Two recent appellate court cases, from Ohio and Pennsylvania, raise the same unusual question—and answer it in the same way. Both cases involve young accident injury victims with minor children, and both faced claims for child support payments from the other parent of each child. Both also had Special Needs Trusts established with the settlement proceeds from their personal injury lawsuits.

Special Needs Trusts are commonly used to handle proceeds from personal injury lawsuits. Under federal law, trust assets are not counted as available resources in determining eligibility for public benefits like Medicaid and Supplemental Security Income. Such trusts can be a tremendous benefit to the personal injury victim, who may not be able to pay for needed medical and other services even if the lawsuit proceeds were used first for that purpose.

Gary Ruch actually lives in New York, where the courts established a Special Needs Trust with the $241,547 settlement he received in 2003. He met Pennsylvanian Heather Mencer a year before his settlement was received and their daughter was born just months before the settlement—and the establishment of his Special Needs Trust. When Ms. Mencer sued for child support, Mr. Ruch argued that the trust assets were not available to him by law, and that payments from the trust should not be counted in determining his income. The trial judge agreed and ordered no support payments.

The Superior Court (Pennsylvania’s first-level appellate court) reversed and ordered that payments for Mr. Ruch’s benefit should be counted as income in calculating his support obligation. It would be unconscionable, said the judges, to let Mr. Ruch enjoy unlimited cable television and cell phone services while his daughter went without necessities. Mencer v. Ruch, June 14, 2007.

Meanwhile Tina DeVore was catastrophically injured in an Ohio auto accident in 1997. Her ex-husband took over custody of their son, and then argued that the Special Needs Trust set up for Ms. DeVore’s benefit should be considered in setting her child support obligation. The Ohio Court of Appeals agreed, and ordered that trust payments for her benefit totaling $19,884 should be treated as income in the calculation. Myers v. DeVore, October 6, 2006.

What do these two similar cases mean for Special Needs Trusts generally? It is not clear how either child support order will be enforced; neither court ordered that trust assets be used to make the support payments. But the two cases do suggest that Special Needs Trusts may not be completely protected from claims against their beneficiaries.

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