Know Your Lane: Special Needs Trusts and Public Benefits Planning
***NEWSLETTER***
Why the Plaintiff Attorney’s Job May Not End with Maximizing the Recovery
Plaintiff attorneys are hired to ring the bell.
Identify who caused the injury. Establish liability. Prove the damages. Maximize the tort recovery.
But as a significant case approaches resolution, another question becomes increasingly important: what happens to the money after you recover it?
For some clients, a settlement check is not simply an asset. It can intersect with Medi Cal, Supplemental Security Income, Medicare, disability benefits, housing assistance, structured settlement planning, trust planning, and future access to medical care.
That creates an important boundary for plaintiff counsel. The trial lawyer does not need to become a probate attorney, public benefits specialist, fiduciary, or financial planner. But the plaintiff attorney does need to recognize when those professionals should be part of the settlement conversation.
That is the focus of Lien Project Network’s Know Your Lane: Special Needs Trusts and Public Benefits Planning video series with John Rice and probate attorney Vincenzo Giordano.
Getting to the Net Is Only One Part of the Settlement
Lien resolution has traditionally focused on getting from gross recovery to net recovery.
Resolve Medicare. Address Medicaid. Analyze ERISA. Negotiate provider claims. Deal with hospital liens. Determine what remains for the client after fees, costs, and reimbursement obligations.
But there is another layer.
What happens when the client actually receives the net?
For a client who depends on means tested public benefits, distributing settlement proceeds without considering benefit eligibility can create consequences that extend long after the personal injury file closes. The issue is particularly significant when the settlement involves a client with a disability, substantial future medical needs, or ongoing reliance on public programs.
The settlement may have solved the tort case while creating an entirely different problem.
That is why public benefits planning belongs in the settlement conversation before the money moves.
Not All Public Benefits Work the Same Way
One of the first mistakes plaintiff attorneys can make is treating “disability benefits” or “government benefits” as a single category.
They are not.
SSI is a means tested program. In 2026, Social Security generally limits countable resources to $2,000 for an individual and $3,000 for a couple. A personal injury recovery held directly by the beneficiary can therefore raise significant eligibility questions.
SSDI operates under a different framework. Eligibility is tied to disability and sufficient covered work credits rather than the SSI resource limit structure. A client saying, “I am on disability,” therefore does not tell counsel enough. The next question should be: which benefit?
The same distinction matters with health coverage. Medicare and Medicaid are not interchangeable, and in California Medicaid means Medi Cal. A catastrophically injured client may even have multiple programs operating at the same time.
The practical lesson for plaintiff counsel is not to become an expert in every benefit. It is to identify what the client is actually receiving early enough for the right expert to analyze the consequences.
California Shows How Quickly the Planning Landscape Can Change
The Medi Cal rules provide a particularly timely example.
California currently applies asset limits to certain Medi Cal populations, including specified older adults, people with disabilities, nursing facility residents, and others subject to asset testing. Through June 30, 2027, the asset limit is $130,000 for one person. Beginning July 1, 2027, that limit is scheduled to decrease to $21,000 for one person, with different amounts applying to larger households.
Think about what that means in a plaintiff practice.
A settlement structure that creates no immediate concern under one set of eligibility rules may require a completely different analysis when the law changes. A client may have walked into the firm with Medi Cal coverage, litigated a case for several years, and eventually reach settlement under a materially different public benefits framework than the one that existed when the case began.
The plaintiff lawyer does not need to predict every legislative change. But counsel should know enough to ask the question again before settlement:
What benefits is this client receiving now, and could the settlement affect them?
That inquiry should not wait until the closing statement is being prepared.
Where a Special Needs Trust Enters the Conversation
A special needs trust may be one planning tool for a qualifying client whose settlement proceeds could otherwise affect means tested benefits.
In the personal injury context, the discussion often involves a first party special needs trust because the settlement proceeds belong to the injured plaintiff. Federal rules provide an exception from certain SSI resource counting rules for qualifying trusts containing the assets of a disabled individual under age 65 when the statutory requirements are satisfied. Since a federal change effective in 2016, a qualifying individual may also establish their own first party trust rather than requiring only a parent, grandparent, guardian, or court to do so.
That does not mean every disabled plaintiff needs a special needs trust.
Settlement amount matters. Age matters. The type of public benefits matters. Existing assets matter. The client’s ability to manage funds matters. Future medical needs matter. Family structure matters. Court involvement may matter.
And the client needs to understand what they are agreeing to.
A special needs trust is not simply a bank account with a different title. A trustee controls and administers the assets according to the trust and applicable benefit rules. For qualifying first party trusts, federal rules also require Medicaid reimbursement language addressing amounts remaining at the beneficiary’s death.
Those are material considerations for the client.
They are also precisely why this work belongs with someone whose lane is special needs and public benefits planning.
The Trustee Is Part of the Planning
Creating the trust is only the beginning.
