Protecting Benefits While Securing a Future for Special Needs Individuals

Close family members of individuals diagnosed with progressive medical conditions often worry about future financial stability. Children and adults with special needs may have significantly higher medical expenses. They may require more accommodations at home, in vehicles, at schools and at places of employment. Their limitations may also limit their earning potential.

Special needs planning involves providing supplemental resources while ensuring continued eligibility for needs-based benefits such as Medicaid and Supplemental Security Income (SSI).

Frequently, special needs planning involves the creation of a special needs trust. There are three primary forms of special needs trusts used for people with disabling medical conditions in Michigan: 

1. First-party special needs trusts — These trusts are funded by the resources of the person with the disabling medical condition. Sources can include prior income, home equity, personal injury settlements and inheritances. The person with the support needs or their guardians can establish the trust. First-party special needs trusts are subject to Medicaid payback requirements, and they be established only for people under the age of 65.
2. Third-party special needs trusts — These trusts are funded by assets provided by others, such as parents, grandparents and other relatives. Creating such a trust eliminates the need for a Medicaid payback after the beneficiary dies. There are no limits to the size of the trust or the age of the beneficiary, and family members or other designated parties can receive the remainder of the resources in the trust when the beneficiary passes.
3. Pooled special needs trusts — These trusts, managed by nonprofit organizations, combine the resources of multiple individuals in need of long-term care and then invest those funds. Proceeds from investments go into individual sub-accounts for each beneficiary. Some of the funds in the trust may remain with the nonprofit entity after the death of the beneficiary, while the remainder may go to Medicaid or family members.

A MiABLE account (Michigan’s version of a federal Achieving a Better Life Experience account) is another special-needs-planning option. It is available to anyone diagnosed with a disabling medical condition or who becomes blind before the age of 46. Up to $500,000 may be deposited into a MiABLE account without affecting eligibility for benefits. The funds can help cover a variety of expenses, ranging from housing and transportation to medical expenses and support services.

Evaluating different solutions for special needs planning can help individuals and families ensure access to key benefits while setting aside resources for future expenses. A special needs plan can give everyone in the family peace of mind while protecting future access to critical benefits.

Otlewski & Maloney, P.C. in Rochester Hills can help families throughout Michigan create effective special needs plans. Arrange a consultation by contacting us online or calling 248-759-5641.