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If your child has sustained a catastrophic injury, it might seem beyond crazy to stop and think about money. After all, settlement could be on the way, which should be enough to cover lifelong expenses related to the injury. Unfortunately, it’s not that simple.

Your child might already be receiving government benefits like Supplemental Security Income (SSI) and/or Medicaid. But with the influx of settlement money, his or her eligibility could change. On top of that issue, a large lump sum isn’t easy to manage for a lifetime.

That’s where settlement planners come in. There are lots of options for managing your child’s settlement money, no matter the amount, and an experienced adviser will be able to help you choose the most beneficial one for your family. Below are a few financial planning options you might discuss.


Trusts are often a helpful tool to manage your child’s settlement. A special needs trust is intended to supplement, but not replace, government benefits by paying for non-covered services or equipment.

With as little as $50,000, a pooled trust will safeguard the assets when your kid is a minor, and it will act as the steward of the assets at age 18 and beyond.

A domestic asset protection trust offers the opportunity for lifelong planning and protection of one’s assets from any judgments, creditors, bankruptcy, divorce, business failure, and liability from accidents. Anyone can establish this type of trust to protect their assets at any time.

A settlement planner can establish a discretionary support trust to identify the minimal distributions a trustee must make to provide basic support to a disabled individual while still giving the trustee broad discretionary powers over the money. The beneficiary will be guaranteed coverage for basic needs, but the trustee maintains control.

Blocked Accounts/Simple Guardianships

All states have a simple guardianship or blocked account option for minors. If you are recovering or settling the case for more than $10,000, most states require court approval for any planned or unplanned disbursements.

With blocked accounts, there is far less interest growth than with other options, as the money is kept in a savings bank account. In addition, the account will be available to your child at age 18. The viability of this option depends on each individual case.

529 Savings Plans

Many parents consider investing in a 529 savings plan when planning for their child’s college years. The money in a 529 plan grows tax-deferred. Additionally, if the child attends college and uses the money for qualifying expenses such as tuition, books, supplies, and equipment, the distributions are exempt from capital gains or earned income. Some courts will allow these savings plans, but it’s critical for parents to receive unbiased advice on this option, especially regarding the associated fees and costs.

These financial decisions carry lifelong implications for your child. That’s why it’s helpful to consult with a settlement adviser to make an informed decision.

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