Planning for the long-term care and financial stability of loved ones with disabilities is a top priority for many Michigan families. Special needs trusts play a crucial role in safeguarding the well-being of individuals with disabilities, ensuring they have the necessary resources while preserving their eligibility for essential government benefits.
Understanding how special needs trusts work and their importance can help you make informed decisions for your loved ones. Here’s what our Plymouth estate planning attorneys at Steslicki & Ghannam, PLC want you to know.
What is a Special Needs Trust?
A special needs trust is a legal tool designed to financially support individuals with disabilities without compromising their eligibility for needs-based government benefits, such as Supplemental Security Income (SSI) or Medicaid. Unlike traditional trusts or direct gifts, assets placed in a special needs trust are not counted as part of the beneficiary’s resources, making it an effective way to enhance their quality of life without risking the loss of crucial benefits.
Why Do You Need a Special Needs Trust in Michigan?
Michigan residents with disabilities often rely on government benefits to meet basic needs, including healthcare, housing, and personal assistance. However, these programs have strict income and asset limits. A direct inheritance, settlement, or other financial gifts could disqualify an individual from these benefits. Establishing a special needs trust ensures the beneficiary can access additional resources for various expenses without jeopardizing their benefits.
Are There Different Types of Special Needs Trusts in Michigan?
Three main types of special needs trusts are tailored to meet different needs.
They include:
First-Party Special Needs Trust
- Funded by individuals with disabilities, often using personal injury settlements, inheritances, or other assets.
- Must be established before the beneficiary turns 65.
- Must include a “Medicaid payback” provision, meaning that any remaining funds in the trust upon the beneficiary’s death may be used to repay Medicaid for services provided.
Third-Party Special Needs Trust
- Funded by parents, grandparents, or other third parties.
- Assets do not belong to the beneficiary, allowing more flexibility in the trust structure.
- No Medicaid payback requirement makes it an ideal option for estate planning.
Pooled Special Needs Trust
- Managed by a non-profit organization that pools funds from multiple beneficiaries while maintaining separate accounts for each.
- Suitable for families who want professional trust management at a lower cost.
- Often used for individuals with smaller amounts of assets.
What Can a Special Needs Trust Pay For?
Special needs trusts are designed to cover various expenses that improve the beneficiary’s quality of life.
These can include:
- Medical and dental care not covered by insurance or Medicaid.
- Assistive technology, such as communication devices or mobility aids.
- Rehabilitation services or therapies.
- Education, job training, and related expenses.
- Transportation, including adapted vehicles.
- Personal care attendants.
- Travel, entertainment, and recreational activities
Planning for the future of a loved one with disabilities is one of the most important steps you can take to ensure their financial security and well-being. Special needs trusts offer a practical, flexible, and legally sound way to provide for your loved one’s needs while preserving their access to vital government benefits.
Contact Our Plymouth Estate Planning Attorneys Today
Contact our dedicated Plymouth estate planning attorneys if you’re considering setting up a special needs trust in Michigan. We are here to help you navigate the complexities, understand your options, craft a plan that meets your family’s needs, and protect your loved one’s future.
Related Links:
