Dog Bite Law

Introduction

Until the mid-1900s, the monetary part of a injured child's settlement usually was paid to his parents in a single lump sum. This exposed the settlement funds to unnecessary purchases, bad investments, and loss through fraud. All too often, the injured child's parents spent his net settlement money on luxuries benefiting the parents, leaving the child with nothing.

As a result of those abuses, the courts and legislatures of all states enacted laws which prevent parents from accessing their children's net settlement money. For example, the California Probate Code provides as follows:

• The court can appoint a guardian of the minor’s estate and order the money paid to the guardian. Probate Code section 3611(a).

• The balance can be deposited in an insured account in a financial institution in this state, or in a single-premium deferred annuity. Probate Code section 3611(b).

• If the minor qualifies and it is in his or her best interest, a special needs trust can be created and the balance paid to the trust. Probate Code section 3611(c).

• If the balance is less than or equal to $20,000.00, the court can order that it be held on any conditions that would be in the minor’s best interests. Probate Code section 3611(d).

• If the balance is less than or equal to $5,000.00, the court can order that it be paid or delivered to a parent of the minor, without bond. Probate Code section 3611(e).

• The court can order the balance transferred to a custodian for the benefit of the minor under the California Uniform Transfers to Minors Act. Probate Code section 3611(f).

• The court can create or approve a trust and order the balance paid to the trustee. Probate Code section 3611(g).

• The court can order the balance paid to the county treasurer if the latter has been authorized by the county board of supervisors to handle such deposits. Probate Code section 3611(h).

In the 1970s, personal injury claims began getting resolved by structured settlements. The key feature of a structured settlement is that the victim is paid "periodically," meaning in installments. This proved so advantageous to victims as well as insurers that, in the early 1980s, Congress enacted legislation that encouraged broader use of structured settlements.

The legislation consisted of changes to the Internal Revenue Code. These new laws created a tax shelter for accident victims. Specifically, accepting installment payments made the interest earned on the settlement funds entirely tax-free. As long as the structured settlement was properly set up, and the settlement money was invested in the prescribed manner, the initial money would grow and no tax would have to be paid on that growth.

To put this in more technical terms, the new laws provided that the gain on settlement funds would be excluded from the victim's gross income, provided that the structured settlement was done correctly. Prior to the enactment of these laws, the initial settlement payment was not taxable but, if settlement money was invested, the interest on the invested funds was included in the victim's gross income and therefore was taxable. After these changes to the Internal Revenue Code, however, both the principal and the interest were excluded from the victim's gross income, and therefore nothing was taxable.

This was, and remains, a dramatic benefit for victims --

• Under the old system, if a two-year-old child received a net settlement of $40,000 and it was held in a blocked bank account for 16 years (assuming the age of majority was age 18), the victim would receive $64,000 (assuming an APR of 3% and no withdrawals) of which $24,000 was taxable.

• Pursuant to the new laws, however, if the annuity paid the child 4 payments starting at age 18 and ending at age 21, he would receive approximately $96,000 entirely tax free. (An APR of 5% was used in this example because the interest paid by the annuity issuer is always significantly higher than deposit accounts. In January 2009, for example, timed certificates of deposit are receiving under 1% while annuities will earn 4.5%.)

Therefore, a "structured settlement" is a method of resolving a claim by paying some portion of the victim's net settlement money at one or more dates in the future, making both the principal and interest exempt from federal tax.

"Net settlement" refers to the portion of the settlement that remains after deducting the attorney fee, costs of presenting the claim to the insurance company, litigation costs if any, balances due to health care providers and other third parties who rendered services related to the accident, reimbursement of the victim's health insurance if required, and reimbursement of government benefits such as Medicaid. For details, see Determining the net settlement, below.

The net settlement often is divided into two portions. One portion is deposited into a federally insured deposit account, usually at a bank. The other is expended on an annuity which provides a stream of payments to the child after he attains the age of majority.

