By Thomas D. Begley, Jr., CELA

When a personal injury victim receives a settlement, one of the biggest post-settlement problems is making the money last. If the plaintiff is receiving means-tested public benefits, the monies must be put in a Special Needs Trust. How long do the beneficiary and other family members need that money to last? When the size of the settlement is significant, best practices would dictate that a three-step process be followed:

1. Counseling Session.  A counseling session should be held with the person with disabilities, the family members, if appropriate, the trustee, the attorney drafting the Special Needs Trust and the Personal Injury attorney, if necessary. At that point. a discussion should be held as to what the immediate needs of the beneficiary arc. Typically these would include a home, a vehicle, a vacation and repayment of debt. During the counseling session a budget should be prepared for the plaintiff’s living expenses going forward. The budget could be broken into three sections: (I) shelter expenses. (2) transportation expenses. and (3) personal expenses. For each item of expense a determination should he made as to whether the expense will be paid by the plaintiff or by the trust. A professional trustee should always be used. At that point. the trustee should prepare a Monte Carlo analysis to determine how long the trust will last. The Monte Carlo analysis is complex, but essentially it is based on trust rates of return and trust distributions. The analysis will determine how long the trust will last based on various rates of distribution. It is helpful if the beneficiary can determine how long the trust should last. If it should last the beneficiary’s lifetime and if the plaintiff is healthy, this will likely be calculated on a life of 90 years. If the plaintiff is unhealthy. the life expectancy will be shorter.
2. The Depleting Trust. In most instances the plaintiff will tend to adopt a budget for a lifestyle he or she would like without consideration to how long the trust will last and what will happen when the trust is exhausted. If the professional trustee determines that the trust is beginning to deplete more rapidly than agreed upon, there is a five-step process. These include the following: notification, conversations, planning, documentation and continuous follow up.
   1. Notification. It is recommended that monthly statements of trust activity be sent to all persons required under state statute. These would include beneficiaries, guardians and generally all non-contingent rcmaindermen. If the trust is depleting, a letter should be sent at least annually, indicating:
      1. the current market value of the account:
      2. the amount dispersed over the past 12 months: and
      3. an estimate as to the time in which the trust will be depicted based 0n projected principal distributions for the coming year.
      4. The depiction letter should indicate that steps can be taken to extend the lifetime of the trust.
   2. Conversations. Face-to-face conversations should be held with the beneficiary and interested family members to determine if current budget expenditures can be reduced. If so, what can be reduced immediately and what can be reduced over time? The beneficiary, family and support system must understand that the trust will deplete and the time horizon over which it will deplete. There should be a discussion as to whether a different investment allocation strategy should be employed-either a more aggressive strategy to grow assets or a less aggressive strategy to protect current assets. Finally, there should be a discussion as to whether additional funds will he added to the trust such as payments from Structured Settlement Annuities or additions from family members. If the trust contains depleting assets such as real estate or non-liquid securities, such as LLCs, LPs, oil/gas mineral interests. etc., then there should be a discussion as to whether these assets should be liquidated.
   3. Planning. What is the plan when the trust is depleted? Will the beneficiary then rely solely on government benefits? Will family and friends contribute to care? Will family and friends fund a Third-Party Special Needs Trust to take the place of the Special Needs Trust? Will the Third­ Party Special Needs Trust be funded with life insurance or retirement plans? Is the beneficiary in a private pay facility? Does this facility accept Medicaid? What will happen to the beneficiary if the current caregiver dies? If the trust is depleted, final accountings must be filed for the trust.
   4. Documentation. Trustees should retain documentation of trust administration including:
      1. Monthly statements.
      2. Annual depletion letter.
      3. Other communications such as emails or letters. These communications would include discussions regarding a plan for non-liquid trust assets, beneficiary public benefit programs, discussions among interested parties for extending the trust, a final plan for the beneficiary after the trust ls depleted and final administration needs.
   5. Continuous Follow Up. During the course of administration of the trust, the trustee must ensure that the right benefits are in place, that living arrangements are made, that assets are sold off as required, that the necessary court approvals are obtained and that all steps related to final administration are taken.
3. Basic Principles. The third step in making trust assets last is to understand certain basic principles. Most trustees have a limit on what percentage of trust assets can be spent for the purchase of a home. This generally ranges between 15% and 25%. As a rule of thumb, a trust will last the lifetime of the beneficiary if distributions are limited to approximately 4.5% of trust assets annually.

by Thomas D. Begley, Jr., CELA

Personal Injury attorneys must inquire as to whether their clients are receiving public benefits. Certain benefits are means-tested, so that if the client receives money directly those benefits are reduced or lost completely. This article will outline the common public benefits and indicate whether the receipt of a personal injury settlement will affect those benefits.

