TENTATIVE¿ 

¿ 

The Court excuses the personal appearance of Claimant and the guardian ad litem. Counsel may appear by telephone or video conference call.¿¿ 

The Court has reviewed the Petition to Approve Compromise of Pending Action of a Person with Disability, Maria E. Meza (“Claimant”).  

The parties have agreed to settle all claims for the total amount of $6,015,000, with $5,965,000 being apportioned to Claimant. Pertaining to Claimant, if the settlement is approved, $243,872.46 will be used for medical expenses, $41,268.94 for expenses, and $1,988,333.33 for attorneys’ fees. The net balance of $3,691,525.27 will be transferred into a special needs trust (“SNT”).    

The Court has reviewed the settlement and finds it fair and reasonable.¿After reviewing counsel’s declaration in support of 33% of Claimant’s settlement, the Court finds the attorneys’ fees fair and reasonable in light of Counsel’s representations. 

Previously, the Court found issues with the proposed SNT, which Petitioner must resolve before the Court is able to grant the petition. (Min. Order, Nov. 1, 2023.) 

Since then, Plaintiff filed supplemental declarations and documents. The Court has reviewed the supplements and amendments. ¿  

PETITION TO APPROVE COMPROMISE FILED:  

8/30/23, Declaration of Counsel filed 11/09/23 to correct proposed SNT instrument and amend/supplement relief regarding the use of a blocked account and annuity to receive the settlement proceeds.   

As previously discussed, a prior issue was that the proposed SNT was approved in plaintiff’s conservatorship case (21STPB07655).  A review of that file shows that Judge May has vacated that SNT approval in a November 16, 2023 minute order, which states in relevant part: 

On 10/25/2023, the Court granted the Petition for Authority to create a Special Needs Trust filed 6/28/2023 by Petitioner Berenice Frausto Meza. It has come to the court’s attention that a similar matter is being heard in the civil matter Meza v. Freddy Torres, et al., LASC Case No. 22STCV16975. Good cause appearing therefor, the Court vacates the 10/25/2023 minute order and denies without prejudice the petition filed 6/28/2023. The Court advances and vacates the two Order to Show Cause hearings set for 1/31/2024 at 8:30 a.m. 

NOTICE TO STATE AGENCIES WHEN PROPOSED TRUST IS AN SNT: 

When seeking approval of a special needs trust (SNT), notice of the hearing and service of the petition must be made upon three state agencies including the Dept. of Mental Health, Dept. of Developmental Services, and Dept. of Health Care Services.  (Probate Code sections 3602(f), 3611(c).). Correct proof of service filed on 11/15/23 for the three state agencies, notice is complete.     

PLAINTIFF:   

Maria Meza, age 60, disabled 

PETITIONER:   

Bernice Meza, conservator of person and estate, daughter   

GROSS AND NET SETTLEMENT (Petition, p. 6, sections 15 and 16f):   

Gross $5,965,000, Net $3,691,525.27 

PROPOSED RECIPIENT OF SETTLEMENT PROCEEDS (Petition, pp. 8-9, sec. 18): 

Petitioner proposes to fund $200,000 of the settlement proceeds into the SNT as cash and place the remaining $3,491,525.27 into a blocked account that will be a version of an investment account with annuity component, as the court has discussed at prior hearings.  As described in counsel’s declaration, the invested portion of the trust assets will return 7.2% and 5.1 percent and will pay into the SNT, via annuity, at $17,000 per month.  (11/9/23 Declaration, p. 3, paragraph 5.).  

An SNT is used to receive the settlement funds in these situations so that plaintiff does not lose benefits eligibility for Medi-Cal, SSI, and other benefits.  Historically, a person receiving Medi-Cal or SSI benefits could have only up to $2,000 in non-exempt assets, and any additional non-exempt assets over $2,000 would cause the loss of benefits eligibility under the relevant federal and state law.  Funds held in a valid SNT, however, are exempt assets that do not count toward the $2,000 asset limit for purposes of calculating benefits eligibility.  On July 1, 2022, the Medi-Cal asset qualification limit was raised to $130,000 for individuals while the asset qualification for other benefits, like SSI, did not change.   

BRIEFING REGARDING TRUST ISSUES: 

Petitioner provides briefing regarding trust issue at Attachment 18a(3)(e), court’s pdf at p. 146. 

PROPOSED TRUST INSTRUMENT: 

Petitioner provides the proposed trust instrument at 11/09/23 declaration of counsel, Exhibit A. 

The trust instrument includes a mandatory payback provision to require, upon the death of the trust beneficiary, that the trust pay back states that have provided medical assistance to the trust beneficiary, up to the amount of remaining trust assets:  Yes 

The trust instrument provides that upon the death of the trust beneficiary/plaintiff, any trust assets remaining after payback of medical assistance to the states shall be distributed to the trust beneficiary’s heirs at law and not to any specific persons:  Yes 

The trust makes itself subject to the continuing jurisdiction and supervision of the court:  Yes 

The main requirements for court created or funded trusts are set forth at California Rules of Court (CRC) rule 7.903(c) and LASC rule 4.116(b).   

The proposed trust instrument now meets the requirements meets the requirements of CRC rule 7.903 and LASC rule 4.116(b) and can be approved for use and funding.   

The proposed initial trustee is Berenice Frausto-Meza. 

Normally, bond must be required of a trustee unless the trustee is a corporate fiduciary.  (California Rules of Court, Rule 7.903(c)(5), Probate Code section 2320.)  The proposed trustee does not meet the definition of a corporate fiduciary.   

Petitioner requests $222,200 bond.  That calculation, however, is based upon a request to place the majority of the $3,691,525.27 settlement proceeds in a blocked account except $200,000.  With that understanding, the proposed $222,200 bond is sufficient and the court will require that amount of bond. 

ORDERS/PROPOSED ORDER: 

Proposed Order received stamp date:  11/16/23 – updated order filed in light of revisions to the requested relief regarding the blocked account/annuit and the correction of the proposed SNT instrument. 

General trust orders:  Yes, Attachment 9 at order pdf, p. 5.  Includes orders regarding the blocked investment account. 

Trust terms included in order as required (Probate Code section 3604(a):  Yes 

Required Probate Code 3604(b) findings made in order:  Yes 

Order provides for satisfaction of state liens (Order p. 3, sec. 8b(3)):  Yes 

Order provides for court jurisdiction over trust: Yes 

Order requires first trust accounting in one year and sets 14 month calendar due date: No 

Moving party is ordered to give notice.