Settlements can be received from a variety of claims. More prevalent claims we see are from Personal Injury Claims and Medical Malpractice Claims.
We have the honor of helping families and attorneys determine how to try and ensure that the receipt of a personal injury or medical malpractice award does not result in the loss of public benefits, such as Arizona Long Term care (ALTCS) benefits and Supplemental Security Income (SSI). Many individuals who have been impacted by an accident or medical malpractice event are also receiving benefits from ALTCS or SSI to cover medical expenses, long term care costs and loss of income. These two specific programs are available when someone has low income, low assets and meets the medical criteria. The receipt of settlement money may mean the loss of these important benefits.
It’s important to determine whether the amount of money being received is sufficient to cover the health care and caregiving needs of the injured party. If the funds are sufficient to meet all of the needs of the injured party, there may be nothing else to do. However, for the vast majority of people, the costs of care far exceed the amount of money being received. Remember to do your evaluation on the net amount that will be available, I.E. the amount after all of the medical liens are paid, outstanding debts are paid, attorneys’ fees and costs and any court costs are paid. Next, try and determine if there are immediate costs to be covered, such as the purchase of a handicap accessible van or other transportation, home accommodations, housing, assistive devices and other needs.
A Special Needs Trust might be the vehicle needed to hold the funds once immediate expenses are paid and to try to ensure that the government benefits remain available. These trusts are often referred to as “First Party Special Needs Trusts.” Some of the hallmarks of these trusts are: they are funded with money of the injured party; the Trustee must follow specific rules in making distributions to or for the benefit of the injured party; and any funds remaining in the trust at the death of the beneficiary must be paid back to ALTCS and/or any other Medicaid programs that provided care. This must all be done before the funds can be used for any other purpose or distributed to other beneficiaries.
It’s important to remember that the money in the trust is for the sole benefit of the injured party. For example, the trust can pay for transportation for the injured party, his/her share of the household expenses, his/her computer, phone, education, vocational training, funeral/cremation, entertainment and in some cases the vacation costs of the injured party and one other person if the injured party cannot travel alone. These are the most common uses of a special needs trust.
As with all things legal, it’s complicated. But we are here to help!
Written by: Jennifer Kupiszewski, Esq.
The lawyer disclaimer: We hope you find this informative, but it is not legal advice. You should consult your own attorney, who can review your specific situation and account for variations in state law and local practices. Laws and regulations are constantly changing, so the longer it has been since this was written, the greater the likelihood that the information might be out of date.
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