It may be hard for a prevailing plaintiff to imagine that winning a personal injury judgment or settlement could make it more difficult to afford housing and medical care, but that is often that case for people who receive Medicaid and Supplemental Security Income (SSI). Unless the award is substantial enough to provide for the recipient for the rest of his or her life, clients and their personal injury attorneys should consider whether a self-settled supplemental needs trust may be right for them.
Amounts received as a result of a personal injury case are countable resources that may make an individual ineligible for Medicaid and SSI. Whether a person is disabled as a result of the injury that is the subject of the lawsuit or whether the client has a pre-existing disability, an award of more than $2,000 could render that person ineligible for any government benefits until the entire award is spent on his or her care.
A “self-settled” or “first party” supplemental needs trust may be the answer. This type of trust is designed to hold the assets of a disabled person, and is typically created for large accident settlements or inheritances that are given directly to a person with special needs. If properly drafted, the funds held in a self-settled supplemental needs trust will not count against a disabled person if that person requires government assistance in the future, and can be used to pay for almost anything a disabled person may need or want. However, it is important to note that the terms of the trust must provide that the government is entitled to receive reimbursement from the trust when the beneficiary dies, up to the total amount of the assistance the beneficiary receives from the government after the creation of the trust.
If you have been injured and are thinking of pursuing or settling a personal injury case, you and your personal injury attorney should consider discussing the creation of a self-settled supplemental needs trust with an experienced estate planning attorney. Doing so could turn a potential curse into a blessing for years to come.