Obtaining a personal injury settlement is, without a doubt, a victory for the plaintiff. But what might come as a surprise later is that the influx of money from the settlement can disqualify the same person from government benefits like Supplemental Security Income (SSI) and Medicaid. A big part of what we do at Milestone is helping those plaintiffs plan ahead so they can receive their settlement without impacting their eligibility for benefits.
Establishing a special needs trust is one way to set up a system in which a person can fully benefit from SSI and Medicaid AND the settlement. A special needs trust ensures funds from a personal injury settlement go to expenses that SSI and other means-tested government programs do not cover. These “non-countable” resources include things like a home and furnishings, a vehicle, a college degree, a life insurance policy, and others. Meanwhile, the benefits programs work in harmony by covering medical expenses and so on. In this scenario, an injured person can still benefit from the government programs while making the most out of settlement.
As with any trust, there are costs to consider when deciding what’s best. Fees to establish and maintain the trust can be thousands of dollars. It’s not always easy to tell how much is too much for these fees.
Simply put, a special needs trust should cost no more than 1.25% each year. Using a nearby bank or a big national institution might seem like the safest way to get started, but it is actually the most expensive route. Trustee fees and expense ratios can run as high as 3% annually. In contrast, a professional and independent trustee will have fees of about 0.5% to 0.6%.
Working with someone who has your best interest in mind can help cut through the mountains of information and possibilities with regard to trustees. If you believe a special needs trust might be the way to go before settlement arrives, it’s important to speak with a comprehensive settlement planner to get a full cost-to-benefit analysis and discuss your trustee options.
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).