Things to Ask Before Consulting a Settlement Planner

By March 27, 2019 April 1st, 2019 Structured Settlement

Settlement planners, also known as estate planners or special needs attorneys, are specialists in the setting up of structured settlements, mainly with the purpose of preserving the eligibility of disabled claimants for certain needs-based disability benefits. They also work on behalf of other vulnerable members of society such as minors and those without the capacity to make sound financial judgements.

Settlement planners are used to working in multi-agency teams which might include financial planners, CPAs, trust and estate attorneys and personal injury attorneys. If you are a personal injury attorney and you think it is in your disabled client’s best interests to set up a structured settlement, you will probably want to bring in a settlement planner. However, it is a good idea to be prepared with answers to the following questions before you make that call:

Do you or your Client Need the Help of a Settlement Planner?

Each case and every structured settlement is different but working alongside a professional settlement planner is always recommended whenever you are involved in setting up guaranteed or life contingent structured settlements for disabled people. However, it is particularly important if the defendant has a settlement planner working with them. Without an equivalent on your team, you and your client will be at a disadvantage as the defendant’s settlement planner will be looking mainly to minimize the exposure of their client. You will need access to the specialist knowledge of a settlement planner to understand fully the implications of what is being proposed and also to challenge any proposals that would negatively impact on your client’s present or future finances.

Structured settlements are complex tools at the best of times but when vulnerable people are involved, the implications of making a wrong decision can be catastrophic – both for the plaintiff and you as a professional lawyer with a reputation to uphold. Unless you have extensive personal experience with settlement planning, it isn’t worth the risk in going it alone as a little knowledge is a dangerous thing.

One of the most complex issues when dealing with structured settlement planning on behalf of disabled people is the link between structured settlement benefits and public disability benefits. Failing to understand which benefits your client is in receipt of (or applying for) could jeapordize their eligibility for those benefits. Once benefits have been stopped, it can take a long time to reinstate them, causing extreme hardship not to mention stress and upset to your client. This is not going to do your reputation as a personal injury attorney much good and it could even land you with a legal malpractice, breach of fiduciary duty or deriliction of duty claim. So if the defendant has hired a settlement planner, you should to!

One of the most complex issues when dealing with structured settlement planning on behalf of disabled people is the link between structured settlement benefits and public disability benefits. Failing to understand which benefits your client is in receipt of (or applying for) could jeapordize their eligibility for those benefits. Once benefits have been stopped, it can take a long time to reinstate them, causing extreme hardship not to mention stress and upset to your client. This is not going to do your reputation as a personal injury attorney much good and it could even land you with a legal malpractice, breach of fiduciary duty or deriliction of duty claim. So if the defendant has hired a settlement planner, you should to!

Which Disability Benefits Does your Client Claim?

Understanding the type of benefits a plaintiff is in receipt of (or is planning to claim for) is of utmost importance. If they are only eligible for entitlement benefits such as SSDI (Social Security Disability), Social Security Retirement or Medicare, you might decide to go it alone. Settlement planning will not have an impact on these benefits.

However, if your client is claiming for means-tested benefits, things can quickly become very complicated.

Once you’ve established that means-tested disability benefits are involved, you should find out exactly which benefits your client is receiving and the amounts. This will help your settlement planner to speed up their work and also ensure you are completely in the loop with the process and able to raise any queries. A good settlement planner will also be able to indicate whether there are any public benefits which the injured party has overlooked and could be eligible for.

The main public means-tested benefits that will impact on your client’s life will be Supplemental Security Income (SSI), Medicaid, SNAP food stamps and Section 8/HUD housing assistance. These are all subject to asset calculations and one of the tasks of a settlement planner is coming up with a schedule that ensures the client gets the money they need when they need it while ensuring they remain able to claim disability benefits.

One of the complexities involved in settlement planning, is working out the interplay between Medicare claims and Medicaid entitlement. Achieving Medicare Secondary Payer (MSP) compliance in personal injury lawsuits is even more complicated than in Workers’ Comp cases and even States paying Medicaid can now pursue full reimbursement for cases where other policies should have paid out.

It is also worth making sure your client knows how selling their settlement to structured settlement buyers in the future may also impact eligibility for means-tested disability benefits as structured settlement advances count as resources for asset calculation.

What is the Total Value of your Client’s Assets?

An experienced settlement planner will have several different tools in their financial toolbox for protecting a claimant’s assets from affecting their eligibility for means-tested benefits. The particular ones they are likely to suggest will depend in part on the value of the assets being protected.

For example, an Achieving a Better Life Experience (ABLE) account is a tax-advantaged savings account designed specifically for disabled people. Funds in that account are not counted when calculating assets for SSI, Medicaid or other means-tested benefits. However, the 2019 upper limit for ABLE contributions is $15,000 so assets above that value can’t be protected in this way.

Depending on circumstances, assets of between $15,000 and $250,000 could be put into a Special or Supplemental Needs Trust (SNT) or, for over 65s, a pooled trust. In some circumstances a spend down will be recommended. This is where all the money is spent in the month received but requires evidence to be presented to Social Security within 12 months. A successful spend down will preserve eligibility but may, depending on the jurisdiction, still impact on the value of benefits received. Depending on the type of disability, gifting may be permitted without affecting eligibility for needs-based benefits.

For assets of $250,000 and upwards, an SNT with Medicare Set Aside (MSA) may be the best course of action to avoid problems with MSP compliance. Settlement planners not only help disabled people to set up these special accounts, they can also provide a degree of administrative support and legal advice for ensuring your client meets their fiduciary duties. Ultimately, there should be a smooth transition from the conclusion of the legal case to a long-term financial planning arrangement with the settlement planner in the middle of the process.

Before contacting a settlement planner, liaise with your client to get a full picture of their existing assets. This will help you to design a structured settlement schedule that protects your client’s eligibility while providing a mixture of regular and lump sum payments that maintains their quality of life and provides for their future needs.

Summary

Getting the best outcome for your disabled client requires a multi-agency approach. If you are representing a disabled client in a personal injury case and working on setting up a structured settlement, find out what benefits they are in receipt of, gather together full details of their assets and then find a reputable settlement planner to help beat out the best deal for your client and, most importantly, safeguard their critical public disability benefits.

Editorial Team

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