Special Needs Trust Can Protect Benefits After Personal Injury


Joseph is eighteen years old and requires total care. He has been in his current condition, unable to speak or move and unresponsive to most stimuli, for five years. His family believes his condition is a result of improper treatment he received during a hospital stay, and lawyers negotiated a substantial settlement of a claim made against the hospital at the time.

Bridget and Diane have similar stories, except that their injuries both occurred prior to or during birth. Both require full-time care that is both expensive and exhausting to arrange and manage. Both live with family members, who provide most of that care.

Each of these three individuals (whose names, and some facts, have been changed to protect their privacy) receives care that would cost over $100,000 per year if paid for privately. Each received a substantial settlement as a result of a lawsuit filed by family members years ago—but each would have used up all their settlement proceeds within less than ten years if they had been required to pay for all their care privately.

Joseph, Bridget and Diane are not alone. There are dozens of individuals with catastrophic injuries and substantial, but inadequate, personal injury settlements in our community, and thousands more around the country. Their settlements may have been insufficient because the facts were ambiguous, or the defendants inadequately insured, or the families emotionally ill-equipped to sustain the rigors of protracted litigation. But they all need services they can not afford.

These three individuals have benefited from a 1993 federal law permitting establishment of “special needs” trusts with their personal injury settlements. Although the requirements are stringent and the rules tend to shift, the trusts established for Joseph, Bridget and Diane can pay for transportation, supplemental therapy, supplies and housing, while each remains eligible for federal, state and school programs providing much of the care they require. In this manner, their personal injury settlements can be stretched to provide real benefits long past the time they would otherwise run out.

Establishment of a special needs trust to hold a personal injury settlement can be both a positive and a frustrating experience. Involvement of experienced and knowledgeable legal counsel is essential to successful implementation. There are often less expensive yet equally efficient alternatives available, and qualified counsel can help sort through the options.

Next week: Arizona attacks special needs trusts.

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