Individuals seek professional guidance to protect their assets, children, spouse, partner or other family members after they are gone. If their loved one is an individual with disabilities who depends on means-tested public benefits to meet his or her basic needs, it is essential to choose experienced counsel to help protect his or her present and future eligibility. Individuals who do not hire counsel, whether from a lack of sophistication or resources, may resort to disinheriting their child with disabilities and leave a disproportionate share to a sibling who , it is hoped, will “do the right thing.” While this is the least expensive approach, it provides no protection for their special needs child, and as such, it is the number one planning mistake many families make. The designated sibling may use the funds for themselves, especially if they encounter personal financial difficulties. The assets may become part of marital estate in the event of divorce, disability or death, and they are vulnerable to the creditors and claimants of the designated sibling.
In order to protect vulnerable family members, counsel will properly suggest a custom drafted third-party special needs trust as part of a complete estate plan. Most third party trusts are created either by execution of a custom drafted document, or through use of a third party joinder agreement with a pooled trust.
Even though other family members, especially those without children of their own, may wish to make a bequest to a family member with special needs, parents fail to inform them of the existence of the third party trust. As a practice point, counsel should inform the client how to instruct others to make current or future gifts to the trust and the tax consequences of doing so. However, not all families are of sufficient means to warrant a complex estate plan. They may have difficulty paying legal fees for the creation of this type of estate plan, or it may be too complex for them to manage. They may never fully fund the trust, or review the plan again. All of these factors contribute to the reluctance to create a comprehensive estate plan for themselves or periodically revise their existing plan. Counsel may consider the use of pooled trusts to assist families in exploring options which are cost effective and help meet the particular needs of their family member with disabilities. A pooled trust, as defined by 42 USC §1396(p)(d)(4)(C), is created and administered by a non-profit entity to manage and protect the assets of individuals.
Social security defines a third party trust as “a trust established by someone other than the beneficiary as grantor.” POMS SI 01120.200(B)(17). A grantor is further defined as the party who provides the res of the trust. POMS SI 01120.200(B)(2). To qualify as a valid third party special needs trust the beneficiary must have no ability to revoke the trust or direct distributions in any way (42 USC §1382b(3)(3)(A), 20 CFR §416.1201(A)(1); POMS SI 01120.200(d)(2)).
A pooled trust is defined in 42 U.S.C. §1396p(d)(4)(C), which states: “A trust containing the assets of an individual who is disabled (as defined in section 1614(a)(3) that meets the following conditions: (i) The trust is established and managed by a non-profit association. (ii) A separate account is maintained for each beneficiary of the trust, but, for purposes of investment and management of funds, the trust pools these accounts. (iii) Accounts in the trust are established solely for the benefit of individuals who are disabled with disabilities who are dependent upon governmental benefits to meet their basic needs, such as shelter, medical care, food, and income. An individual with excess assets, his or her parent, grandparent, guardian or court actions on his behalf, can place his or her excess funds into the trust and thus maintain their eligibility for governmental benefits.
In order to become a member of any pooled trust, the beneficiary, or other recognized authority as listed above, must execute a Joinder Agreement which dictates the terms under which the beneficiary will become a member of the pooled trust. While maintaining separate accounts for each individual member, assets are pooled together to maximize the return on investments, to spread the cost of administration and management among the members, and to reduce those costs through economies of scale. Pooled trust administrators apply these same principles to the administration of third party funds for individuals with disabilities. Pooled trusts are as varied in culture, fee schedule, asset management, and administrative style as other corporations, and there are many choices in pooled trusts, ranging in scope from local to national organizations.
(as defined in section 1614(a)(3)) by the parent, grandparent, or legal guardian of such individuals, by such individuals, or by a court. (iv) To the extent that amounts remaining in the beneficiary’s account upon the death of the beneficiary are not retained by the trust, the trust pays to the State from such remaining amounts in the account an amount equal to the total amount of medical assistance paid on behalf of the beneficiary under the State plan under this title.”
Parents with eligibility issues can also transfer assets to their child with special needs without penalty pursuant to 42 U.S.C. §1396p(c)(2)(B)(iii), and the funds must be placed in a self-settled trust, which mandates either a payback to the State or retention of the remaining assets. When reviewing the pooled trusts available in your state, counsel should consider several factors: (a) the reputation of the non-profit and trust within the locality of the client being served, (b) the cost of membership such as initial set up fees, perpetual and extraordinary fees (which varies greatly), (c) the longevity of the pooled trust, (d) reputation and experience of the counsel and administrators, (e) the ease and method of requesting distributions, (f) the performance of the investments and oversight of same, (g) availability of advocacy on behalf of the beneficiary, and (h) the retention policy of the trustee. Choice of pooled trusts, in many cases, depends on the recommendation of counsel creating the estate plan. Counsel should not make recommendations based on costs alone, but all of the listed factors, including compatibility of the emotional needs of the client with the trustee. Many pooled trusts have developed third party joinder agreements to allow parents or other family members to make current or future gifts to their loved one with disabilities. The method for determining the residual beneficiaries and the terms by which they receive funds vary greatly among pooled trusts. Typically, there is very little drafting required by counsel when using a third party joinder agreement, as the agreement itself is created and implemented by the non-profit trustee. The trustee may have a standard joinder agreement which contains provisions that are filled out by family or their counsel as to the disposition of any remaining assets. Other pooled trusts may implement a joinder agreement which references anaddendum to the joinder agreement outlining the grantor’s wishes. As with other ©2009 all rights reserved 5 third party special needs trusts, there is no payback required to any governmental entity. However, counsel should thoroughly investigate the non-profit trustee’s policy regarding the fees associated with disbursement of the residual funds to the designated beneficiaries, and whether the trust retains a percentage or charges a flatfee for wrapping up the affairs of the trust. Each family is unique in dynamic and presentment of issues. Use of the pooled trust joinder agreement provides flexibility when the parent is not sure whether governmental benefits will be necessary. Given the uncertainty as to their child’s potential for achievement and self-supporting independence, counsel can incorporate language which will allow the trustee of the parent’s trust agreement to convert the trust to a special needs trust.
