If you have a family member with special needs, it is important that you create an estate plan that accommodates them and protects their future. It is in your best interest to retain the services of a dedicated Michigan estate planning attorney to discuss the specifics of your case and your options. At Collis, Griffor & Hendra our legal team is committed to helping you and your family.
Who would benefit from a special needs trust in Michigan?
Many people may need to draft a special needs estate plan. This includes those who cannot live independently because they have certain conditions, such as autism or Down Syndrome. Other individuals who may need this plan can include those with a progressively debilitating disease, such as Parkinson’s, Alzheimer’s, or ALS.
What are the different types of special needs trusts in Michigan?
There are three main types of trusts that can be made for a loved one with special needs. They include the following:
- First-Party Special Needs Trusts: These trusts can solely be created by a parent, grandparent, or legal guardian, and may only be funded by the beneficiary’s funds. For eligibility, the beneficiary has to be under the age of 65. Notably, these types of trusts are irrevocable. Generally, first-party special needs trusts are created when a beneficiary is to receive or inherit funds through a lawsuit or settlement.
- Third-Party Special Needs Trusts: These trusts are created by another person for a beneficiary. Generally, these trusts are funded through life insurance, and they may begin either during a lifetime or at the time of death. Additionally, family members may contribute gifts toward these trusts.
- Pooled Account Trusts: This is established by a non-profit organization for the advantage of a disabled person and his or her family. The non-profit organization manages, invests the funds, and controls payments. This type of account is used to supplement expenses other than basic needs provided for by government benefits.
- ABLE Accounts: These refer to savings accounts for disabled individuals and their families that have certain tax advantages. Contributions can be made to the account by anyone using post-taxed money. Notably, these funds are not deductible on federal tax returns, although some states may allow deductions. Furthermore, it is important to note that income earned from these accounts is not taxable.
Do not hesitate to reach out to our firm if you have any questions or concerns about planning for a loved one with special needs, reach out to our firm today. Our legal team is prepared to walk you through each step of this process.
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