You were seriously injured in an auto accident due to a distracted driver. You were left with serious or debilitating injuries an unable to return to work. You have filed a lawsuit, but the medical bills are piling up, you need to replace your damage vehicle, your credit cards have reached their limits, and you are unable to return to work due to your injuries. You may even find it difficult to put food on the table. The insurance company extended an offer, but it is much less than your attorney says the case is worth. You wait, but the insurance company keeps delaying. You know they are trying to wear you down to accept the inadequate offer. But, how long can you wait. Financially desperate, you are considering taking their offer. Your attorney says to be patient; lawsuits take time, but time is not on your side. What can you do?

Credit Cards
If you have enough credit available, you can certainly charge expenses on your credit cards. But, there is more to it than simply pulling one out of your wallet. There are monthly payments and accumulated interests. The longer it takes to pay of the credit card, the higher the interest and fees. Furthermore, the debt must be paid even if the case is lost.

Banks
Traditionally, banks and other financial institutions will not provide a loan against a pending lawsuit. Additionally, the application process is time consuming and requires good credit, employment, and collateral. Even if you are approved, banks require monthly. Again, despite the results of the lawsuit, the plaintiff must repay the bank loan.

Family and Friends
Although you can certainly borrow money from family or friends, this could be a tough option. While it may help you with your immediate financial needs, if you lose your case you may still owe the money borrowed or the inability to repay may damage an important relationship.

Litigation Funding
Litigation funding is a risk-free solution to obtaining fast cash while your lawsuit and/or settlement check is pending. Often times termed as a “lawsuit loan”, this cash advance is one of the safest ways to obtain immediate cash during a pending lawsuit. With this emergency cash advance, a plaintiff can not only pay the bills, but is able to withstand lengthy litigation process needed to receive a larger and fairer settlement. The fees associated with litigation funding will be higher than a traditional bank loan or the interest on credit cards because the lending company assumes all the risks. There are no monthly payments and should you lose your case, there is no obligation to repay the cash advance or associated fees.

If you are currently involved in a personal injury lawsuit, don’t wait another day for the financial relief you need. Call Litigation Funding Corporation if you need “no strings attached” financial support. We can typically make a funding decision within 24 – 48 hours because we approve cases base on case strength alone; your credit standing and employment history are never considered.

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[This article was originally printed in the Straight Word, a publication of the Burlington County Bar Association.]

In administering a special needs trust, it is crucial that the trustee not advance cash to the beneficiary. Historically, beneficiaries have sent their bills to the trustee for payment. An easier way to accomplish this objective is to obtain a credit card for the trust beneficiary. If the beneficiary has good credit, the card can be obtained in the beneficiary’s name. If the beneficiary does not have good credit or is a minor or is incapacitated, a credit card could be obtained in the name of a family member. The process of determining distributions from a special needs trust should begin by a trustee and beneficiary and/or beneficiary’s family developing a budget. The budget would be broken into three main categories.

One would be shelter expenses. The second would be transportation, and the third would be personal items. Generally, trustees should avoid paying for in-kind support and maintenance (ISM). ISM is defined as food and shelter. There are ten items of shelter expense that constitute ISM. Other categories of shelter expense do not count as ISM. The ten items that do constitute ISM are: mortgage payments, property insurance (if required by the mortgage holder), rent, gas, electricity, heating fuel, water, sewer, garbage collection service and real estate taxes. Frequently, the trustee must pay these expenses because the beneficiary simply does not have sufficient income to do it. Payment of these expenses results in a reduction of the SSI payment of one-third or one-third plus $20, depending on living arrangements. Transportation expenses include the purchase of a vehicle and maintenance including gasoline. It is easier for the beneficiary to get a credit card and pay for gas by a credit card than it is to pay cash. There are a whole host of personal items that can be more easily paid for by credit card than by cash or by sending bills to the trustee for payment.

During the last year, the POMS were changed to permit a special needs trust to reimbursement a third party for goods or services purchased on behalf of the trust beneficiary. This makes it easy for a parent to use a credit card to buy items for the beneficiary and have the credit card bills sent to the trustee for payment. However, there are certain rules that must be strictly followed. If it is impossible for the beneficiary or a family member to obtain a credit card due to bad credit, a secured credit card should be considered. Under a secured credit card, a deposit is made with the credit card issuer and an agreement signed so that if the credit card is not paid, the issuer can obtain payment through the funds on deposit to secure the card. The agreement must be carefully drafted to insure that under no circumstances will the beneficiary ever receive the funds on deposit with the credit card issuer. Rather, those funds would be returned to the trustee.

