Case Study: What Comprehensive Settlement Planning Looks Like

We are often asked: “What do you mean by comprehensive settlement planning?” It’s easiest to demonstrate the value of comprehensive settlement planning through a brief case study.

In this scenario (based on an actual, recent case). We recently were brought in to help in a birth injury case where the baby received a substantial settlement.

In this case, we decided to place a portion of the funds into a structured settlement annuity. This annuity guarantees income to the client for the rest of his life.

Because the baby suffered disabilities from the injury, we established a special needs trust to preserve eligibility for Medicaid (which covered thousands of dollars worth of medical bills each month). The structured settlement annuity payments were set up to pay directly into the special needs trust. We placed the remaining funds (the funds not placed in the annuity) into the trust, and we were able to invest those funds to provide for higher long-term growth potential and to provide additional liquidity for the client’s needs.

In this particular plan, the annuity provided the foundation for a guaranteed tax-free lifetime income. The amount that went into the special needs trust was invested and is able to grow and achieve market rates of return to keep up with inflation.

The special needs trust benefits the client by allowing him to stay on his much-needed Medicaid and other benefits, while also providing a source of funds for other medical treatments that Medicaid does not cover.

Because the distribution rules for special needs trust are quite broad, the funds in the special needs trust can be used for nearly anything that will benefit this client and improve his quality of life, including elective therapies, service animals, wheelchair accessible equipment, and much more.

In birth cases, funds in the special needs trust can be used to pay the parents as caregivers, which provides income to the family and takes some financial stress off of the family.

This case study is an example of how comprehensive settlement planning helps clients by providing flexibility, protection, and peace of mind knowing that the settlement funds will be available for many years to come (even for life).

If you have a catastrophic injury case, give us a call. We do our best work in catastrophic injury cases where many different needs and aspects of the client’s future need to be planned and prepared for. 

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