1. STRUCTURED SETTLEMENTS, THE PROBATE COURT, AND SPECIAL NEEDS TRUSTS
Bridget O’Brien Swartz, J.D., M.P.A.
State Bar of Arizona Webinar
May 16, 2007

2. Protecting the Personal Injury Attorney from Liability
Ensure client is advised about
- Protecting his/her benefit eligibility, e.g., with special needs trust
- Ability to structure the settlement
Address issues early; don’t overwhelm your client at time of settlement
Ask yourself whether a family member, who may also have a claim, is the right person to nominate as fiduciary

3. Identifying the Public Benefits for which the Client is Eligible
Not all public benefits are needs-based:
Social Security (retirement)
Social Security Disability Insurance (SSDI)
Medicare
Some public benefits are needs-based:
Supplemental Security Income (SSI)
Medicaid
TANF, Food Stamps, Section 8

4. Social Security Benefits for the Disabled: SSDI
Federal program
“Disabled,” i.e., unable to engage in substantial gainful activity
Based on the claimant’s earnings record or that of a retired, disabled or deceased parent if disabled before age 22 and through date of application
Eligible for Medicare 24 months later (note 5 month waiting period)

5. Social Security Benefits for the Disabled: SSI
Cash benefit based on need
Elderly (age 65 or over), blind or disabled
Resource and income test
Resources and income of spouse or parent “deemed” to eligible spouse or child under 18 living in household
Automatic Medicaid eligibility

6. Medicare Eligibility
Not based on financial need; settlement won’t affect eligibility
Must be age 65 or older, eligible for SSD or RRD for 24 months, or have end stage renal disease
Limited skilled nursing care coverage (institutional and home health care)

7. Medicaid Benefits Federal/state program Administered by AHCCCS or ADES
Provides coverage for otherwise uninsurable
Automatically eligible if SSI-eligible
If not SSI-eligible, must satisfy resource and/or income test
Waiver programs provide home health care

8. Structured Settlements and Public Benefits
Structured settlements = “unearned” income
“Deeming” applies to structured settlements payable to ineligible spouse or parent of minor who is SSI-eligible
Structured settlements payable to “financially responsible” relative counted as income for household of individual eligible for AHCCCS, food stamps, TANF

9. Striking a Balance with Structured Settlement Annuities
Consider size of settlement in determining whether to utilize a structure
Factor into decision up front cash needs, e.g., handicap-equipped vehicle and home
Consider unanticipated expenses
Don’t put all your eggs in one basket-DIVERSIFY!

10. Special Needs Trust Established by - parent - grandparent - guardian
- court
Beneficiary must be
- disabled
- under 65
Payback provision

11. Pooled Trust LIKE SNT EXCEPT: Can be “established” by disabled person
Can be over age 65
Managed by non-profit
Assets pooled for investment
Individual accounts maintained
No payback if assets remain in trust

12. The Life Care Plan
Use the plaintiff’s life care plan as a tool in determining the best way to structure (preferably, before mediation)
Identify what services in the life care plan are anticipated to be covered by public sources
Look for and price structures using favorable rated ages for those items that will be paid for privately
Finally, determine the best way in which the structure can fund a SNT to meet the needs of the individual

13. Oh, no! We don’t have enough time . . .
If you need time to do the following:
- compromise liens
- determine allocation among claimants
- evaluate structured settlement annuity options
- establish special needs trust

14. § 468B Qualified Settlement Funds: The Requirements
Must have more than one claimant
Must be trust, account or fund approved by court order
Must be trust under applicable state law
Treated as a corporation for income tax purposes

15. § 468B Qualified Settlement Funds: The Advantages
Removes defendant, their counsel, and structure broker from equation
Plaintiff’s attorneys’ fees/costs can immediately be paid
Plaintiffs receive income from the settlement held in the fund (after taxes)
No constructive receipt!

16. Probate Court Approval
Minor
Incapacitated Adult or “Person in Need of Protection”
Allocation
Attorneys’ fees and costs
Structured settlement
Special Needs Trust