Credit Cards

In appropriate cases, the trust beneficiary, if an adult and competent, should obtain a credit card. The credit card should have a low limit so that it is not abused. Credit cards are loans, and loans are not considered income for SSI purposes.[1] The POMS state, “If a trust pays a credit card bill for the trust beneficiary, whether the individual receives income depends on what was on the bill. If the trust pays for food or shelter items on the bill, the individual generally will be charged with in-kind support and maintenance (ISM) up to the Presumed Maximum Value (PMV). If the bill includes non-food, non-shelter items, the individual usually does not receive income as a result of payment, unless the item would not be a totally or partially excluded non-liquid resource the following month.”[2] The trustee must examine each credit card bill to determine a number of factors:

• Did the beneficiary obtain cash from the credit card? If so, the cash would be income in the month received.

• Did the beneficiary charge any items that constituted ISM?

• Did the beneficiary charge any items that were for the benefit of a third party, rather than the trust beneficiary? If so, there would be a violation of the sole benefit rule and there may be a transfer of asset penalty.

The trustee may refuse to pay an inappropriate credit card bill or the inappropriate portion of a credit card bill.

In some situations, the beneficiary of a trust utilizes a credit card for items that violate the sole benefit rule. The trust may refuse to pay the bill. For certain beneficiaries, the trustee may want to negotiate a payment plan so that the beneficiary can make payments from his or her Social Security income. If negotiations fail, the trustee should petition the court prior to paying for a debt incurred for purchases made in violation of the sole benefit rule. Additionally, the credit card should not be used to pay for items that would be ISM, if this can be avoided.

If there is a third-party special needs trust, distributions for payment of credit card balances where the beneficiary has purchased items for the benefit of others do not violate the sole benefit rule. The trustee may want to seek reimbursement for such charges in appropriate cases.

Gift Cards/Gift Certificates

Trustees love to give trust beneficiaries gift cards or gift certificates. However, gift cards and gift certificates are considered cash equivalents. If a gift card/certificate can be used to buy food or shelter (e.g., restaurant, grocery store or VISA gift card), it is unearned income in the month of receipt. Any unspent balance on the gift card/certificate is a resource beginning the month after the month of receipt. If the store does not sell food or shelter items (e.g., book store or electronic store), but the card does not have a legally enforceable prohibition on the individual selling the card for cash, then it is still unearned income.[3] Best practice dictates the use of credit cards for beneficiaries of special needs trusts rather than gift cards.

[1] 20 C.F.R. 416.1103(f); POMS SI 01120.201 I 1 d.

[2] POMS SI 01120.201.I.1.d.

[3] POMS SI 01120.201 I 1 e.

Financial Accounts
If you and your spouse have any joint financial accounts, it is likely that either of you may withdraw the entire balance at any time. Two possible precautionary actions to take are to withdraw what is rightfully yours, leaving the account in place, or to close the account by way of separate checks issued to each spouse. However, keep a close accounting of any monies spent, in case the court wants to know where the money went. Consider carefully whether you believe your spouse might make unreasonable withdrawals from the accounts and be sure to consult with your attorney before taking these steps. This action in particular may exacerbate tension between the parties. In Florida, actions take which will prejudice the other party, such as closing accounts leaving them with no access or means of support may result in serious adverse sanctions by the court against the party closing the account.

Set up new accounts solely in your name to replace the joint account. Make sure any direct deposits from your employer or between your accounts go to your individual accounts.

If you co-rent a safety deposit box, write down a careful inventory of its contents and consider whether to remove anything. At the very least, make copies of documents therein.

Loans and Credit Cards
If you and your spouse both signed an application for a loan or credit card, or the statements are addressed to both of you, the account is joint, and you are liable for amounts owed. If you believe your spouse will run up the credit line, then speak with an attorney and file quickly, as generally the date of filing is the date that is used for division of liabilities. If you and your spouse are in agreement you may close the account to further purchases by either party. Obtain a credit report to make sure you are aware of all accounts that are open in your name.

Financial Records
Locate and safeguard the records of all finances that are solely yours, and obtain either originals or copies of records of all joint accounts. This includes tax returns, account statements, checkbook ledgers, insurance policies, credit card bills, and loan applications.

Communication
Consider opening a post office box or mailbox in order to receive sensitive mail outside your home. Have all financial and legal information sent to the new address. Change your passwords for your email, voicemail, computer, smart phone, and online financial accounts. Even if you do not recall giving your spouse a password, you may have mentioned it in the past or your spouse may have otherwise obtained it.

Vehicle
Make sure you have your own copy of keys to vehicles that are owned jointly. If possible, ensure that your spouse does not have a key to a vehicle that is solely yours.

If you and your spouse remain amicable despite facing the possible end of your marriage, and you feel certain he or she would not violate your trust, these precautionary measures may not be necessary. If you are unsure, go over this list with your attorney to decide what steps to take.

Alston & Baker, an Affiliation of Professional Associations: The Law Office of Robert C. Alston, Esq., P.A. and The Law Office of Marcie L. Baker, Esq., P.A. To contact a Zephyrhills divorce lawyer call 1.888.500.5245 or visit http://www.alstonbakerlaw.com.