Personal Injury Settlement? You may need a Special Needs Trust!

5 Benefits of a Special Needs Trust for a Personal Injury Settlement

If you or a loved one has received a settlement from a personal injury lawsuit and have a disability or may require government benefits, a Special Needs Trust (SNT) is a crucial legal tool to consider. It’s important that your settlement provides long-term financial security without jeopardizing eligibility for essential public benefits such as Medicaid and Supplemental Security Income (SSI).

Here’s why an SNT can be a smart choice:

1. Preserving Eligibility for Government Benefits

Many individuals with disabilities rely on needs-based government programs like Medicaid and SSI, which have strict asset limits. If you receive a large settlement outright, you could exceed these limits and lose benefits. By placing the funds in a Special Needs Trust, the assets are not counted as your personal resources, allowing you to keep your benefits while still having financial support for your needs.

2. Ensuring Long-Term Financial Security

A lump sum settlement can be quickly depleted without proper planning. An SNT protects the funds from mismanagement, overspending, or financial exploitation. A trustee (whom you can choose) oversees the trust, making distributions according to your best interests while keeping your assets secure for the long run.

3. Providing for Expenses Not Covered by Public Benefits

Government programs typically cover only basic necessities like food, shelter, and medical care. An SNT can be used to pay for quality-of-life expenses such as:

• Specialized medical treatments or therapies

• Assistive technology and mobility devices

• Education and training programs

• Travel and recreation

• Personal care attendants

• Home modifications for accessibility

This allows you to maintain a higher standard of living while still benefiting from public assistance.

4. Avoiding Family Burden and Conflict

Some families consider transferring settlement funds to a relative to manage on behalf of a disabled individual. However, this poses risks such as:

• The funds being misused or spent for unintended purposes

• Exposure to the relative’s creditors, divorce, or bankruptcy

• Ineligibility for government benefits if the funds are later given back

An SNT legally protects the funds and ensures they are used solely for your benefit, preventing financial and family conflicts.

5. Flexibility and Control Over Distributions

A Special Needs Trust can be customized to your specific needs. The trustee can make distributions based on your unique circumstances, ensuring the money is used wisely while preserving eligibility for benefits.

Next Steps: Setting Up a Special Needs Trust

If you are receiving a personal injury settlement and want to maximize your financial security while protecting your benefits, setting up an SNT is a critical step. At KEN NANCE LAW, we can help you:

• Determine the best type of SNT for your circumstances

• Select a qualified trustee

• Ensure the trust is structured properly to comply with legal requirements

Proper planning today can secure your financial future while allowing you to maintain access to essential government programs. If you’d like to discuss how a Special Needs Trust can benefit you or a loved one, please give us a call and we will be happy to guide you through the process.