Settlement Support Services FAQ

Why do I need to bring in a settlement support consultant early in my case?
Oftentimes, an individual’s need for public benefits and future benefits planning starts at the time of injury.  Litigation can take years, but your client’s needs are immediate.  Public benefit medical coverage and cash benefits may be the most important single issue that needs attention at the onset of the case.  Bringing in a settlement support consultant to handle public benefits planning frees the litigator to focus on proving the case.  By planning early, the case can often be structured and settled to minimize the effect of public benefit liens, thus protecting a larger share of the settlement for the client’s long term needs. 
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With a large settlement or inheritance on the horizon, why is my client’s public benefits eligibility important?
The actual settlement received may be a fraction of the amount necessary to minimally sustain the individual throughout a lifetime of disability or lost earnings. For a variety of reasons, settlements often don’t replace an individual’s potential lost lifetime earnings caused by an injury.  The settlement can be further reduced through compromise due to questionable negligence, limited resources or insurance of the tortfeasor, medical and insurance liens, public benefit liens, and not the least of which, the fees and expenses associated with litigation. Despite an excellent litigation result, the injured and family can be very upset and angry over the failure to realize life expectations or to have reduced independence or life expectancy.  Family members frequently do not properly plan for their disabled individual when doing their own estate planning, leaving assets directly in control of the individual and thus causing benefit eligibility problems.  Coordination of the settlement or inheritance with new or continuing eligibility for governmental benefit programs can be essential to helping the injured or disabled individual adjust and sustain as independent a lifestyle as possible.
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When should a special needs trust be considered as part of a settlement plan?
A special needs trust should be considered in any case in which receiving a significant settlement amount would negatively impact current or future public benefits.  Some public benefits are income or asset sensitive and structures standing alone can cause permanent disqualification.  Furthermore, even if public benefits are not involved, spendthrift management or protection from predators may be the most important function of a properly managed trust.  In some cases, the settlement has no impact on the client’s current eligibility, but later on, circumstances change and much needed benefits could be unavailable.  For example, when a child reaches age 18, the income and resources of the parents are no longer counted for SSI or Medicaid eligibility, even if the child remains living at home. Not paying attention to these details with a trust when a case is settled for a minor or disabled plaintiff can create later liability for the litigator when the funds cause ineligibility or are wasted.
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What public benefit liens need to be considered when settling a case?
Both Medicare and Medicaid (called MassHealth or CommonHealth in Massachusetts) medical benefits make conditional payments subject to payback requirements when there is a third party responsible for an injury.  Both agencies have laws and regulations that extend liability for recovery to the injured party, insurers, their attorneys, and even medical providers who are otherwise paid with settlement proceeds.  Medicare is extending its Medicare Set Aside Arrangement (MSA) program from certain Worker’s Compensation settlements to tort settlements as well.  If there is a decedent plaintiff’s estate involved, Medicaid can have a lien on the estate for certain benefits paid even if the conditional payment lien has been paid.  Conversely, if Social Security Disability Insurance (SSDI) benefits have been offset by weekly Worker’s Compensation benefits, then the offset SSDI can be recovered if the settlement includes paying back the Worker’s Compensation. 
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Must a Court be involved in an injury settlement?
When there is an incompetent or deceased plaintiff or family member involved, Probate or Trial Court authority or fiduciary appointment to proceed or settle on behalf of that person is almost always necessary.  Once a Guardianship or Conservatorship is in place for an incapacitated or protected person, a settlement or inheritance cannot be placed into a special needs trust without court authority.  Certain types of special needs trusts require the Court to create the trust if other specific individuals are not available to do so.  With the implementation of the new Uniform Probate Code beginning on July 1, 2009, new procedures and rules are being required on a regular basis over the next several years.  Some insurers may insist on Court oversight to settle even if not otherwise required to protect their defendant’s potential future liability if they feel that the individual is not fully competent. 
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How can settlements be structured to minimize tax liabilities?
Certain settlements have income tax liability, even when personal injury is involved.  Structured settlements can have state or federal estate tax liability upon the death of the plaintiff, and it is necessary that the estate have liquidity to pay the taxes within nine months from the date of death for the entire estate.  Long structures and an early death can create a very large liability.  Planning at the time of settlement can take into account these taxes.
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