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What Purpose Does a Special Needs Trust Serve in Personal Injury Lawsuits?

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What Purpose Does a Special Needs Trust Serve in Personal Injury Lawsuits?

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Personal injury claims or lawsuits may arise when one party suffers as a result of another party's intentional or negligent conduct. Common examples that may qualify for a personal injury claim include car accidents, workplace accidents, medical malpractice, and more. However, some personal injury cases are more severe than others; whenever an injury sustained due to another party's negligence results in long-term or permanent injuries, or even a disability injury, it is important to pursue every option for recovery. In addition to medical bills, lost wages, and pain and suffering that could be claimed in a run-of-the-mill personal injury lawsuit, it may also be possible to pursue compensation for ongoing life care needs in the event that someone suffered permanent damage. This is where a special needs trust might come into play.

A special needs trust can protect an individual’s eligibility for government assistance.

While Medicaid and Supplemental Security Income (SSI) may also assist individuals in this situation, it's important to know that some government assistance programs might count you ineligible based on any financial recovery made in a lawsuit. However, if the money from a lawsuit goes into a special needs trust fund, the money cannot be counted as income and therefore should not affect your eligibility for these important benefits. This is good news, since some special needs expenses may not be covered by these programs.

The money in a special needs trust is exempt from certain restrictions and does not count as income. 

With a special needs trust fund, a trustee—usually a family member or a hired professional—is assigned to manage the trust and disburse the funds as necessary to the injured party. Not only does this protect the funds and ensure that they are available whenever the injured party is in need, but it ensures that the injured party does not have to lose out on any other government assistance; this is because the money in a special needs trust is not counted as income; the reason for this is because the injured person in question does not have direct control over the compensation. That said, the trustee cannot use the funds in a special needs trust in whatever way they choose; the money in a special needs trust can only be used for the benefit of the injured person in relation to their needs.

 A special needs trust fund may cover the following:

  • Rent
  • Cost of a home
  • One vehicle
  • Furniture
  • Household items
  • Special accommodation items used for work
  • Further education or expenses related to the injured person’s occupation or future occupy
  • Funeral and burial expenses
  • Life insurance

It should be noted that none of these items typically count toward the assets considered by SSI and Medicaid programs; these are considered uncountable resources and therefore should not affect your eligibility for benefits. Some examples of countable resources include stock, bonds, real estate other than the home, and even retirement accounts.

A special needs trust is not for everyone but could be useful if you rely on government assistance in one or more areas.

If the injured party does not rely on government assistance programs and does not predict future reliance on these programs, a special needs trust may not be strictly necessary. However, if there is any concern in this area and/or if the individual is likely to suffer long-term or permanent severe disability due to the accident, a special needs trust could be the answer. 

If you suspect a special needs trust might be helpful in your situation or the situation of a loved one, reach out to an experienced personal injury attorney. These attorneys typically offer free consultations and work on contingency, which means clients only pay if they win their lawsuit and not before. An experienced personal injury attorney can acquaint you with all of your options following a successful settlement or verdict from a personal injury lawsuit, including setting up a special needs trust. In fact, your lawyer can even help you decide on and assign a trustee as well as file any necessary paperwork to ensure that you remain eligible for the government assistance benefits that you currently rely on or may rely on in the future.

To learn more about special needs trusts or to discuss your situation, reach out to an experienced personal injury lawyer in your area.

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