Funds are placed on deposit to pay for accident-related services including, for example, cosmetic medical procedures to improve the appearance of the child's scars. If no such treatment is anticipated, then no funds are placed on deposit. The funds on deposit are "blocked," meaning that they cannot be released without the approval of the court. Upon attaining the age of majority, the balance of the account can be withdrawn by the victim and spent any way he pleases.

An "annuity" is a contract by which the annuity issuer agrees, in exchange for a premium, to make periodic payments to the purchaser or beneficiary of the annuity. The annuity issuer usually is a life insurance company. The type of annuity used for structured settlements is usually a single-premium, fixed annuity (i.e., the "single premium" is the portion of the net settlement that pays for the annuity, and "fixed" means that the payments will not go up or down). To learn more about annuities generally (not applicable to settlements), see SafeTnet - Annuity Basics.

The annuity payments begin at the age of majority and usually cease not later than age 30. These payments might cover college tuition, a down payment on a house, and yearly living expenses for some period of time. Like the money in the blocked account, the payments are transmitted to the victim and can be expended on anything he pleases. Unlike the money from the blocked account, however, the victim cannot receive all the payments at once, giving time for reflection upon, and hopefully preventing, unnecessary purchases, unwise investments, and outright fraud.

Parents frequently request an annuity payout schedule that will pay their child's college costs, among other things. Such expenses can be estimated with the College Cost Calculator or the College Cost Projector. To maximize the total funds paid through the annuity, the following principles apply:

• The more that is invested, the greater the payout can be.
• The later the payments begin, the greater the payout can be.
• The smaller the payments are at the beginning of the payment schedule, the greater the payout can be.
• The longer the payment schedule extends, the greater the payout can be.

A structured settlement can be defined in several different ways. On Dog Bite Law (www.dogbitelaw.com) the focus is on structured settlements for children who were attacked by a dog, leaving them scarred but not disabled. If the victim is disabled, the structured settlement should provide for payments in accordance with a life care plan. Such a plan also might include a Special Needs Trust. A supplemental care special needs trust will preserve the victim's eligibility for government assistance, with the trust providing for non basic needs and quality of life enhancements. For a broader, more detailed definition of "structured settlement," as well as a detailed discussion of its history and features, see Quick Overview: Structured Settlements. Keep in mind, however, that it involves many different types of structured settlements rather than those which are common in dog bite cases.

The mechanics of a child's structured settlement

A child's structured settlement typically requires the following actions:

• The victim's attorney and the tortfeasor's representative (insurance adjuster or defense lawyer) must enter into an agreement to resolve the claim or litigation by using a structured settlement.

• The child's parents have to work with his attorney and a structured settlement specialist to determine the schedule of payments and, if necessary, how much of the net settlement should be deposited into a blocked bank account.

• The victim's lawyer and the tortfeasor's representative must provide special documentation of the settlement, including a structured settlement agreement (as opposed to a standard release) and possibly a qualified assignment agreement.

• The victim's attorney must prepare for and, with the child and one parent, appear before a judge for confirmation of the settlement and disposition of the net settlement funds. This hearing is referred to as court approval, court confirmation, guardianship, friendly suit, or minor's compromise proceeding.

The order must be worded properly or the agreement must be properly documented in a way that satisfies the structured settlement provisions of the Internal Revenue Code.

The payer can be the defendant or tortfeasor, if that is acceptable to the plaintiff or victim. More commonly, the defendant or tortfeasor relies on his liability insurer to settle the claim. The liability insurer then has the obligation to make a number of long-term payments to the victim. The liability insurer typically purchases an annuity to fund the stream of payments to the victim.

