A Family Benefit Trust (Family Trust) can preserve the Medicaid and SSI eligibility of minor children when their parents receive proceeds from a settlement or other source. By using the settlement proceeds to fund a Family Trust, the entire family can benefit. The minor child benefits because his or her Medicaid and SSI eligibility is preserved, and the parents benefit because the Family Trust can be used to provide for the security and needs of the entire family.
For minor children who need to qualify for Medicaid and SSI, the assets and income of their parents are counted through to the child for purposes of determining the child’s financial eligibility. The Social Security Administration calls this process “deeming”, and the parents are referred to as “deemors”. A properly established Family Trust is based on the fact that deemors can make uncompensated transfers of their assets without causing any transfer penalties for their minor children who receive Medicaid and SSI.
While the basic rule for establishing a Family Trust is relatively straight-forward, it is critical that the trust document be properly written. For example, to protect the minor child’s eligibility, a Family Trust still needs to contain certain special needs provisions as it relates to the child. It is also critical that the Family Trust be administered properly so that trust disbursements are made in a manner that protects the minor child’s Medicaid and SSI. These means that the trustee of a Family Trust must understand the trust document and be experienced with Medicaid and SSI rules so that the substance and form of trust disbursements will comply with the necessary rules.
Even though a Family Trust must have special needs provisions for the minor child, one important difference between special needs trusts and Family Trusts is that Family Trusts can have very liberal disbursement standards. One other very important difference is that Family Trusts are not required to contain payback provisions, which means that parents are free to name other family members as remainder beneficiaries of the Family Trust.
If you are a plaintiffs’ attorney, call the attorneys at Staunton & Faglie, PL for more information on how a Family Benefit Trust can be created to meet the specific needs and goals of your clients.
The attorneys of Staunton & Faglie, PL have a proven history of working with plaintiff attorneys and their clients. We work hard to maximize personal injury settlements and to insure that the needs of plaintiffs are given first and foremost priority.
Protecting the Client
It is not unusual for personal injury clients to wait a considerable amount of time before receiving a measure of justice. This can create financial hardship for clients in addition to the hardship created by their injuries. These clients naturally look forward to how their settlement proceeds will improve their lives and help them get a new start. Because injured clients can never truly be made whole, settlement maximization is often the critical factor that has the biggest post-settlement effect on their lives.
Protecting the Attorney
It is generally recognized by the plaintiffs’ bar that personal injury cases have become increasingly more complicated to resolve. Not only do defense tactics make cases harder to settle, but the days are gone when plaintiff attorneys could obtain a good settlement and release the proceeds to a client worry-free. Today, plaintiff attorneys are nagged by such issues as public benefit eligibility, subrogation claims, and Medicare Set-asides to name a few. Being nagged by these issues is not an overreaction since legal malpractice claims most commonly involve claims of negligence.
By consulting with Staunton & Faglie, PL, plaintiff attorneys can rest assured that they are protecting the interests of their clients and maximizing their settlements while simultaneously protecting themselves from potential claims of negligence.