Supplemental Security Income

Supplement Security Income (SSI) is a means-tested federal program that provides income (a cash assistance grant) to certain aged (65 or over), blind, and persons with disabilities. The program is administered by the Social Security Administration. It is governed by federal statute,[1] federal regulations,[2] and the Program Operating Manual System of the Social Security Administration (POMS). For 2016, the maximum federal SSI benefit is $733 per month. In addition, the State of New Jersey has a supplement in the amount of $31.25 per month. If an individual has more than $2,000 of assets, he or she will lose SSI. Therefore, the receipt of a personal injury settlement will disqualify the plaintiff from SSI, unless the funds are placed in a Special Needs Trust. 

Social Security Disability Income

This program is known as Old Age Survivors and Disability Insurance (OASDI). It is governed by the Social Security Act.[3] Unlike SSI, which is a means-tested welfare program, Social Security Disability Income (SSDI) is an insurance program. Coverage is based on quarters of Social Security insurance coverage during the applicant’s employment. Receipt of a personal injury settlement will not affect the plaintiff’s SSDI.

Medicaid

Medicaid is a medical insurance program that benefits millions of Americans. There are many ways that individuals qualify for Medicaid. The vast majority of Medicaid recipients receive that benefit, because they are also receiving SSI. If they lose their SSI, they also lose their Medicaid. However, since the Affordable Care Act (ACA), millions of Americans now receive Medicaid regardless of whether or not they are disabled and regardless of whether they are receiving SSI.

For SSI-based Medicaid, there is an asset limit of $2,000. For ACA Medicaid, there is no resource limit. Therefore, receipt of a personal injury settlement by an SSI recipient will cause a loss of Medicaid. However, receipt of a personal injury settlement by a Medicaid recipient who obtained Medicaid through the ACA will not affect eligibility, except that the income from the settlement may push the income of the plaintiff above the income limits for eligibility under the ACA. The solution for an individual receiving SSI-linked Medicaid is a Special Needs Trust. However, under the ACA, only individuals with disabilities are qualified for a Special Needs Trust. Individuals receiving Medicaid under the ACA who are not disabled may not utilize a Special Needs Trust.

Medicaid Waiver Programs

Medicaid Waiver Programs are designed to provide Medicaid coverage for long-term care services. These services are typically delivered in the home or assisted living facilities. These services are vital to catastrophically-injured individuals. These programs have an asset maximum of $2,000. Receipt of a personal injury settlement would disqualify the plaintiff from Medicaid Waiver services, unless the funds are placed in a Special Needs Trust.

Medicare

Medicare is a program that pays medical costs of eligible beneficiaries. Unlike Medicaid, which is a welfare program, Medicare is an insurance program. Receipt of a personal injury settlement will not affect Medicare eligibility.

Federally Assisted Housing

The federal government has two housing programs that provide assistance for low-income individuals and people with disabilities. These are known as Section 2.02 and Section 8. Section 8 is the program that has the most effect on personal injury plaintiffs. The Department of Housing and Urban Development (HUD) pays rental subsidies so eligible families can afford decent, safe and sanitary housing. Each section of the country has a maximum income limit for eligibility for public housing. If a tenant is eligible, they pay 30% of their net income for rent. While there is no asset test for federally assisted housing, if the assets produce income, the income may render the plaintiff ineligible or cause an increase in monthly rental. Income for the entire household is considered.

Payments from a Special Needs Trust are not counted as income, so long as the payments are irregular and sporadic.

Supplemental Nutritional Assistance Program

The Supplemental Nutritional Assistance Program (SNAP) is now the name for a program that used to be called Food Stamps. Recipients are provided an electronic benefit transfer (EBT) card that looks much like a credit card. SNAP eligibility is determined on the basis of household eligibility.

In New Jersey SNAP has complex resource and income limits. Therefore, receipt of a personal injury settlement could disqualify the individual from these benefits, unless the personal injury proceeds are placed in the Special Needs Trust.

Division of Developmental Disability

Many Division of Developmental Disability (DDD) programs are now based on Medicaid eligibility. The asset limit is $2,000. If the plaintiff is receiving or would otherwise be eligible to receive those benefits, then receipt of a personal injury settlement would disqualify them unless it has been placed into a Special Needs Trust. Other DDD benefits would be unaffected by receipt of a personal injury recovery.

Group Home

In New Jersey most group homes are paid with Medicaid dollars. The asset limit is $2,000. Therefore, receipt of a personal injury settlement would disqualify the individual from those benefits, unless it is placed in a Special Needs Trust.