If the liability insurer is willing to retain on its books the obligation to make the stream of payments to the victim, the liability insurer will buy and retain the annuity contract, and directly make the payments to the victim. If the liability insurer does not wish to retain the obligation to make the payments, however, it will buy the annuity contract and then assign both the obligation and the annuity contract to a third party called an assignment company. The latter will make the payments to the victim. The victim's intelligent choice under this arrangement is to require the life insurer to guarantee that the assignment company will make all payments in a timely manner. The contract of assignment must contain certain provisions in order to be a "qualified assignment" under the Internal Revenue Code.

Annuity vs. bank account

Even when the world financial markets suffer a downturn, parents should consider whether investing their child's net settlement into an annuity is in his best interest. A qualified financial planner needs to be consulted. The following points should be thoroughly explored with your financial planner.

Parents need to compare the odds of the life insurance industry losing the settlement money, versus the odds of an 18-year-old losing the money. Generally, one would expect correct financial decisions from the life insurance industry, as opposed to an 18-year-old. Not many suddenly "rich" 18-year-olds will escape the lure of unnecessary purchases, bad investments, and outright fraud. Here are two important questions to consider during your discussion with your financial planner:

• Are the odds of losing your child's money by purchasing an annuity less than the odds that your child at age 18 will "blow" all or most of his settlement funds?

• If you had a whole lot of money on your 18th birthday, would you have skipped going to college?

If the answer to either question is affirmative, then discuss with your financial planner whether it makes the most sense to put the funds into an annuity rather than turn them over to your 18-year-old.

Courts also will approve putting the child's money into a UGMA account, US Treasury instruments, and restricted trusts such as special needs trusts and qualified settlement trusts. All of these, however, require the services of a paid trustee and are cumbersome and costly to set up.

Sample structured settlements

• A 65-year old victim received $10,000.00 at the time of settlement, then $400.00 per month for 10 years. She was interested in the tax-free income, which nicely supplemented her existing retirement income.

• Parents of a pre-teen directed the creation of a college fund, in the amount of $2,000.00 per month, for four years, starting at age 18. At age 25 the victim shall receive $25,000.00, and at age 35 she will get $50,000.00.

• Parents of a pre-teen asked that all of their son's money be applied to a college fund, because the settlement was somewhat small.

• Parents of a pre-teen required that $5,000.00 be placed in a blocked bank account to pay for medical expenses that might occur before their daughter reached age 18. The remainder of the money was used for a college fund and payments of lump sums similar to those described above.

• Parents of a toddler directed that the boy receive $3,000.00 per month for his entire life. He was seriously injured when a dog tore off the end of his nose. The nose was reattached to his face. His income will be tax-free, as will the amounts paid under each of the other arrangements mentioned above.

Determining the net settlement

The net settlement is the amount of money that remains after the victim pays for the following: 

• Reimbursement to the victim or his or her parents have paid out of pocket for medical treatment and other costs, less how much money the insurance company already paid them under the medical payments coverage or as advances against the final settlement.

• Reimbursement to the attorney for amounts paid, incurred and to be incurred for a photographer, private investigator, record copying company, medical witnesses, court filing fees, court charges for certified copies, a trustee (in some jurisdictions), and other costs.

• The victim's attorney fee.

• Amounts payable to doctors, hospitals and other health care providers for past medical treatment. Many providers will agree to reduce their charges under certain circumstances.

• Amounts payable to government agencies such as Medicare. Some agencies will agree to reduce their charges, some have legal limits as to the amount that they can recover from the victim, and others will not reduce their charges under any circumstances.

• Amounts payable to insurance companies that paid benefits under health insurance policies which provide such companies a right of reimbursement (also called a lien or subrogation), in states that permit insurance companies to have such rights. Some will agree to reduce their charges, and in certain states they have to do so if the victim retained an attorney and they did not.

Evaluating the annuity

Because the settlement payments will come from the annuity issuer at various times in the future, it is important to evaluate the financial strength of the annuity issuer and the surety that might be called upon to make such payments. 

The victim or his or her representative should review either a financial statement or another competent source of financial information about each company. Financial statements often are found on insurance companies' websites.

