There are many estate planning tools available for a Michigan family to choose from. When people are making their estate plans, they need to consider all their options to ensure that their plans fit their needs. For families with a mentally or physically disabled family member, a special needs trust may be one tool that they choose to use.
If you have a child with special needs, you may be wondering: what is a special needs trust? A special needs trust is a type of trust that holds assets for the benefit of a person with special needs. These needs can include mental or physical disorders or illness. Often, they are created to help a person that does not have the mental capacity to care for the person’s own financial affairs.
Additionally, these trusts are created to help protect a person’s access to governmental services and benefits. Often, people with special needs rely on governmental services, including Medicaid, SSI, subsidized housing and others, in order to live. These programs are often governed by income restrictions. In other words, if a person has too many assets, the person may not qualify for the benefit.
If a special needs trust holds title to the assets, however, they will not be used against the person applying for benefits. The trust, through the trustee, will then purchase goods and services for the beneficiary, without risking the beneficiaries access to important governmental benefits.
There are certain legal requirements that must be present in order for a special needs trust to be effectively created and used. People should understand these limitations in order to take full advantage of the trust. By considering speaking with an attorney, Michigan families may enjoy access to specific legal advice, which this blog post cannot provide, about their estate planning options.
Source: Findlaw, “Special Needs Trusts FAQ’s,” accessed July 19, 2015