Settlement for a catastrophically injured 5 year old.

A catastrophically injured 5 year old, quadriplegic on a ventilator, was referred to FORGE by their attorney roughly six months prior to the settlement being finalized. FORGE put together a team of trust officers, cash management experts, and Elder Law/Medicaid attorneys, along with our staff of experts, to look at every angle and option available to the family. Our efforts also included an aggressive interface with the defense carrier to fight for control of pricing the annuity (periodic payment) portion of the settlement in an open market to ensure the family had their choice of best pricing and highly rated companies for the portion that they choose to structure.

After determining the final amount available after fees and expenses, other items considered were a new house and the cost for modification to the house. FORGE assisted in everything from locating a realtor, assisting with mortgage planning, to including annual calculation for taxes on the new property and annual maintenance requirements to determine the amount of up-front cash needed by the family. The balance of funds available to the family had to then be assessed, and the hard question had to be answered by the family pertaining to the preservation of public benefits for their child. The determination was that the funds must be sheltered in an approved Medicaid payback or D4A Special Needs Trust. The uncertainty of medical expenses put the family in a position in which the only choice was to give up full control of the money in order to insure that their daughter would always have adequate health care. Once this decision was made, FORGE interviewed multiple trustees with various different national and local trust companies and helped the family make a decision choosing the trustee and the trust company that would assist with the management of the funds, as well as the balance of distributions, as to not be disqualified from Medicaid.

After the trust company and trustee was chosen, all parties assisted in the decision for allocation of funds to the trust and to the periodic payments that would fund the trust over time. The family had a very low risk tolerance and understood that the funds in the trust were at risk. The immediate reaction was to place as much money in the structured periodic payments as possible, due to its virtually risk-free nature, leaving little to no available liquid funds for unforeseen life events and/or medical emergencies not covered by Medicaid. After receiving advice from all parties, the family made a final allocation decision of roughly 35% of the balance of funds to the corpus of the trust and the remainder to purchase periodic payments to be funded by the defendants.

The last phase of planning was to retain an estate planner to check the numbers and help determine the amount and type of the commutation rider to allow for cash at the time of death to satisfy any estate tax due, as well as provide for a lump sum of money to the Special Needs Trust to satisfy any Medicaid lien. This variable is often overlooked but is critical to a family with an uninsurable family member.

The end result was a plan that allowed for current cash needs as well as future needs for both security and liquidity. As the quarterback for the team, FORGE had accomplished the bulk of the interface with the injured party and her family, freeing the attorneys and their staff to concentrate solely on the final aspects of the settlement with the defendant.