How You Can Protect An Infant Settlement For The Lifetime Of A Disabled Child In Kingston, New York

In an infant settlement or judgment, New York law requires that the money recovered for a child (an infant is anyone under age 18 in New York) be deposited and kept in an interest-bearing account consisting entirely of government insured bonds. The interest rate is absurdly low, but at least the child’s money is protected.

The Ugly Side of Infant Settlements: A Spending Spree at Age 18

But what happens when the child turns 18 years old? When the child turns 18 years old, they are typically given unfettered access to their settlement money and what inevitably happens next? You got it, a spending spree like there’s no tomorrow. Fancy cars, boats, super-size TV’s, you name it, the 18-year-old spends the injury settlement like there’s no tomorrow. Just like you or I would do when we were 18 years old.

For children with significant physical or mental disabilities, the injury money is supposed to last a lifetime. This rarely happens. When the kids turn 18, the party starts. What, you might ask, can you do about it? It’s the 18-year old’s money anyway, isn’t it?

In the view of most personal injury lawyers, they’ve done their jobs by getting the injury money for a child, whether by settlement or judgment. What the child does with the money once they turn 18 years old is up to them. I have a different point of view.

Why a “preservation trust” is a great idea for infant settlements

The goal of litigation for a disabled child is simple: make sure he/she has enough money to take care of their medical, academic and financial needs for the rest of their life. Not so simple, even after you get the settlement or judgment for the child. Preservation of capital is the goal for all of the infant cases that I have resolved. Great, but how do you preserve the injury money for the lifetime of a child?

A “preservation trust” is designed to ensure that a child has limited access to his/her injury money, even after the child reaches adulthood. Instead of giving the disabled child access to the funds at age 18, the preservation trust gives them a limited right of access for specified needs, such as college tuition, medical emergencies, insurance premiums for health insurance and a down payment for their first house purchase.

If the disabled person wants to use the funds for anything other than school tuition, medical emergencies or health insurance premiums, he/she must get a Court Order granting the right to spend the trust money. This is practicallly impossible to do.

Why are preservation trusts a great thing?

With such conditions imposed on the injured person’s right to access their money, the trust principal accumulates over time and provides monthly benefits for the duration of the disabled person’s life. The disabled person’s eligibility for government benefits, such as Medicare or Medicaid, can be preserved as long as a Supplemental Needs Trust is used as part of the preservation trust.

It is a beautiful thing to know that a disabled child’s money will provide for their financial, medical and academic needs throughout their entire lifetime. Isn’t that the whole point of litigation? It’s not about the child’s parents or their lawyers. It’s about ensuring that a disabled child has enough money to provide for optimal medical care and treatment for as long as they need it.

If you have questions about your case, consult a dedicated attorney right away.