A special needs trust can be a great way to provide for a loved one after you have passed away. There are some important benefits to setting this up instead of just leaving someone a bit of money in their bank account, but there are also many rules to be aware of. This means that you can’t change its rules once you establish it. A Washtenaw County trusts attorney can tell you more about this kind of arrangement and why you still might want to make one a part of your estate plan.
Why Form a Special Needs Trust in Michigan?
As its name suggests, when you form a special needs trust, the assets can be used to care for a loved one with special needs. Even if the beneficiary can work and pay for some of their own expenses, your assets can be used to help them live a fuller life. If they ever want to travel, invest in a hobby, or do anything else to enrich their lives, your money can allow that, as your beneficiary will not be seen as “rich” or “wealthy” in the eyes of the government, and that can be important.
A properly structured special needs trust can also help ensure families preserve eligibility for important public assistance programs while still providing financial assistance for their loved one.
What Does a Special Needs Trust Do?
- Holds assets for a person with disabilities without impacting their eligibility for certain government assistance programs
- Helps preserve eligibility for Medicaid and Supplemental Security Income (SSI)
- Pays for additional expenses not covered by government programs
- Can cover recreational activities, travel, therapy, and education
- Protects assets from both creditor claims and mismanagement
- Allows families to provide long-term financial support for loved ones
Common Expenses a Special Needs Trust Can Cover
- Educational programs
- Therapy, counseling, and rehabilitation
- Transportation and vehicle modifications
- Travel and recreation
- Computers and internet access
- Specialized medical equipment
Why Can’t This Trust Be Revocable?
An irrevocable trust cannot have its terms changed. A special needs trust is often set up this way so that no one can change the terms of the trust later and potentially take advantage of a beneficiary. Making this irrevocable also helps protect the assets inside from creditors or lawsuits.
An irrevocable structure is critical, as many government assistance programs consider whether or not a beneficiary has direct access and control over the assets. If the trust was eligible for alteration or revocation, the assets held in the trust could count against the eligibility limits.
Why Are Special Needs Trusts Usually Irrevocable?
- Prevents the beneficiary from directly controlling the assets
- Helps maintain eligibility for SSI and Medicaid
- Shields the trust from creditor claims and lawsuits
- Provides more robust legal and tax protections
- Reduces the risk of misuse
- Established long-term financial stability for vulnerable individuals
What Happens If a Trust Is Revocable?
- Assets can be counted against Medicaid and SSI eligibility
- The beneficiary may lose eligibility for important assistance programs
- Creditors have easier access to the assets held in the trust
Does a Special Needs Trust Interfere With Government Benefits in Washtenaw County?
So why should you set up this trust instead of just leaving some money for a loved one? When you leave your beneficiary money, that can actually be used against them if they rely on government benefits. They could end up having too many assets to qualify for programs like SSI, Medicaid, or housing assistance.
We don’t want that. When you set up a special needs trust, the assets are not treated as if they belong to your beneficiary. As a result, they can qualify for benefits and use money from the trust for other things.
Special needs trusts are generally referred to as supplementary trusts, as they act as a supplement for rather than a replacement of government assistance programs.
Can Someone With a Special Needs Trust Still Receive Benefits?
Yes, in many circumstances, a carefully drafted special needs trust allows a beneficiary to continue access to important benefits like:
- SNAP benefits, in some cases
- Housing assistance
- SSI
- Medicaid
- Other state and federal assistance programs
Important Government Benefit Programs to Know
In addition to SSI and Medicaid, beneficiaries may continue receiving benefits through programs including:
- U.S. Department of Housing and Urban Development
- Michigan State Disability Assistance
- Community support and waiver programs
For families throughout Ypsilanti, Ann Arbor, and surrounding Washtenaw County communities, special needs trusts play an important role in supporting vulnerable loved ones while ensuring they can still access important government assistance programs.
Should I Hire a Washtenaw County Estate Lawyer?
We do recommend talking to a lawyer if you plan to set up this kind of trust. An attorney from our firm can help you with the paperwork, and we can help you figure out if it’s the right kind of arrangement for you and your family.
Because special needs trusts must comply with complex state and federal laws, obtaining legal guidance for these matters can help you avoid mistakes that jeopardize your loved one’s eligibility for important government assistance programs.
Schedule a Consultation Today With Our Ypsilanti Estate Firm
If you are ready to make an estate plan of your own in Washtenaw County, contact Collis, Griffor & Hendra. We can schedule a consultation and take a closer look at your financial situation and your family’s needs. Then we can help you make a plan that protects your assets and provides for your loved ones. Contact us today to learn how we can assist you during these difficult times.
