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In the past, families would disinherit disabled family members and leave assets to someone else who agreed to “take care” of them. If assets are left to a disabled beneficiary, it could disqualify them from the state or federal programs they are receiving. In 1993, Congress enacted new laws that entitled disabled individuals to derive the same estate planning benefits as non-disabled individuals without affecting their eligibility for state or federal benefits. The law created Supplemental Needs Trusts, which enable you to leave any amount of money to a loved one who has special needs without affecting their eligibility for the state or federal benefits they receive.
The law further provides the trust proceeds must be used to provide luxuries for the disabled individual he or she would not otherwise receive under the state and federal programs. Luxuries can include trips, computers, power wheel chairs, prosthetics, or other comforts not generally provided by the government.
A Supplemental Needs Trust can be created by an individual with their own funds or be created by someone other than a disabled individual, typically a parent or relative.
There are different rights and restrictions to each of these trusts, but both ensure immediate qualification for federal and state benefits (i.e. Medicaid) and provide luxuries to the disabled beneficiary they, otherwise, most likely would be unable to have.
As a parent of a special needs child, you are the child’s “natural guardian” and can make all decisions regarding the child. However, your rights as guardian do not allow you to have access or control of your child’s assets (i.e., proceeds from a lawsuit or gifts from a family member). In addition, when your child turns 18, you lose your rights as natural guardian to make healthcare and other life decisions for them. To maintain these rights, you must commence a guardianship proceeding in Surrogate’s Court or the State will assume legal authority over your disabled loved one. To avoid losing your authority, you should contact a qualified attorney to begin a guardianship proceeding at least six months prior to your child’s 18th birthday.
Probate is the legal process in which a Norton Shores probate court will oversee the distribution of an estate’s assets. Generally, it is desirable to avoid probate when possible. The process can sometimes be expensive, lengthy and it is also public. A big benefit of a family trust is that it allows you to pass assets to your relatives without going through probate. You will usually be able to have a faster, simpler, more private process.
A family trust is extremely flexible and you will always be able toretain full control over it. Life is unpredictable, and there is always a chance that your needs might change. An experienced estate planning attorney can help you quickly update the document whenever your needs change. There are no limits to the changes you can make to a family trust, so you do not need to worry about making a permanent commitment when establishing a trust.
In some cases, a family trust may allow you to reduce your estate tax burden. This depends entirely on your individual circumstances. If you have a substantial amount of assets, an experienced Michigan estate planning lawyer should always comprehensively review the tax implications of your situation.
A trust is an important part of proper estate planning, and can be an invaluable tool in protecting what you value and preserving what you own. Contact us today to discuss whether establishing a trust might be a smart move for you.