There are many different types of trusts created to serve a wide range of estate planning needs. Special needs trusts are drafted to allow individuals to provide for loved ones in their lives who may be facing special challenges. For example, if you have a loved one in your life with a developmental disability, a child or grandchild, who may receive assets from your estate upon your death, you may want to consider adding a special needs trust to your estate plan.
These individuals may be on the autism spectrum, have cerebral palsy or other disabilities. When they are children, they may not be receiving any special governmental benefits because of their disability. However, once they reach the age of 18 and are considered adults, they could be eligible for certain governmental benefits. Using a special needs trust allows one to leave assets to a disabled individual so that person can benefit as your other children or grandchildren might, but assures that person continues to receive any government benefits to which he or she is entitled because of any special needs he or she may have.
Failing to use a special needs trust in your estate plan when your loved one with a disability may receive assets under your estate does not mean that he or she cannot take assets and benefit from them. It can change, however, the way those assets are passed upon the death of that individual. The law allows a disabled individual or his or her guardian to establish a special needs trust at the time an inheritance is received, however, this often requires a petition in probate court. Further, the law requires that the Department of Health and Human Services for the State of Michigan be the first-named beneficiary of that trust upon the death of the disabled beneficiary. This means that your other beneficiaries will not receive the benefit of your entire estate, as you may have anticipated and hoped. If you make a special needs trust a part of your estate plan, you can direct where any remaining assets go after the death of the disabled individual.
There are other times when you may want special protections in your estate plan for certain individuals. For example, if a loved one is struggling with substance abuse problems, problems with creditors or is incarcerated, these are all circumstances which can be addressed in your estate plan so that your loved one receives the benefits you intend for him or her, but protects the assets from the circumstances of your loved ones life; circumstances which may prevent that person from appreciating and benefiting from that asset passing directly to them.
Special circumstances in the lives of the people whom you care about call for considerations in your estate plan to assure that your wishes for how your assets pass upon your death happen as you plan and hope. Working with an estate planning attorney can help you to determine what estate planning options best achieve these goals.