As a personal injury lawyer, you are well aware of the difficulties associated with getting large cases resolved. They can be very costly, difficult to prove, and create a large amount of uncertainty. When representing minors or individuals with special needs, this can become even more problematic. A Sacramento CA trusts attorney can help navigate through these muddied waters.
In this short blog, we examine some of the ABCs of understanding and preserving your client’s personal injury settlement or verdict.
Each state has different state laws regarding when a trust is required. But in general, these arise where the plaintiff is either a minor or suffers from special needs. In the case of a minor, the general rule – which again, varies from state to state – is that the proceeds must be held until the minor reaches the age of majority, or 18. Until that time the child is unable to protect himself, so the purpose of the trust is to protect the funds. As a plaintiff’s lawyer, most states will require you to petition the court for appointment of the trustee, as well as approval of the trust. The trustee typically will be a parent, and the terms of the trust may include a provision that will protect the minor plaintiff from being able to claim all proceeds on his/her 18th birthday. It may be structured in such a way as to require that the proceeds are paid out over time. Typically, the trust will also provide for distributions to be made for the health, education, maintenance, and support of the minor. Other exceptions are available as well.
The second type of trust is to protect an individual with special needs. This trust has the goal of protecting injured plaintiff (i.e., the beneficiary) from exploitation. An individual with special needs who is not a minor may not have the ability to adequately protect settlement or verdict proceeds. This type of trust, which again varies state by state, may be administered by a family member, or sometimes a third-party. Most often, these trusts must also be approved by a court as well. As a final note on these “special needs trusts” is that there may be a Medicare or Medicaid impact. If a person who is of limited means meets Medicaid eligibility, but then comes into a large sum of money, then that eligibility may evaporate if a trust is not implemented. A mistake here could come back to haunt you as the lawyer!
In short, you should celebrate receiving a large settlement or verdict on behalf of your client! Cases are hard to win, and you’ve done an excellent job. That said, there are complexities can arise which can have a major impact on both you and your client. In the case of a minor or of an otherwise incapacitated individual, make sure you comply with your state laws on setting up trusts, so that both you, your firm, and your client are fully protected.