Settlement Planning: A Case Study

Whether your client is a minor child, a working age adult, or an elderly claimant, a settlement planner can be a valuable addition to your team. Unlike a broker or a financial advisor who focuses solely on the finances, a settlement planner takes a more comprehensive approach to settlements, considering additional factors such as living situation, medical needs and future goals. The following case study illustrates how a settlement planner might approach a personal injury case.

Case Study: Shelly F., age 73

Injury Details: Shelly was hit by a car while riding her motorized wheelchair across a pedestrian crosswalk. She has considerable injuries to her left leg and hip, which will require extensive rehabilitation. She will likely have intermittent pain indefinitely and will require pain management care throughout her life. Her motorized wheelchair will need to be replaced and she will also need a hoist for the shower.

Estimated Net Recovery to Claimant: $300,000

Shelly’s attorney brought in an Traci Kaas Settlement Planner to meet with Shelly and her 91-year-old sister, Beth, who has Power of Attorney over Shelly. During the meeting, the settlement planner’s assessment revealed the following:

• Shelly has had some mental/cognitive delays since birth. She has a history of poor self-care and exhibits extreme hoarding tendencies.
• Shelly was living alone in a home that she owned prior to the accident. The home was in disrepair and there was concern of risk of infections to Shelly’s healing wounds.
• Post-accident, Shelly moved into Beth’s home temporarily.
• Shelly has always been on some form of SSI and Medi-Cal. She is also currently on Medicare Parts A & B.
• Beth supplements Shelly’s living expenses by giving her approximately $700/month.
• Beth’s daughter, Helen, has agreed to step in as POA for Shelly when Beth passes away, but Helen has communicated that she would not be in a position to care for Shelly in her home, so future attendant care or placement in a residential care facility would have to be organized.

How would a settlement planner approach this case?

The settlement planner would first look at Shelly’s estimated net recovery. It’s likely that Shelly would burn through the $300,000 recovery fairly quickly due to the cost of rehabilitation and pain management, the purchase of a new motorized wheelchair,  home modifications/equipment purchases (such as the shower hoist), and living expenses. Additionally, the settlement planner would take into account the age of Shelly’s primary caregiver—at 91, there is a distinct likelihood that Shelly will outlive her elderly sister. Even while Beth is still living, her age is prohibitive in terms of her ability to manage Shelly’s medical needs. The family would want to factor in the cost of attendant care or a facility.

In terms of government benefit preservation, if the family were to accept the $300,000 settlement in cash, it may result in a termination of Shelly’s needs-based government benefits (Medi-Cal and SSI fall into this category). Medicare is an entitlement benefit, so the settlement should not affect her eligibility for that program.

Shelly’s Settlement Plan

When putting together a plan for Shelly, the settlement planner would want to achieve several goals:

1. Ensure that Shelly will have a suitable living situation.
2. Preserve Shelly’s SSI and Medi-Cal benefits.
3. Ensure that Shelly’s settlement funds will be protected, and will last long enough to meet her needs.

Given Shelly’s medical needs, financial situation, and relatively small recovery, the settlement planner might recommend a pooled trust. A pooled trust is a type of special needs trust that allows a disabled individual of any age to preserve eligibility for needs-based benefits while retaining access to their settlement funds. Different than an individual trust account, a pooled trust is established and managed by a non-profit organization and is managed by a professional trustee. A sub-account is opened for each beneficiary, and all of the accounts are pooled together for investment purposes.  Its low overhead costs also make it a suitable option for Shelly. She could maintain her eligibility for SSI and Medi-Cal, continue receiving Medicare parts A and B, and use the funds in the pooled trust to pay for expenses not covered by her government benefits.

Should the family decide against a pooled trust, other alternatives may include a spend down of Shelly’s assets, or a number of other viable solutions. The settlement planner would walk Shelly’s family through the pros and cons of different approaches so that they could ultimately reach a decision that best meets Shelly’s needs.

Contact a settlement planning expert today

Our team understands that each case is different, and we are committed to working with claimants, their families, and their attorneys to develop an individualized settlement plan. For more information, contact us today at info@tracikaas.com or 800-354-2258.