Does My Child Need a Special Needs Trust?
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When representing children, it is extremely important to ensure they are taken care of going forward. One way to protect a child’s damages from a personal injury lawsuit for the long term is to set up a special needs trust. In this video, attorney Patrick Montoya explains how special needs trusts work, why they are important, and how they can guard your child’s future.
We think it’s very important when representing children that their future care is taken care of, and frankly guaranteed if at all possible. One of the ways of protecting a child’s assets are the recovery that they make from a lawsuit, is to put those funds in what’s called a special needs trust, or some sort of annuity or trust fund where the money is actually earning interest over time to make sure that it can pay for the needs going forward. We all know that products and services get more expensive year by year by year as we go on. We know we’ve seen medical costs go up. So, an injured child is going to need to make sure that their needs are taken care of going forward. One of the best ways to do that is through a special needs trust or a trust fund, and we can help set those up for the children. Setting up a special needs trust basically involves taking the asset that’s there. Whatever the amount of money is, putting it into a special account that’s protected and that’s secure. And you want the highest and most trusted account, a “AAA” type bond rating for example, for an account. That money goes into a trust and it earns interest over time. Often times the court will appoint a trustee; someone neutral or a family member to oversee that trust. And really what the trust does is make sure that the money is not wasted. Moneys that are needed for essential items such as food, clothing, shelter, education, those needs are paid out of the trust. But if you have a child for example that has a special needs trust and at 16 or 17 all of a sudden wants a fancy car, that’s the type of things that we’re trying to guard against. We’re trying to make sure that the child is provided for, for the rest of their life for the essential things that they need. That trust protects that asset for the child. Special needs trusts are also very important for one main reason. If someone is receiving some sort of governmental benefits or disability, social security disability for example, or a Medicare or a Medicaid, the proceeds for a lawsuit, if they took all those proceeds at once, they would be out of eligibility for those programs. So what the special needs trust allows you to do is to accept the money. The money goes into that trust and then the person can receive the amount of money up until the point where they would lose their benefits. For example, if for Medicare or Medicaid, you could receive up to seventeen hundred dollars a month, and the person was normal income was four hundred dollars a month. A special needs trust would provide that gap of up to thirteen hundred dollars per month to make up the gap in between, but not exceed the seventeen hundred, so the person loses their benefits. So in other words, it’s there to protect the person’s benefits going forward to make sure they get the most health care that they can afford and that they’re entitled to under those benefit programs. For more information, you can contact Colson Hicks Eidson at our website, Colson.com.