You may need a special needs trust in a Naperville catastrophic injury case if it results in permanent disability and you rely on or anticipate needing government benefits like Medicaid or Supplemental Security Income (SSI).
A special needs trust allows you to receive personal injury settlement funds without losing eligibility for these critical programs.
Without this protection, a large settlement could disqualify you from benefits that cover essential medical care and living expenses. If you suffered a catastrophic injury in Naperville that resulted in permanent disability, a Naperville catastrophic injury lawyer can help you understand whether a special needs trust is necessary.
What Is a Special Needs Trust?
A special needs trust, also called a supplemental needs trust, is a legal arrangement that holds assets for the benefit of someone with disabilities without those assets counting against eligibility for government benefits programs. These trusts are specifically designed to supplement, not replace, government benefits.
The trust is managed by a trustee who makes distributions for expenses that government benefits do not cover. Money in a special needs trust can pay for things like additional therapy services beyond what insurance covers, specialized equipment and mobility aids, home modifications for accessibility, personal care attendants, and more.
The key feature of a special needs trust is that you, the beneficiary, do not have direct access to the funds. Instead, the trustee determines when and how money is distributed.
This structure prevents the trust assets from being counted as resources that would disqualify you from means-tested benefits like Medicaid or SSI.
Why Government Benefits Matter After Catastrophic Injury
After a catastrophic injury that results in permanent disability, government benefits often become essential to your long-term care and financial stability. Understanding what these programs provide helps you see why protecting your eligibility is so important.
Medicaid
Medicaid provides health insurance coverage for low-income individuals with disabilities. Unlike private insurance, Medicaid covers many long-term care services that private plans do not, including extended nursing care, home health services, and specialized therapy.
Supplemental Security Income
Supplemental Security Income (SSI) provides monthly cash payments to disabled individuals with limited income and resources. While the monthly benefit is modest, it provides essential funds for daily living expenses. More importantly, SSI eligibility often automatically qualifies you for Medicaid coverage.
Social Security Disability Insurance
Social Security Disability Insurance (SSDI) provides benefits based on your work history and does not have the same strict asset limits as SSI.
However, if you receive both SSDI and SSI, or if you might need SSI in the future, protecting your settlement funds in a special needs trust remains important.
How Large Settlements Without a Special Needs Trust Can Disqualify You From Benefits
Government benefit programs like Medicaid and SSI have strict asset and income limits. If you receive a personal injury settlement that exceeds these limits, you could lose benefits immediately, leaving you without the medical coverage and financial support you need.
For SSI, individuals cannot have more than $2,000 in countable resources. For Medicaid, asset limits vary by state but are generally in the same low range. A personal injury settlement of $50,000, $100,000, or more would far exceed these limits, making you ineligible for benefits until you spend down the settlement to allowable levels.
The problem is that catastrophic injuries often result in settlements or verdicts worth hundreds of thousands or even millions of dollars.
Without proper planning, receiving this compensation could force you to choose between accepting the settlement and keeping your benefits. A special needs trust for your Naperville catastrophic injury case can solve this problem.
When You Must Establish the Trust
The timing of when you establish a special needs trust is critical. You cannot receive settlement funds directly and then place them in a trust afterward. The trust must be established before settlement funds are paid out.
Your attorney will work with the insurance company or defendant to structure the settlement so that funds are paid directly into the special needs trust. This ensures the money never counts as your personal asset and does not jeopardize your benefit eligibility.
Planning is essential. Before accepting any settlement offer, you need to determine whether a special needs trust is necessary and begin the process of establishing one. This typically involves working with both your personal injury attorney and an estate planning attorney with experience in these trusts.
Who Should Serve as Trustee
Selecting the right trustee is one of the most important decisions when establishing a special needs trust. The trustee manages the trust assets, makes distribution decisions, and ensures compliance with program rules that protect your benefit eligibility.
The trustee can be a family member who is financially responsible and understands the rules governing special needs trusts. However, family members may not have experience managing trusts.
A professional trustee, such as a bank trust department or professional fiduciary, brings experience and objectivity but charges ongoing fees for their services.
The trustee must understand what distributions are allowed without jeopardizing benefits. For example, paying for housing or food directly can reduce SSI benefits, while paying for medical equipment, therapy, or recreation does not.
The Medicaid Payback Requirement After Death
One of the most important features of first-party special needs trusts is the Medicaid payback provision. Understanding this requirement helps you and your family plan appropriately for the long term.
When you die, any assets remaining in a first-party special needs trust must first be used to reimburse your state’s Medicaid program for all benefits paid on your behalf during your lifetime. Only after this reimbursement is complete can any remaining funds pass to other beneficiaries you name in the trust document.
For someone with a catastrophic injury who receives Medicaid benefits for decades, the Medicaid payback amount can be substantial, potentially consuming most or all of the trust assets after death.
Contact Charlie Therman for Help With Your Naperville Catastrophic Injury Case
At Charlie Therman Injury & Accident Lawyers, P.C., we understand the long-term implications of serious injuries and work with estate planning professionals to ensure your settlement is structured properly. Since 2002, we have recovered over $100 million for injured clients, including those facing permanent disabilities.
Our founding partner’s background working for Allstate on the insurance defense side gives us unique insight into how to maximize your compensation, and our 75 years of combined legal experience means we understand the full scope of your future needs.
Choose Charlie and let our family-oriented firm provide the comprehensive representation your catastrophic injury case deserves. Contact us today to see if you may need a special needs trust for your Naperville catastrophic injury case.