Start with the Directory of Insurance Companies on the Internet. After finding the company's website, locate the investors' section. Locate the most recent SEC filings, especially the 10-K.

The company that issues the annuity should be of substantial size and have at least $100,000,000.00 of capital and surplus, exclusive of any mandatory security valuation reserve. The victim or representative also should obtain current ratings from any of the following rating companies:

• A.M. Best (accept only A+, A+g, A+p, A+r, or A-s). At the home page of their website, enter the name of the life company, and then establish a free account when asked to do so.

• Standard & Poor's Corporation Insurer Claims Paying Ability Rating (AA-, AA, AA+ or AAA). At the home page of their website, select Insurer Profiles.

• Moodys Investors Service Claims Paying Rating (Aa3, Aa2, Aa1 or Aaa). A very frustrating and difficult website. Click on Ratings.

• Duff & Phelps Credit Rating Company Insurance Company Claims Paying Ability Ratings (AA-, AA, AA+ or AAA)

A great website to get ratings and other information about insurance companies and insurance topics is Insure.com.

Internal Revenue Code provisions

The following section is for attorneys and tax professionals.

Taxation of damages for personal injuries

The victim does not have to pay taxes on his net share of the settlement, except for that portion of the money that constitutes punitive damages or interest. Generally speaking, compensation received as damages on account of personal injuries is not included in the victim's gross income and therefore is not taxable, per Internal Revenue Code section 104(a)(2):

§ 104. Compensation for injuries or sickness

(a) In general. Except in the case of amounts attributable to (and not in excess of) deductions allowed under section 213 (relating to medical, etc., expenses) for any prior taxable year, gross income does not include—
...
(2) the amount of any damages (other than punitive damages) received (whether by suit or agreement and whether as lump sums or as periodic payments) on account of personal physical injuries or physical sickness....

The exclusion in section 104(a)(2) applies whether the damages are received as a result of a lawsuit or settlement agreement, and whether they are received in a lump sum or periodic payments. The exclusion also extends to the portion of damages received as compensation for lost wages and lost income, even though the same would have been taxable if the plaintiff had earned them. (Burke, Therese A., 504 US 229 (Sup. Ct. 1992).)

However, when such compensation is received and invested, the gain (i.e., the interest or profit) on the same is taxable as ordinary income. (Rozpad, Joseph S., 154 F3d 1 (1st Cir. 1998); Greer, Yancy D., TC Memo 2000-25 (2000).) For example, if an accident victim settles his claim and receives $10,000, invests the $10,000 in a certificate of deposit, and makes $300 in interest after one year, that $300 is taxable even though the $10,000 is not. This same principle is applied to "delay damages" added to the jury verdict in a personal injury suit. Because such damages essentially compensate the plaintiff for the lost time value of money, they are not considered to be damages received on account of personal injury, and therefore are not excludable from gross income. (Francisco, Charles, 267 F3d 303.)

To learn the tax rates for 2009, see CCH Projects Key Tax Figures For 2009.

Congress determined that it would be in the best interest of accident victims if they received their compensation in the form of future periodic payments that had certain restrictions, rather than a single lump sum that could be spent immediately. To encourage victims to agree to do so, the lawmakers provided an incentive in the form of a "tax break." Specifically, Congress passed Public Law 97-473, which made the gain on a personal injury settlement excludable from income (i.e., tax free) if certain conditions are met. (See P.L. 97-473, Jan. 14, 1983 (97th Cong., 2d Sess.))

Tax rates for children

Dependent children are subject to special tax laws:

• In 2009 the first $950 of a dependent child's (below the age of 19, or 24 if a full-time student) unearned income is tax-free.

• The next $950 is taxed at the child's rate, which is typically 10%. So if a child earned $1,900 or less in unearned income in 2009 and did not have additional earned income, he would pay $95 at most in tax (10% on the second $950).

