Robert, a 40-year-old football coach, was rear-ended by a garbage truck. Robert suffered a traumatic brain injury and complete paralysis of his lower extremities. He is now wheelchair-bound and entirely dependent on others for his daily activities. Robert received a $2 million settlement.
Fortunately, Robert’s parents are only in their early 60s and healthy. They plan to keep him at home to assist with his care as long as possible. They want a plan for Robert that includes funds for group home care when they can no longer care for him.
Settlement Allocation and Considerations
Robert’s gross settlement was $2,000,000. After deducting attorney fees ($800,000), other costs and liens ($200,000), and other immediate needs ($80,000), Robert netted $920,000.
Robert’s settlement plan needs to include funds for the following:
- Respite care
- Personal attendant care services
- Physical therapy and rehabilitation
- Accessible vehicle
- Home accessibility modifications
- Daily living costs (e.g., food, clothing, entertainment)
- Group home care (in the future)
Additionally, Robert receives Medicaid benefits, which his parents would like to continue.
Goals for the Settlement Plan
With all the considerations above, there are three main goals for Robert’s settlement and how it is distributed:
- Maintain Medicaid eligibility
- Provide for present needs while he lives with his parents
- Provide for future needs with a possible stay in a group home
The best option for Robert is a blended approach of a structured settlement annuity and a special needs trust (SNT).
How it Works: Blending a Structure and an SNT
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Robert has $920,000 to work with. By allocating $520,000 to a structured settlement annuity and $400,000 to seed an SNT, he will be able to reach his three goals. Here’s how.
$520,000 is used to purchase a structured settlement annuity. The annuity payments will be distributed directly into the SNT, allowing Robert to maintain Medicaid eligibility. The payments will be distributed as follows:
- Monthly payments of $1,566.13 beginning at age 40; guaranteed for life with 25 years certain.
- $35,000 lump sum payment at ages 45 and 50
- $40,000 lump sum payment at ages 55 and 60
- $50,000 lump sum payment at ages 65 and 70
The monthly payments will help cover Robert’s regular expenses. The lump sum payments can be used for larger purchases, such as a new accessible vehicle or additional home modifications.
Special Needs Trust
The remaining $400,000 will seed the special needs trust, with the monthly structure payments providing a stable funding source. Again, by directing the $400,000 to Robert’s SNT, he can maintain his Medicaid eligibility.
Contact Sage to Learn More
Sage works closely with injured claimants and their families to create plans that improve their long-term quality of life. Contact us today for more information about structured settlement annuities and special needs trusts.