The client must understand who will administer it, how distributions will work, and how decisions involving the funds will be made. Depending on the circumstances, the trustee may be a family member or professional fiduciary, but the role carries responsibilities that continue long after the personal injury attorney closes the underlying case.
The videos explore this practical side of the analysis, including how trust funds may be used, how distributions can interact with public benefits, and why choices involving housing, health care, education, support, travel, equipment, and other expenses require thoughtful administration.
That matters because a beautifully drafted trust is not particularly useful if it is administered in a way that defeats the planning objective.
The planning therefore involves more than asking, “Do we need a trust?”
It also requires asking what life inside that trust will actually look like for the client.
A Special Needs Trust Is Not the Only Tool
Another reason plaintiff counsel should bring in the appropriate professional is that the answer may not be a traditional special needs trust at all.
Pooled trusts can provide another planning option. Under Social Security rules, pooled trusts are established and managed by nonprofit organizations, maintain separate beneficiary accounts while pooling assets for management and investment, and operate under a distinct set of requirements. Unlike the traditional first party trust exception, the federal pooled trust exception does not itself impose the same under age 65 establishment requirement, although transfers after age 65 can raise separate eligibility issues.
ABLE accounts may also enter the conversation in appropriate cases. Beginning in 2026, eligibility expanded to individuals whose qualifying disability began before age 46. Social Security also generally excludes up to $100,000 in an ABLE account from the SSI resource calculation, although contribution limits and distribution rules still apply.
The significance for the plaintiff lawyer is not memorizing every requirement.
It is recognizing that settlement planning is rarely a simple choice between “give the client the check” and “create a special needs trust.”
There may be multiple tools, and in some cases those tools can work together.
Timing Can Determine Which Options Remain Available
Settlement planning is particularly sensitive to timing.
The video series discusses why trust planning, public benefits analysis, and structured settlement discussions should occur before settlement proceeds are simply released to the plaintiff. It also examines constructive receipt and the relationship between settlement documents, annuity funding, trust funding, and the movement of money.
The broader practice point is straightforward: do not wait until the money is sitting in the attorney trust account to begin asking what should happen to it.
If the plaintiff may require a special needs trust, structured settlement, public benefits analysis, or coordinated financial planning, bring those professionals into the case while there is still flexibility in how the settlement is documented and funded.
Earlier involvement also gives the client time to understand the choices rather than being introduced to an unfamiliar planning structure while waiting for a settlement check.
The Plaintiff Attorney as Quarterback
There is a larger practice philosophy behind the Know Your Lane series.
Staying in your lane does not mean ignoring everything outside it.
It means recognizing the issue, identifying the appropriate professional, making the referral, and creating a record that the client had the opportunity to receive advice.
The plaintiff attorney remains the person who understands the litigation, the recovery, the client, and the timing of the settlement. That puts counsel in a natural position to quarterback the process without assuming the professional responsibilities of the trust attorney, financial planner, structured settlement professional, CPA, or benefits specialist.
As John and Vincenzo discuss in the series, relationships matter. A strong plaintiff practice should have professionals it can call when the client’s circumstances extend beyond the underlying tort claim.
The point is not that every referral results in a trust, annuity, or financial plan. Sometimes the professional reviews the circumstances, speaks with the client, and concludes that no additional planning is necessary. That can still be valuable.
The client received the analysis. The plaintiff attorney stayed within their proper professional lane. And the file reflects that the issue was identified before settlement proceeds were distributed.
Three Parts of the Settlement Conversation
The video series frames settlement planning around what John describes as three legs of the stool: resolving liens to determine the net recovery, financial planning for the funds that remain, and public benefits planning for clients whose eligibility may be affected.
Those disciplines overlap, but they are not identical.
A plaintiff attorney may successfully reduce every lien and maximize the client’s net recovery, yet still leave an important issue unresolved if receiving those funds changes access to essential benefits.
The goal is not to expand the plaintiff attorney’s scope of representation indefinitely. It is to recognize that maximizing a recovery and protecting what happens next are connected conversations.
Watch the Full Video Series
This blog provides the framework. The videos go significantly deeper.
John Rice and Vincenzo Giordano discuss special needs trusts, Medi Cal, SSI and SSDI, Medicare, first party and pooled trusts, trustees, Medicaid payback, court involvement, structured settlements, ABLE accounts, distributions, settlement timing, constructive receipt, and when a plaintiff attorney should bring another professional into the case. The full interview was developed specifically around the issues a personal injury lawyer needs to recognize and when the lawyer should move the issue into someone else’s lane.
There are multiple videos available on special needs trusts and public benefits planning, and the entire collection is free for all Lien Project Network members, including a la carte members.
A la carte membership is free.
Visit www.lienprojectnetwork.com to access the videos.
For plaintiff attorneys, the takeaway is not that you need to become a special needs trust lawyer.
It is that when the client’s settlement intersects with public benefits, disability, future medical needs, or long-term financial planning, recognizing the issue early may be just as important as resolving the lien at the end.
Know your lane.
Know when another professional belongs in it.
And make that introduction before the money moves.
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