Infant or Disabled Person Compromise

An infant compromise occurs when a parent or guardian requests that the Court allow them to settle an infant’s or disabled adult’s lawsuit. An infant is considered a person under the age of 18. New York law requires that any lawsuit settlements regarding an infant must be approved by the Court first. The intent of this aspect of the law is to protect the child and make sure the funds are secured until the infant reaches the age of 18 years.

The Court has the jurisdiction to review the terms of the settlement and make any recommendations or changes to the settlement terms. The judge also has authority to review any attorney’s fees.

When a disabled child has reached the age of majority, a guardianship needs to be secured prior to the Court approving the compromise settlement terms giving the parents of the disabled adult authority to settlement the lawsuit on behalf of their adult child.

Since infant or disabled person compromise matters are complex, most parents hire a New York estate attorney to assist with the settlement terms and to handle ancillary issues.

Structured or Unstructured Settlement

IRS rules require the claimant who receives a one lump sum settlement payment to pay taxes on earning received from the subsequent investments of the money. In a structured sentiment where the claimant receives monthly payments, the full amount of the payments is not considered income. The Court requires that in connection with a structured settlement, all insurance companies and parties to the lawsuit comply with the IRS codes.

Special Needs Trust

A special needs trust should be included as part of estate planning when an infant or disabled person is receiving government benefits such as Medicaid or SSI so that the proceeds can be protected and the person can still collect their government benefits. The settlement proceeds are placed in the special needs trust so they can be used for clothing, education, hobbies, health care and medical procedures, household items, personal care items, personal home care services, job rehabilitation costs, automobile and other costs for the child or disabled adult. Money from a grandparent or parent can also be placed in a special needs trust for an infant or adult disabled child’s benefit. It is suggested that disbursements be made to the provider of services instead of paying the proceeds directly to the infant or disabled person so as to not reduce the person’s government benefits.

New York Estate Attorney

If you are a parent or guardian involved in an infant or disabled adult’s lawsuit settlement matter, you should contact a New York special needs trust and estate attorney to assist you. The attorney can prepare all legal documents and related documentation required in connection with the settlement, including a special needs trust and help you establish a guardianship for an adult disabled child. A New York estate attorney also represents executors, beneficiaries, creditors and interested parties in connection with routine estate administration, probate matters and estate litigation matters.