If the NH only has the option to receive payments as a trust (e.g., the carrier's
policy is to pay in a certain manner), offset only the principal payments withdrawn
from the trust at the time that they are withdrawn or over the period that they represent,
if any. For example, if the settlement states the funds are to be withdrawn once every
year, divide the amount by 12 to arrive at a monthly equivalent. Do not offset any interest or any other income generated by the trust, e.g., dividends or
EXAMPLE: The NH is incapable after a catastrophic injury and the attorney negotiates a settlement.
The NH appoints his wife trustee and the entire $143,000 LS settlement is paid as
an irrevocable trust. When the NH is declared incapable, it is the WC carrier’s policy
to pay out funds only in the form of irrevocable trusts. The settlement agreement
states the trustee must withdraw $1,500 of the principal each month for the care of
the disabled individual. In addition to the trust, the carrier pays the individual’s
attorney fees of $15,000.
Offset determination: The NH or his attorney had no option. Therefore, offset payments when received. Attorney
fees are normally an excludable expense. However, in this case, they were not paid
out of the NH’s funds. Therefore, they do not count as excludable expenses per DI 52150.050 - Excludable Expenses.
ICF processing: Input the as a WC claim with periodic payments of $1,500 per month. Post the trust
information to the Special Message.