Psychiatric Institutions

Many psychiatric institutions are paid for by Medicaid dollars under Medicaid Waiver Programs. Again, the asset limit is $2,000, so receipt of a personal injury settlement would disqualify the plaintiff unless the funds are placed in a Special Needs Trust.

[1] 42 U.S.C. §1381 et seq.

[2] 20 C.F.R. §416.

[3] 42 U.S.C. §401 et seq. The Regulations are found at 20 C.F.R. §404.1 et seq.

by Thomas D. Begley, Jr., CELA

Personal Injury attorneys must inquire as to whether their clients are receiving public benefits. Certain benefits are means-tested, so that if the client receives money directly those benefits are reduced or lost completely. This article will outline the common public benefits and indicate whether the receipt of a personal injury settlement will affect those benefits.

Supplemental Security Income (SSI)

Supplement Security Income (SSI) is a means-tested federal program that provides income (a cash assistance grant) to certain aged (65 or over), blind, and persons with disabilities. If an individual has more than $2,000 of assets, he or she will lose SSI. Therefore, the receipt of a personal injury settlement will disqualify the plaintiff from SSI, unless the funds are placed in a Special Needs Trust.

Social Security Disability Income (SSDI)

This program is known as SSDI. It provides an income to disabled workers. It is an insurance program, not a welfare program. Receipt of a personal injury settlement will not affect the plaintiff’s SSDI.

Medicaid

Medicaid is a medical insurance program. There are many ways that individuals qualify for Medicaid. The vast majority of Medicaid recipients receive that benefit, because they are also receiving SSI. If they lose their SSI, they also lose their Medicaid. However, since the Affordable Care Act (ACA), millions of Americans now receive Medicaid regardless of whether or not they are disabled and regardless of whether they are receiving SSI.

For SSI-based Medicaid, there is an asset limit of $2,000. For ACA Medicaid, there is no resource limit. Therefore, receipt of a personal injury settlement by an SSI recipient will cause a loss of Medicaid. However, receipt of a personal injury settlement by a Medicaid recipient who obtained Medicaid through the ACA will not affect eligibility, except that the income from the settlement may push the income of the plaintiff above the income limits for eligibility under the ACA. The solution for an individual receiving SSI-linked Medicaid is a Special Needs Trust.

Medicaid Waiver Programs

Medicaid Waiver Programs are designed to provide Medicaid coverage for long-term care services. These services are typically delivered in the home or assisted living facilities. These services are vital to catastrophically-injured individuals. These programs have an asset maximum of $2,000. Receipt of a personal injury settlement would disqualify the plaintiff from Medicaid Waiver services, unless the funds are placed in a Special Needs Trust.

Medicare

Medicare is a program that pays medical costs of eligible beneficiaries. Unlike Medicaid, which is a welfare program, Medicare is an insurance program. Receipt of a personal injury settlement will not affect Medicare eligibility.

Meanwhile, a new report by US Mobile Data Market, Update Q3 2012, suggests that there has been a drop in the number of texts sent each month by users via cell phone, from an average of 699 texts sent during the second quarter of 2012, to just 678 in the third quarter. While some safe driving advocates lauded the drop as a potential indicator that texting-while-driving laws were influencing behavior, the information in the US Mobile report does not drill down enough to indicate which texts were sent via a potentially distracted driver and which were sent in other situations.

According to NHTSA data, there were more than 416,000 car crash injuries and more than 3,000 car crash fatalities in 2010 due to distracted drivers. The NHTSA report also notes an increase from 2009 to 211 by 50 percent in the number of sent text messages.

Texting only seems to be picking up. A survey by the International Association for the Wireless Telecommunications Industry states that text messaging is only growing: 2.206 trillion texts were sent in 2011 and 2.273 trillion (and counting) texts have been sent by late 2012.

The issue with texting during driving is one of distraction. Texting takes enough attention away from the road – researchers believe texting while driving reduces brain activity by some 37 percent and reduces attention by as much as 50 percent, according to the NHTSA. Studies by the federal government show that human error such as distracted driving, is now the leading cause of car accidents nationwide. In 2010, more than 3,000 people in the U.S. were killed in distracted driver car accidents.

The U.S. Department of Transportation has been pushing for more public education on the dangers of texting behind the wheel, from pushing for a ban, now enforced, which forbids commercial drivers to text or use their cell phone while driving, to advocating for tougher laws and penalties for distracted drivers, to launching http://www.distraction.gov, a website devoted to getting the public to “commit to distraction-free driving.”

Nathan Williams is a Brunswick personal injury lawyer, Brunswick divorce attorney, criminal defense and Brunswick DUI lawyer in Southeast Georgia. Visit http://www.thewilliamslitigationgroup.com or call 1.912.264.0848.