August 27, 2018
How Do You Fund A Special Needs Trust in Michigan?
If you are concerned about providing for your loved one with special needs, you may want to consider a Special Needs Trust. With a Special Needs Trust, you can provide for the care of your loved one while protecting your loved one’s ability to qualify for income-based government benefits. It can be crucial that a loved one receives SSI and Medicaid benefits. However, you want to ensure your loved one has the funds to supplement these benefits to pay for anything your loved one needs that government benefits do not cover. Our Michigan trust attorney can help you choose the trust agreement that is best for your situation.
Third Party Special Needs Trust
You can use a Third Party SNT as part of your estate plan. Anyone can create a Third Party SNT because the settlor and the beneficiary do not need to be related. Therefore, a grandparent or an uncle may want to protect a person’s inheritance by including a Third Party SNT in their estate plan. By transferring the assets into a trust, the person with special needs never owns the property; therefore, the assets do not impact government benefits. The trust agreement provides for how the funds are to be disbursed after the person’s death, if any funds remain in the account.
A Third Party SNT is an excellent way for someone to help care for and provide for the needs of a person with special needs. You have the peace of mind of knowing that your loved one will have what he or she needs even when you are unable to take care of this person.
First Party Special Needs Trust
A First Party SNT is funded by assets owned by the person with special needs. This type of trust is also called a “self-settled trust.” Assets used to fund a First Party SNT may include inherited property or the proceeds from a lawsuit. The trust must be an irrevocable trust to avoid losing eligibility for government benefits. The beneficiary of the trust may not have any access to the assets within the trust. The trust must own the assets, and a trustee must determine how the proceeds of the trust are used.
In addition, the person must be younger than 65 years of age when the trust is created. A parent or guardian must create a First Party Special Needs Trust. When the person passes away, the remaining assets in the trust are used to reimburse Medicaid for any payments it made on behalf of the person with special needs.
Drafting and Funding a Special Needs Trust
It is very important to work with a Michigan trust attorney when drafting and funding a trust for someone with special needs. The trust must be an irrevocable trust and include specific clauses to make sure the trust does not interfere with government benefits. If the trust is not carefully drafted to ensure that all requirements are met for a Special Needs Trust, your loved one may not qualify for government benefits. Because the trust is used to supplement government benefits, you want to ensure the person receives the government benefits first and uses the trust assets to pay for any expenses the government benefits do not cover.
Contact a Michigan Trust Attorney
The attorneys of The Elder Care Firm of Christopher J. Berry, CELA work with families to ensure their loved ones with special needs are cared for throughout their lifetime. In addition to a Special Needs Trust, there are many estate planning tools that you can use to provide for your family member. The key is to take steps now before the need arises so that you are prepared for whatever may happen.
Call 888-390-4360 or use the contact form on our website to request a consultation with our Michigan estate planning attorney.