What can I do to Provide Future Care for My Loved One?
When a serious accident leaves a spouse or child debilitated with a need for lifelong medical care, a number of legal and financial issues must be addressed in order to provide future care for them. While a large settlement or personal injury award is important for providing financial support for in-home nursing care, medical equipment, hospitalizations, future surgery, and physical therapy, planning for how your family member’s care will be paid for after you’re gone is essential. In general, there are two options – a structured settlement or establishing a special needs trust (also referred to as “supplemental needs trust”). In both cases, there are certain tax advantages that should be considered, as well as how each could affect Medicaid eligibility calculations.
If the settlement or award won in a personal injury case involves a large sum of money, you can choose to have the money paid in installments over a specified period of time. Payment schedules can be on a monthly, quarterly, semi-annually, or annual basis. Structured settlements can last for the lifetime of a recipient with a beneficiary named for any remaining amount should the recipient pass away before all of the funds are distributed. Alternatively, a lump sum option can be included or a date named after which the amount disbursed can be increased. Regardless of which option you choose, structured settlements are not taxable.
Here, structured settlements can be customized to meet the unique needs of an injured person and his or her family. For instance, if a debilitating head injury or spinal cord injury has left you or your spouse unable to work, a structured settlement can provide you with monthly funds to pay your mortgage, rent, utilities, medical bills, and needs for your children. The amount paid can be increased once your children are of college age and need to attend school.
Special Needs Trust and Medicaid Eligibility
A special needs trust allows you to set up a trust using money from a personal injury settlement or award in order to provide for the upkeep and care of the person injured. Not only are the funds in a special needs trust exempt from federal income tax, they are also exempt from Medicaid eligibility calculations. This is especially important since, in order to qualify for Medicaid, you must first spend down your asset or be impoverished. Consequently, a catastrophically injured person with a special needs trust doesn’t have be impoverished to received long-term care benefits from Medicaid that can help defray the costs of institutional or in-home care.
San Francisco Bay Area Car Accident Injury Attorneys Weber & Nierenberg
If you or a family member has been seriously injured due to a car accident, truck accident, motorcycle accident, construction accident, or slip and fall, email San Francisco, California personal injury attorneys Weber & Nierenberg today. We’re experienced personal injury attorneys who can discuss whether a structured settlement or special needs trust makes sense for you and your family.
For more information regarding our practice or to speak with one of our attorneys for a free consultation, call Weber & Nierenberg at 415-788-3900.