Supplemental Needs Trusts - De Caro & Kaplen, LLP

Supplemental Needs Trusts

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Supplemental Needs Trusts & Brain Injury

Michael V. Kaplen: What is a supplemental needs trust? Attorneys handling traumatic brain injury cases need to protect the assets recovered on behalf of their clients and to take the necessary steps to insure the settlement does not jeopardize their client’s right to government benefits such as Medicaid.

I am proud that our law firm was involved in one of the first cases in the nation which protected the funds of a brain injury survivor and allowed this individual to continue receiving government benefits.

After all, the settlement funds that we as brain injury attorneys were able to obtain were never intended to replace these government benefits, but were intended to compensate the brain injured individual for their pain and suffering, their disability and for their lost wages.

Since these settlement funds may be insufficient to replace government sponsored benefits, these funds and the government benefits that our clients receive, both need to be protected.

Many of our clients, both children and adults are receiving Medicaid assistance which provides both medical care and home based assistance following a brain injury.

Since Medicaid benefits are based upon the financial assets of the individual, if a case is settled and the funds are given directly to the client, the individual will become ineligible for continued Medicaid benefits.

To protect the client’s assets and continue Medicaid eligibility, the funds need to be placed in what is commonly known as special needs trust or a supplemental needs trust. Under this plan, the money is held in trust for the brain injured individual and is administered by a trustee.

The terms of the trust provide that the funds can be used for any purpose other than what Medicaid pays for.

Therefore some of the things that can be funded through the trust are:

  • Medical expenses and treatment not covered by Medicaid.
  • Expenses for home care attendants that are not covered by Medicaid.
  • Rehabilitation care not funded by a government program.
  • Special living arrangements, remodeling of a home and properly equipping a home for a handicapped individual.
  • Transportation expenses for items such as a specially designed van or special chair can be obtained through the use of a special needs trust and still preserve Medicaid eligibility.
  • Educational equipment such as computers or special learning devices or memory aides can be obtained through the trust.
  • Importantly, recreational expenses for an individual’s vacation or leisure travel or travel to see friends and relatives can all be paid from the trust .

But, there are very special rules that need to be followed in the creation of the trust and it is important that your brain injury lawyer consult with other attorneys who possess the specialized knowledge necessary to create the trust.

You and your brain injury attorney need to know the following:

  1. The trust can only be created for an individual under the age of 65.
  2. If Medicaid has paid money for the individuals care up to that point in time, then arrangements must be made with the Medicaid program to reimburse Medicaid for past payments before the settlement funds are placed in the trust.
  3. If funds remain unspent in the trust upon the individual’s death, then the funds that remain must be used to first pay back Medicaid for any expenses that they have paid during the individual’s life before the remainder can be distributed to the person’s heirs.

It is always important to discuss the creation of a supplemental needs trust with your attorney before your brain injury case is settled.