When big-ticket lawsuits are settled, a trust fund is often established for the future maintenance of the person whose injury occasioned the suit. How secure are these trust funds from being raided and squandered by faithless guardians? In New Jersey, apparently not very secure:
Calling it an “extremely sad case,” a judge on Friday sentenced a Fair Haven woman to seven years in prison for misappropriating much of her disabled daughter’s $2.8 million trust to buy drugs and a Porsche, among other things….[Barbara] Marschall in October admitted misappropriating funds from the $2.8 million special-needs trust established through a settlement of a medical malpractice lawsuit against Monmouth Medical Center, Long Branch. She did so between 1996 and 2004. The funds were intended to be used for services and other care for her daughter, Liza, now 20, to supplement care provided by Medicaid.
According to an assistant Monmouth County prosecutor, Marschall, an admitted heroin and cocaine addict, by 2002 had “spent about $614,000 she had received as an award from the medical malpractice settlement in 1995, then turned to the trust fund for Liza, who was born with neurological problems and cerebral palsy. By December 2004, only about $100,000 of the trust fund remained.”
Since it’s common for large funds of money to be set aside for purposes of covering future medical and personal needs for disabled plaintiffs, at least two questions suggest themselves. First, how frequently are such moneys dissipated (whether through criminal depredation, as here, or simply through less spectacular failings of stewardship) before they were supposed to run out? Second, given that they owe their existence in most cases to legal action, shouldn’t such trust funds be better protected from guardians’ criminality or incompetence? Wasn’t anyone required to ask questions — or call in an auditor, or withhold their co-signature — as this mother drained the trust fund at a rate of more than $100,000 a month over more than two years? (Karen Sudol, “7 years for raiding fund of infirm girl”, Asbury Park Press, Feb. 11; Christine Varno, “F.H. woman sentenced for embezzling”, Red Bank Hub, Feb. 16)(via Rovito).
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