A California court hast the power to order transfer of the minor’s settlement funds to a “special needs trust” upon the petition of the guardian, guardian ad litem, conservator or any person interested in the guardianship or conservator estate. The purpose of this type of trust is to provide for the minor child’s special needs, leaving Medi-Cal or other governmental programs to provide for the minor child’s medical and day-to-day needs. Without a special needs restriction upon the settlement funds, the minor child may lose eligibility for public assistance or, with this same thought, government agencies may assert a reimbursement right against settlement proceeds.
A “Special Needs Trust” may be established by the court only if it determines all of the following to be true:
• The minor child has a disability that substantially impairs the child’s ability to provide for his or her own care or custody and constitutes a substantial handicap.
• The minor child is likely to have special needs that will not be met without the trust in place.
• The amount to be paid directly to the trust does not exceed the amount reasonably necessary to meet the minor child’s special needs.
Payment of all statutory medical liens in favor of certain state and local California agencies that have rendered medical assistance to the injured minor child is a prerequisite to creation of this special type of trust. The trust is subject to continued court supervision, and it may be terminated upon proof by such an agency that the trust is not being used for the child’s special needs. A good child injury lawyer will know, in cases where a child’s injuries are severe and resources are limited, to look for the possible need of future public assistance. In fact, if a special needs trust is warranted for a particular child, it is best to establish one as soon as possible in order to maximize benefits to the child and minimize government medical liens.
Legal Research for the above FAQ: 145 See L.A. Sup. Ct. Rules 10.186, 10.186.2. 146 Cal. Probate Code Section 3602 (d). 147See Hamilton v. Laine (1997) 57 CA4th 885, 887-890, 67 CR2d 407, 408-409.