How does a personal injury settlement in California need to be structured to protect my ongoing SSI eligibility?

To protect your SSI eligibility, your personal injury settlement funds must be placed directly into a specific, court-approved trust called a first-party Special Needs Trust. Here is how to structure the settlement: Step 1: Immediately Inform Your Attorney Tell your personal injury attorney that you receive SSI and Medi-Cal benefits. This is the most important first step, as it affects all settlement negotiations and legal filings. Step 2: Hire a Special Needs Planning Attorney You will need a second attorney who specializes in drafting Special Needs Trusts (SNTs). This attorney will create a trust document that complies with federal law and California Probate Code Section 3604. Step 3: Petition the Court for Approval Your attorney must file a petition with the court to approve the settlement. Under California Probate Code Section 3611, the petition must ask the judge to issue an order that directs the settlement funds into the SNT. You will need to provide the court with the proposed SNT document for its review. Step 4: Resolve All Medical Liens Before the trust is funded, you must satisfy any claims for reimbursement, especially from Medi-Cal. As required by California Welfare and Institutions Code Section 14009.5, Medi-Cal must be repaid from the settlement for any injury-related medical bills it paid. Step 5: Fund the Trust Directly The court order will direct the defendant or their insurance company to pay the settlement proceeds directly into the newly created Special Needs Trust. The money must never pass through your personal bank account. Step 6: Report the Trust to Social Security Within 10 days of the end of the month the trust is funded, you must report it to the Social Security Administration. Submit a copy of the court order and the finalized trust document for their review and approval. Important Details and Nuances: The trust you create is a "first-party" SNT because it is funded with your own assets. This type of trust must include a "payback" provision, meaning that upon your death, any remaining funds must first be used to reimburse the state for any Medi-Cal benefits you received. The trustee you appoint will manage the funds, which can only be used for your supplemental needs, not for basic food and shelter. Warnings and Limitations: If you receive the settlement money directly, even for a single day, it will count as a resource and you will lose your SSI and Medi-Cal benefits. The rules governing SNTs are complex and strict. Any errors in the trust document or funding process can invalidate the trust and disqualify you from benefits. This is general information and does not constitute legal advice. For a situation this complex, it is essential to consult with a qualified California attorney specializing in both personal injury and special needs planning.