Protecting Personal Injury Settlements with Trusts
Personal injury attorneys, and their clients, often seek the advice of elder law attorneys when complicated issues associated with Supplemental Security Income (SSI), Medicaid, and Medicare are presented in a case. Our role as an advisor in these cases has increased our involvement in planning associated with these very specific benefits, and subsequently, an increased desire for more sophisticated planning to protect other awards or settlements through professional management of funds for clients who do not receive public benefits.
Although the proceeds received by a claimant in a personal injury or wrongful death action are exempt from creditors under Virginia Law, many clients realize the benefit of professional management of funds. Clients may desire this additional level of protection due to a lack of experience with investment management, fear that they will overspend, to avoid a substance abuse relapse, or otherwise prevent others from trying to influence them or take advantage of them in light of the recovery. To provide this additional level of protection, we utilize a Settlement Protection Trust to preserve trust assets via the implementation of professional money management for distributions and investments.
Similarly, a Settlement Protection Trust is a flexible tool to hold personal injury proceeds received by a minor child. In Virginia, the court approves a settlement received by a minor and the proceeds must either be lodged with the court or paid to a qualified fiduciary. If the funds are lodged with the court, the child loses market-like or tax-deferred growth potential. Additionally, all withdrawal requests must be made in court before a judge who will then approve or deny the request. By utilizing a Settlement Protection Trust, the funds received by the minor can be protected by a qualified Trustee until the minor reaches a certain age, as set by the terms of the trust, while also allowing the proceeds to grow under a professionally-managed investment plan. A request for distribution of funds is made to the Trustee, who can approve or deny the request based on the terms of the trust.
Hook Law Center’s approach to settlement planning addresses the financial, public benefit, and estate planning needs of personal injury victims. Our goal is not to sell a specific product or tool, but to serve as a trusted partner and advisor and assist with the development of a comprehensive and holistic plan.
Ask Kit Kat: Firefly Delight
Hook Law Center: Kit Kat, what can you tell us about how fireflies are one species which is benefiting during the pandemic of COVID-19?
Kit Kat: Well, I guess you could say, even in the bleakest of times, there are some glimmers of positivity. So, here is one example—fireflies, commonly known as lightning bugs, a favorite harbinger of summer which delight people of all ages, are thriving. They are particularly pleased that festivals to celebrate their light shows have been cancelled due to the pandemic. A notable one is the one held in Tennessee’s Great Smoky Mountains National Park during late May to early June. Normally, attendance is so coveted that visitors must get their tickets through a lottery. The light show is really a dance of courtship for the firefly named Photinus carolinus. Normally, 1,200 people would be in attendance. Unfortunately for people, the event has been cancelled, the first time this has happened since the 1990s. Firefly festivals around the world also have been cancelled—South Carolina’s Congaree National Park, Pennsylvania Firefly Festival near Tionesta, PA, as well as others in Malaysia and Thailand, to name a few.
The fireflies may be rejoicing at the silence and the lack of interruption. Also, with people comes light from things such as photo flashes, vehicle headlights and camp lanterns. Though well intended, the artificial light interferes with the mating process. Males use their flashing lights to attract females. Also, the more people there are, the greater the likelihood that the firefly eggs, which burrow in leaves and dirt for up to 2 years, will be trampled upon. Scientists, however, are not prohibited from the firefly areas. They will continue to monitor the situation. If they find there is a dramatic increase in the population, they may have to reduce attendance at these events permanently. The fact is there’s never been a situation like this before where there is almost a complete interruption of human presence. Becky Nichols, an entomologist at the Great Smoky Mountains National Park, suggests people this year can “go out in their backyard or walk down the road on a dark night to their neighborhood park, set up a chair, stay socially distant from their neighbors, and everybody can enjoy their local fireflies.” (Jason Bittel, “Firefly festivals are canceled due to coronavirus, and lightning bugs might be pleased about it,” The Washington Post, May 30, 2020)