they cover needs that may not be covered by government benefits. These expenses may include education, counseling, recreation, food, clothing, and shelter. For the families of catastrophically injured children, this can provide the assurance that long-term benefits will be accessible, including in-home nursing, attendant care, and/or facility care.
Setting Up a Special Needs Trust
There are many moving parts that go into creating a special needs trust. At its core, there are four major steps involved:
- Identify a comprehensive settlement planner: Great settlement planners know the ins and outs of establishing a special needs trust. They can answer questions and help guide parents through each step of the process.
- Select a trust attorney: As most states have their own body of law governing Medicaid, it is important to choose a trust attorney with experience in adhering to the legal regulations associated with this type of trust.
- Establish a fiduciary relationship and vet potential trustees: Whether a family member, friend, or corporate trustee is chosen, it is important that he or she understands the responsibility that comes with serving as a trustee and acts in the best interests of the child.
- Strategize appropriate funding options: Funding options can include annuities, savings, stock/mutual fund investments, real property, and/or retirement accounts.
Parents must weigh the potential benefits that may be needed for their child long after they are gone. A special needs trust can be a valuable tool for providing lifelong financial security. For more information, feel free to contact my firm, Milestone Consulting.
A West Point graduate where he served as captain and military aviator, John Bair continues his commitment to our country through his efforts within the settlement planning industry. He has represented families of victims lost in the Flight 3407 crash, offered pro bono services to the families of 9/11 victims and drafted the first consumer protection bill for plaintiffs (H.R. 3699).