Special Needs Trust Planning

Farmington Hills Special Needs Trust Planning Lawyer

SPECIAL NEEDS TRUST PLANNING:
For Loved Ones with Disabilities

A trust, commonly referred to as a "Special Needs Trust," is a flexible planning tool for families with a loved one with a disability. As a parent, family member or friend of a special needs person, you know that life care planning is essential. Such planning helps assure a continuum of care and quality of life for the special needs person even after loved ones are unable to do so themselves.

A special needs person who has too many assets will not be able to qualify for valuable government and community benefits. If your special needs loved one has too many assets, or may inherit assets, or will receive payment from a lawsuit, Special Needs Trust planning should be considered.

This brochure discusses special planning options that are available to provide you with peace of mind and provide your special needs loved one with access to the best available care and quality of life.

For years the ElderCare & Disability Law Group of Mall Malisow & Cooney, P.C. has been serving client families in the areas of elder care planning and Medicaid law, as part of its ElderCare & Disability Law Group. Our care management and ElderCare attorneys on staff will help provide needed guidance and support throughout the full process of elder and disability care planning.

Call toll free 866-699-1800 for further information, to get immediate assistance, or to schedule an appointment.

Why is Special Needs Trust Planning Important?

Many individuals with special needs qualify for needs-based government benefits, including Supplemental Security Income (SSI) and Medicaid. These benefits are extremely important because they provide the special needs person with income and medical care coverage.

Having too many assets is a significant obstacle when qualifying for these valuable benefits. Generally, once someone has more than $2,000.00 eligibility Medicaid and SSI stop. A person with special needs who has more than $2,000.00 must use his or her own money to pay for things that could otherwise have been paid by government benefits.

Example
Sally is 32 and receives SSI and Medicaid due to her disabilities. Sally's mother died leaving Sally an $80,000.00 inheritance. Because Sally's mother did not plan to protect Sally's inheritance, Sally loses her SSI and Medicaid benefits. Unless Sally's inheritance is put into a Special Needs Trust it will have to be used to pay for her medical and basic living expenses. When all but $2,000.00 of Sally's money is gone, she will again qualify for her benefits.

If Sally's mother had planned to have Sally's inheritance go into a Third Party Special Needs Trust she could have saved Sally's inheritance without any requirement to pay back the State any money from the trust. Even now, after Sally's mother has passed, Sally's inheritance can be saved. A First Party Special Needs Trust will allow Sally to continue to receive her Medicaid and SSI. Sally's inheritance can then be used to improve her quality of life and quality of care.

Whose Money is put into the Special Needs Trust?

This part can be a bit complicated. But, it is very important to understand the difference between the two types of Special Needs Trusts – First Party and Third Party trusts. These trusts get their names based on whose money is put into the trust. The First Party trust uses the special needs person's own money. On the other hand, someone else's money goes into the Third Party trust.

When money goes into a trust it is called "funding" the trust. The Third Party Special Needs Trust is funded with money that comes from someone other than the special needs person. In the above example, Sally's mother could have planned for Sally's inheritance to go to a "Third Party" Special Needs Trust. The money going into the trust would have come from Sally's mother, not Sally. A Third Party trust is not required to provide to pay back the State after Sally dies. This type of Special Needs Trust can be funded when the third party dies or during his or her lifetime.

In the example, Sally's mother died without creating a Third Party Special Needs Trust so the inheritance cannot go into a Third Party trust. But, Sally's inheritance can still be saved by putting it into a First Party Special Needs Trust. This trust is funded with Sally's money (her inheritance). Because it was Sally's money that goes into the trust, the State has to be paid back first after Sally dies. This type of trust must be set up before the special needs person reaches age 65.

In Sally's case, the better plan would have been for her mother to set up the Third Party Special Needs Trust before she died. But the First Party Special Needs Trust will still save Sally's inheritance and allow her to keep her government benefits.

Proper Use of Money from a Special Needs Trust

The law protects the money inside the Special Needs Trust if it is used properly. For a special needs person to get maximum benefit from a Special Needs Trust the money in the trust should not be used for food, clothing or shelter. For example, if Special Needs Trust money is used for basic needs (food, clothing or shelter) then the valuable government benefits (SSI & Medicaid) can be reduced or even stopped. At first, the rules can seem very confusing and frustrating. However, consulting with qualified professionals who have experience working with Special Needs Trusts can help make sure that trust money is used properly.

Trust money can be spent on almost anything that will help improve the quality of care and quality of life of the special needs person. For example, Special Needs Trust money may be used to pay for education, recreation, entertainment, travel, dental, nursing care, mental health care, speech, physical or occupational therapies, rehabilitation, counseling, care management, or advisors for legal, financial, tax or government benefits matters.

Who is Responsible for Using Trust Money Properly?

The Trustee is responsible to make sure that the purpose of the trust is carried out and that the trust is properly managed. For maximum benefit from the trust, the Trustee must make sure that money is used only as allowed by Special Needs Trust laws. So, it is very important to pick a qualified Trustee for the Special Needs Trust.

Who Can Serve as Trustee?

Sometimes there is a qualified family member who can serve. Other times a professional Trustee is best. In all cases, the Trustee should be guided and advised by family members and others who know the special needs person best. Friends and family will be most aware of the special needs person's changing needs.

How is a Special Needs Trust Created?

A qualified attorney with special needs experience should create a Special Needs Trust. The attorney should be an expert in the special needs laws, rules, regulations and government benefits programs. As you now know, there are different types of Special Needs Trusts. For the trust to do what you want the right type of trust must be used and it must be set up right from beginning. Such a trust will help make sure that your special needs loved one will have access to the best available care and quality of life.


Special Needs Trust planning is critically important when needed. A special needs person who has too many assets will not be able to qualify for valuable government and community benefits. If your special needs loved one has too many assets, or may inherit assets, or will receive payment from a lawsuit, Special Needs Trust planning should be considered.

For the trust to do what you want you must use the right type of trust and it must be set up right. Such a trust will help make sure that your special needs person will have access to the best available care and quality of life.

At Mall Malisow & Cooney, P.C. we can help you create a proper Special Needs Trust that will safeguard the assets of your special needs loved one. Such planning will help provide you with peace of mind and assure quality of care and quality of life. If you or someone you know could benefit from the creating of a Special Needs Trust or if you want to learn more, please contact:


Mall Malisow & Cooney, P.C.
Holistic Elder Care, Special Needs and Estate Planning Attorneys

30445 NORTHWESTERN HIGHWAY, SUITE 310
FARMINGTON HILLS, MICHIGAN 48334
TELEPHONE: 248.538.1800 FACSIMILE: 248.538.1801
TOLL FREE: 866.699.1800

This brochure provides general information only. It is not intended as legal advice. While every attempt has been made to ensure the accuracy of this information, Mall Malisow & Cooney, P.C. accepts no liability whatsoever for any actions taken in reliance on this information. This brochure provides a simple explanation of complex laws and not a substitute for obtaining specific legal advice regarding your circumstances and needs. If legal special needs and asset preservation planning is required, then the assistance of properly qualified, licensed professionals should be sought.