• This tax rate goes up when the child’s unearned income exceeds $1,900: at that point, his tax is computed at the parent's tax rate, which can be as high as 35 percent. This is referred to as the "kiddie tax."

IRC definition of structured settlement

The most concise summary of these conditions appears in the definition of "structured settlement" contained in Internal Revenue Code section 5891(c)(1):

The term “structured settlement” means an arrangement—

(A) which is established by—

(i) suit or agreement for the periodic payment of damages excludable from the gross income of the recipient under section 104 (a)(2), or

(ii) agreement for the periodic payment of compensation under any workers’ compensation law excludable from the gross income of the recipient under section 104 (a)(1), and

(B) under which the periodic payments are—

(i) of the character described in subparagraphs (A) and (B) of section 130 (c)(2), and

(ii) payable by a person who is a party to the suit or agreement or to the workers’ compensation claim or by a person who has assumed the liability for such periodic payments under a qualified assignment in accordance with section 130.

According to the above definition, the structured settlement of a personal injury claim must be an arrangement (a) established by a suit or agreement, (b) for the periodic payment of damages to an accident victim, (c) under which the payments are of the character described in IRC section 130(c)(2)(A) and 130(c)(2)(B), and (d) under which the payer is a party to the suit or agreement, or an assignee of the liability under a "qualified assignment."

Suit or agreement

A "suit" means a lawsuit. An "agreement" usually means a settlement agreement. A bodily injury claim is resolved by a suit, which leads to a court judgment, or a settlement agreement. Therefore the first requirement of IRC 5891(c)(1) is easily met.

Periodic payment of damages

The "periodic payment of damages" refers to the payments to be received in the future. This is generally understood to mean at least two payments. However, in one case, the IRS announced that one payment would meet the second requirement of IRC 5891(c)(1). Nevertheless, in the usual dog bite settlement, there are several or more payments.

Damages for bodily injuries and not punitive damages

"[E]xcludable from the gross income of the recipient under section 104 (a)(2)" means that the money is being paid on account of bodily injuries. Punitive damages do not qualify. The settlement agreement and everything else should therefore say that no part of the settlement is for punitive damages.

Amount and timing of payments

Section 5891(c)(1)(B) then refers to payments that meet the conditions of IRC section 130(c)(2)(A) and 130(c)(2)(B):

(A) such periodic payments are fixed and determinable as to amount and time of payment,

(B) such periodic payments cannot be accelerated, deferred, increased, or decreased by the recipient of such payments....

In a dog bite case, the victim's periodic payments typically are made through the purchase of a single-premium fixed annuity. An annuity is a contract by which a life insurer agrees to make payments at specific times in the future. These payments are "fixed and determinable" by the very nature of the annuity contract itself. A settlement that is funded by an annuity therefore meets this requirement.

The prohibition against accelerating, deferring, increasing or decreasing the payments is intended to ensure that the accident victim does not defeat the purpose of the legislation. The settlement agreement or the annuity contract itself must contain language that satisfies subdivisions (A) and (B).

Who can make the payments

The last condition has to do with the person or entity that actually will make the payments. The payments have to be made by one of the following: a party to the suit, a party to the settlement agreement, or a person or entity that has assumed the liability under a "qualified assignment."

The party to the suit is the dog owner. Usually he has homeowners or renters insurance. Therefore he will rely upon his liability insurer to make the payments. Note that the payments can be made to a party to the settlement agreement, which would include the homeowners or renters insurance company in the usual case, or a trust if a qualified settlement fund is used (for so-called "QSFs" see Code of Federal Regulations, section 1468(B)(1) (Qualified Settlement Funds)).

