How Estate Planning Can Help Families With Disabled Loved Ones
All Michigan residents should plan for the future, creating a thorough estate plan that outlines your wishes and how you want your estate settled. However, estate planning is even more important for families with a disabled family member.
If you are planning on creating a special needs estate plan in Michigan, you should first consult with a Michigan trust attorney. At Warren & Schairbaum, PLLC, our collective years of experience handling estate planning cases have equipped us with the knowledge needed to help our clients navigate all elements of estate planning, from wills to trusts and more.
Estate Planning Tools & Documents You Need When Caring For a Disabled Adult Child
Estate planning for a disabled adult child comes with some unique challenges and considerations. After all, you need to have certain protections in place to ensure your child will continue to get the care that they require long after you have gone. To ensure this is the case, there are several estate planning tools families can use:
- Wills: Your will details most aspects of your estate, including providing clarity regarding who should get your property and personal belongings, and who will act as executor. Your will is also where you designate guardians for any minor children.
- Revocable living trust: A revocable living trust is highly recommended as it can help your estate avoid probate. It allows you to move your assets to the trust, naming beneficiaries while still giving you control of your assets during your lifetime, and sometimes even after your death. Keep in mind that if you have a revocable living trust, you should also consider a pour-over will, which helps to account for any assets that aren’t in the trust.
- Letter of intent: A letter of intent isn’t necessarily a legal document, but it still deserves a place in your estate plan. A letter of intent provides information for future caregivers regarding things like your child’s daily routines, dietary preferences, personality traits, social fears, medical history, etc.
- Special needs trust: A very important estate planning document you need to have if a loved one is receiving government benefits is a special needs trust. If this is a trust that will receive your money to benefit your disabled loved one, it is a “third-party” trust that can hold and manage assets for your adult child without disqualifying them from public benefits.
- Durable power of attorney: A durable power of attorney is a legally binding document that provides a trusted individual with the legal authority to make financial decisions on your behalf. This document ensures your disabled family member will continue to get the financial support they need even if you are unable to do so directly.
Planning for Government Benefit Eligibility
One of the most important aspects of future care planning for a disabled adult is preserving their government benefit eligibility. Government benefits have asset limits, which can be quite strict. So, you need to carefully plan your estate so that your child continues to receive these benefits without being disqualified.
The best way to do this is with a special needs trust, which can hold and manage assets for your child without counting these assets towards the government asset limit. Many people also use tax-advantage Achieving a Better Life Experience (ABLE) accounts in combination with special needs trusts as a way of providing for your child while preserving their government benefit eligibility.
Choosing the Right Trustee
Another very important aspect of creating an estate plan that supports a disabled individual is choosing the right trustee. A trustee is an individual who has the legal authority to distribute assets held in trust for the benefit of the disabled individual after you have passed away. In some situations, this person is a trusted family member. In other cases, it can be a corporate trustee or other fiduciary, such as an institution or professional, such as a bank trust department, attorney, or CPA. Whether an individual or a corporate trustee, each owes a fiduciary duty to the disabled individual.
The role of trustee is very important, and care needs to be given to determine who will act in that capacity. You want someone who will act in the best interest of your child, as well as follow the often misunderstood rules of benefit eligibility.
Here are some things to consider when appointing a trustee:
- Do they have any knowledge regarding Social Security or Medicaid rules?
- Are they organized and resourceful?
- Do they already have an established relationship with your loved one?
- Can they act in the best interest of the disabled adult without any conflict of interest?
- Can they get along and work with other family members?
- Are they willing to serve in this capacity?
FAQs
Why is estate planning important for families with a disabled adult child?
It creates a legal plan to provide resources for their future needs, while also maintaining their eligibility for means-tested government benefits
Can I simply leave my assets directly to my adult child?
This is not recommended if you want to protect their eligibility for government benefits. You should consult with an estate planning attorney in Michigan to determine the best solution for your situation.
How often should our family’s estate plan be updated?
You should review your estate plan every 5-6 years, as well as after any significant life events.
Get In Touch With a Michigan Estate Planning Attorney Today
If you’re the parent or grandparent of a disabled adult child, prioritizing special needs planning is highly recommended so that your assets do not ultimately cause problems for your loved one. Planning for a disabled adult child comes with some unique elements, which is why it’s a good idea to work with an estate planning attorney in Michigan who has experience with these types of cases. Contact us today at Warren & Schairbaum, PLLC, by calling us directly at 734-769-9300 to discuss your situation with an experienced attorney.
