Settlement Trusts and Planning

Experienced guidance for settlements involving minors and incapacitated adults.

Planning for Long-Term Security

Folks are surprised to discover that, in addition to handling estate planning, probate, trust and business issues apart from their core elder law areas of practice, elder law attorneys are often called upon to become involved in personal injury cases, and specifically where the case involves a settlement on behalf of a plaintiff who is a minor or incapacitated adult.

Legal document for injury claim
Seniors discussing paperwork with advisor

Why Specialized Legal Guidance Is Essential

The reason for the elder law attorney’s involvement is, in the case of a disabled adult, because the plaintiff is usually receiving public benefits (such as Supplemental Security Income (“SSI”) or Medi-Cal) or, in the case of a minor. After all, the minor cannot receive the funds outright. The plaintiff’s attorney is concerned that if the settlement proceeds are not invested properly or handled in the correct manner, the funds may render the plaintiff ineligible for public benefits or, even worse, be squandered by adults who are in charge of the funds.

General Questions That Can Arise

Questions that will be foremost in the plaintiff’s mind in the case of a disabled person will be:
 

  • Will receipts of the settlement funds disqualify the plaintiff for the public benefits that s/he is receiving?
  • Will court approval of the settlement be necessary due to the plaintiff’s limited capacity?
  • Will a Medicare Set-Aside Trust be necessary in order to cover the lifetime medical costs of the plaintiff?
  • Should a special needs trust be set up to receive all or part of the funds? Or is a structured settlement appropriate?
  • Is a qualified settlement fund warranted?
  • In the case of a minor, the plaintiff’s attorney (and the minor’s parents) will be looking for guidance on where to place the funds until the minor turns 18. Is the appointment of a guardian necessary?
  • Would the expense of setting up a trust (“Settlement Trust”) be worthwhile? If so, must the funds be paid out when the child reaches 18, or can it be later?
  • Or how about placing the funds in a UTMA account or a blocked account?
  • Is placing the funds in a deferred annuity/structured settlement a viable option?

Choosing the Right Structure

We at the Law Offices of Patrick McNally have worked with personal injury counsel in a variety of cases in counseling on how best to structure the proposed settlement. Specifically, we can assist the personal injury attorney with:

Specifically, we can assist the personal injury attorney with:
 

  • Assessing what public benefits are currently being received by the plaintiff and how receipt of settlement funds will affect those benefits (e.g., Medi-Cal, Section 8 Housing, State Waiver Program benefits, etc.)
  • Reviewing the life care plan prepared by the plaintiff’s physician or long-term care medical advisor
  • Liaising with the structured settlement agent, if requested, to determine an appropriate structure to meet the plaintiff’s needs
  • Identifying and resolving any Medi-Cal and Medicare liens that may be in place and advising on the establishment of Medicare Set-Aside trusts or other set-aside arrangements
  • Drafting 3600 petitions to approve the court settlement as well as related pleadings, including motions to seal, requests for reimbursement for medical expenses advanced by parents/relatives, etc.
  • Reviewing settlement agreements and releases
  • Advice on how to avoid mistakes that may result in a plaintiff being inadvertently bumped off Medi-Cal or SSI (e.g., DO NOT LET SETTLEMENT FUNDS SIT IN YOUR TRUST ACCOUNT!)
  • Recommending and preparing 468b settlement funds when appropriate

If a trust is warranted, we can:
 

  • Prepare the trust (settlement; special needs trust) and appear in court to ensure court approval of the trust
  • Make recommendations on the feasibility/availability of private (usually parents)/professional, or institutional trustees and advise on related issues such as bonding of the trustee, etc.
  • Meet with the trustee to discuss their duties and responsibilities in administering the trust, and prepare and review with them a comprehensive memorandum on how to properly administer the trust and avoid liability for breach of fiduciary duty
  • Assist the trustee in establishing the trust, including obtaining a tax ID number for the trust and timely notifying Social Security of the establishment of the trust
  • Provide ongoing advice and representation to the trustee in the administration of the trust under probate court supervision, including filing biennial accountings for approval by the court and applications to approve special purchases by the trustee, such as a residence/vehicle, etc.
  • Represent the trustee in the context of eligibility reviews or when benefits are improperly terminated by Social Security

Work With a Team Focused on Long-Term Protection

At the Law Offices of Patrick McNally, we work closely with all parties to the settlement, including the settlement attorney, settlement agent, medical advisors, and parents/plaintiffs, to ensure that the best structure is in place and to take care of the future medical and financial needs of the injured plaintiff.

Get Assistance