Typically, the defendant's liability insurer usually is not the ultimate payer. Liability insurance companies typically do not want long-term obligations on their books, and are not set up to make future payments of losses. There are legal restrictions as to how such companies are permitted to invest and make profits; they are not in the business of simply holding funds over many years for eventual payment to victims. Furthermore, from the victim's perspective, liability insurers go out of business from time to time, while life insurers (which are the annuity issuers) have a nearly perfect record of paying beneficiaries under structured settlement annuity contracts. So the victim would reasonably require more security than a liability insurer can provide. This is where the "qualified assignment" comes into the picture.

Qualified assignment

The last category of person or entity is one which has assumed the liability under a "qualified assignment." This can be any person or entity, but cannot be the victim, his attorney, his attorney's trust account, or anyone who is the alter ego of the victim, or is controlled by the victim. In the usual case, this third party usually is a holding company formed as a corporation and established, maintained and controlled by a life insurance company -- specifically, the company that issues the annuity that provides the future periodic payments. It would be unreasonable for the assignee to be a person, because he would have to be a trustee, he would need to be bonded, he certainly would charge yearly fees, and the funds could be lost if he dies or absconds with them. The assignee could be an institutional trustee, such as a bank, but they too charge fees. The life insurance companies that sell annuities for structured settlements have made it simple and economical to use their assignment companies, because no fees are charged, and the life insurers routinely issue guarantees that these companies will make all payments when due.

Section 5891(c)(1)(B)(ii) refers to "a qualified assignment in accordance with section 130." This refers to an assignment of the underlying obligation to make the future periodic payments. In other words, the holding company assumes the dog owner's tort liability and/or the homeowners or renters insurance company's liability to make the payments to the victim. This performs a neat accounting trick: the liability offsets the value of the annuity contract, so that there is no tax to be paid by the holding company. This becomes a "qualified funding asset" under Internal Revenue Code section 130:

§ 130. Certain personal injury liability assignments

(a) In general

Any amount received for agreeing to a qualified assignment shall not be included in gross income to the extent that such amount does not exceed the aggregate cost of any qualified funding assets.

(b) Treatment of qualified funding asset

In the case of any qualified funding asset—

(1) the basis of such asset shall be reduced by the amount excluded from gross income under subsection (a) by reason of the purchase of such asset, and

(2) any gain recognized on a disposition of such asset shall be treated as ordinary income.

(c) Qualified assignment

For purposes of this section, the term “qualified assignment” means any assignment of a liability to make periodic payments as damages (whether by suit or agreement), or as compensation under any workmen’s compensation act, on account of personal injury or sickness (in a case involving physical injury or physical sickness)—

(1) if the assignee assumes such liability from a person who is a party to the suit or agreement, or the workmen’s compensation claim, and

(2) if—

(A) such periodic payments are fixed and determinable as to amount and time of payment,

(B) such periodic payments cannot be accelerated, deferred, increased, or decreased by the recipient of such payments,

(C) the assignee’s obligation on account of the personal injuries or sickness is no greater than the obligation of the person who assigned the liability, and

(D) such periodic payments are excludable from the gross income of the recipient under paragraph (1) or (2) of section 104 (a).

The determination for purposes of this chapter of when the recipient is treated as having received any payment with respect to which there has been a qualified assignment shall be made without regard to any provision of such assignment which grants the recipient rights as a creditor greater than those of a general creditor.

(d) Qualified funding asset

For purposes of this section, the term “qualified funding asset” means any annuity contract issued by a company licensed to do business as an insurance company under the laws of any State, or any obligation of the United States, if—

(1) such annuity contract or obligation is used by the assignee to fund periodic payments under any qualified assignment,

(2) the periods of the payments under the annuity contract or obligation are reasonably related to the periodic payments under the qualified assignment, and the amount of any such payment under the contract or obligation does not exceed the periodic payment to which it relates,

(3) such annuity contract or obligation is designated by the taxpayer (in such manner as the Secretary shall by regulations prescribe) as being taken into account under this section with respect to such qualified assignment, and

(4) such annuity contract or obligation is purchased by the taxpayer not more than 60 days before the date of the qualified assignment and not later than 60 days after the date of such assignment.

