According to prosecutors, the parents of a boy who sustained permanent disabilities during his birth at a hospital wrongfully took more than one million dollars from his trust account. The trust account was created to cover the boy's medical expenses and care.
The trust was funded from a multi-million dollar judgment against the hospital where the boy was born. The purpose of the trust was to pay for the boy's increased living expenses due to the disabilities sustained during his delivery. In legal terms, the boy was considered a "beneficiary" of the trust.
According to the charges against the parents, after the boy died the city was supposed to be repaid for Medicaid costs with the remaining trust balance. However, the boy's parents took more than half of the trust's original $2 million balance before the city could obtain its share.
Several different types of trusts exist, including special needs trusts. The purpose of such trusts is to make sure that an individual who has a physical or mental disability obtains money that has been set aside for their benefit. In this case, a court order mandated the use of trust. In other cases, family members voluntarily set up trusts for the benefit of a child.
Special needs trusts are not only helpful for disabled children, but can also benefit elders and disabled adults who do not have the mental capacity to appropriately handle their financial assets. Northern Virginia residents who think that they might have a need to set up a trust should contact an attorney who has expertise in this area of law. Trusts can be very helpful tools, but misusing them can result in severe consequences.
Source: The Wall Street Journal, "NYC DA: Parents stole from disabled son's trust," Associated Press, April 17, 2012