Qualified funding asset

The Internal Revenue Code section above set forth provides that any amount received for agreeing to assume damage liability shall be excluded from gross income if it is used to purchase an annuity contract issued by any State-licensed insurance company or a U.S. obligation to cover the liability. While it is possible to use U.S. obligations as "qualified funding assets," it is not as practical or advantageous as a special annuity. U.S. obligations such as Treasury bonds still require an assignee, and do not pay as well as annuity contracts.

Special Needs Trust

When a person is injured seriously, disability may result. A substantially disabled accident victim may require government assistance in the form of Medicaid, Supplemental Security Income and other governmental providers. The settlement of a personal injury lawsuit, however, might produce funds (paid in a lump sum or in periodic payments, as from an annuity) which would disqualify the victim from government assistance. This would be true even if the payments are made in a structured settlement. The solution to this problem is the Special Needs Trust ( "SNT").

An SNT is a professionally managed fund, usually administered by a corporate trustee such as a bank if the amount of the trust is over $200,000; smaller trusts are better served by a professional trustee working on an hourly basis, possibly including a trustee committee consisting of family members. Accident victims would use a Supplemental Care SNT, designed to serve as a secondary source of benefits for the victim after all available government benefits have been exhausted.

The three main advantages of an SNT can be summarized as follows:

• Maintains a disabled individual’s eligibility for critical government benefits
• Supplements treatment, services, and care offered by Medicaid & state programs
• Shelters assets from creditors & protects beneficiaries from financial exploitation

Very generally, a trust is a legal entity which permits one person, the donor, to give something to a second person, the trustee, with qualifications that it must be used for the benefit of someone else, the beneficiary. Assets are owned by the trust. The trustee is usually given the power to manage those assets (e.g., to sell assets, to invest trust funds). In addition, in the case of an SNT, the trustee has the discretion to use trust assets for the benefit of the special needs child. The two main duties of the trustee are:

• Coordinate public benefit programs and use trust assets to enhance lifestyle of beneficiary
• Administer the trust and maintain compliance with all regulations

An SNT may seem appropriate at first, but might not be upon further investigation. Trusts are governed by state laws and should only be drafted by an attorney who is familiar with this area of law. In addition to legal fees, there may be costs associated with transferring assets to, and administration of, a trust. One important consideration is whether some or all of the injured person's settlement should be used to repay government agencies upon his death, or whether it would be more fair under the circumstances for the settlement to pass to the beneficiaries of his estate. Upon death of the child, the SNT will have to repay the benefits previously given by the government to the child, prior to paying any remainder beneficiaries such as the parents of the child.

The legal basis of the SNC is 42 USC 1396(p)(d)(4)(A). For more information about SNTs, click on the following links, which will open in new windows:

• Financial Planning: Special Needs Trusts
• Your Client May Need A Special Needs Trust: Tips For Creating A Special Needs Trust For Disabled Clients
• The expense calculator by MetLife is helpful in estimating how much of your child's needs might be provided by the annuity; be sure to use the current rate of return as given by your attorney, structured settlement specialist, or financial planner.
• A guide for attorneys, including an admonition against settlement of personal injury cases without considering the necessity of an SNT.
• Choosing the Ideal Trustee of Your Child’s Special Needs Trust.

www.dogbitelaw.com and each of its sections and products, including Dog Bite Law, The Dog Bite Law Adviser, Dog Bite Litigation Forms, What To Do If Your Dog Is Injured Or Killed, Avoiding Liability When You Train, Shelter or Adopt-Out, Anatomy of a Dog Bite Case, and the foregoing text, are (c) 1999-2009 Kenneth M. Phillips. All rights reserved. Reproduction in whole or part prohibited except where advance permission is granted in writing. Please read the disclaimer and our rules for linking and quoting. Reporters seeking interviews are welcome to contact us by clicking here.