Counsel should attach an executed joinder agreement to the Grantor’s revocable trust agreement. The grantor, or other family members, provides enough initial funding to qualify the trust as a seed trust, typically a nominal amount. In a more simple estate plan where a simple last will and testament are most appropriate, counsel can also reference the pooled trust as beneficiary on behalf of the heir or devisee with disabilities, and attach an executed joinder agreement. This Sample trigger provision provided by Susan Tomita: “It is the intention of the Grantors, should the Trustee determine that it is in the best interest of a beneficiary to qualify for needs based public benefits, that the Trustee have the discretion to amend the trust (or a trust share) to allow such qualification. Consequently, the Trustee shall have the power, if the Trustee deems it to be in a beneficiary’s best interest, to transfer the assets of the trust (or of any trust share) to a special needs trust or to convert the trust (or any trust share) into a special needs trust for the benefit of the beneficiary of the trust (or any trust share) that will allow such beneficiary to qualify for Supplemental Security Income, Medicaid, or other governmental assistance.” method allows the will to serve as a conduit for funding the special needs trust for the individual with special needs, thus creating a simple, cost effective estate plan that adequately protects the child with disabilities.
Using a pooled trust for third party funds may also offer a unique opportunity for the grantor and beneficiary to experience the pooled trust administration during the lifetime of the grantor. The parent, prospective caregivers, and beneficiary can form a relationship with the pooled trust administrators before the parents are gone. By forming a bond and creating an additional support for the beneficiary during the life of his or her parent, there is less stress after the parent(s) are deceased, and any issues with administration can be worked out ahead of time. It is also an opportunity for any nominated successor advocate to ease into their role by working with the beneficiary and the trustee.
Third party pooled trusts also help to eliminate choice of trustee issues as family members cannot serve as trustee. Rather, pooled trusts must be administered by the non-profits that created the fund, and typically do so with the assistance of counsel. Choosing the wrong trustee is another common mistake parents make when completing their estate plan. Parents naturally place administrative responsibilities for their own fiduciary needs on their adult children, who are typically the natural choice for trustee of the third party special needs trust. However, administration of these trusts is not like wrapping up the affairs of their deceased parent’s trust, which at some point will terminate. A special needs trust is particularly complex in that the ©2009 all rights reserved 7 trustee must provide management of the funds, be aware of changing public benefits policies, have a working knowledge of community and governmental resources, anticipate the impact of distributions on benefit eligibility, community, state and federal benefit programs, address tax issues, and be able to advocate for the beneficiary should benefits be eliminated. The siblings may or may not be familiar or comfortable with the role of advocate for their sibling with special needs. They or their spouse may become resentful of the time and attention required. The use of a pooled trust and its professional administrators and their counsel helps eliminate these issues, and possibly others as well. When the sibling is thrust into the role of trustee for life and has full discretion over the use of funds, it can place unnecessary stress and friction on that relationship. There is also a natural conflict of interest if the sibling is the remainder beneficiary and the trustee. Every dollar spent on theirsiblings needs is one dollar less that they will eventually receive. In addition, many pooled trusts provide the type of professional administration that would otherwise be unavailable for the size of assets under management.
Utilizing a pooled trust for third party special needs can be a flexible tool for counsel to meet the unique needs of their client by providing a cost effective estate plan which addresses the current or potential needs of a special needs beneficiary. Experience with pooled trusts will allow counsel to make confident recommendations to the client, eliminate some of the hazards associated with family trustees, and provide an additional planning choice to the traditional third party special needs trust.
Settlement planning is a comprehensive strategy to manage funds from a legal settlement or award customized to meet the client’s objectives. It's designed to ensure long-term financial stability through wealth management and asset preservation. By forming customized strategies that cater to an individual's unique circumstances, settlement planning provides peace of mind and a sense of security for the future.
The crucial components of settlement planning include financial analysis, government benefit analysis, legal coordination, expert guidance, and ongoing support throughout the process. Each of these factors work together to best serve the individual and ensure effective wealth management and a high quality of life, while avoiding pitfalls such as loss of essential government benefits such as Supplemental Security Income (SSI) or Medicaid.
Settlement planning is paramount for plaintiffs as it provides a clear roadmap for managing their newfound financial resources and avoiding the loss of any government benefits. Through expert legal and financial guidance, plaintiffs are empowered to make informed decisions about their future. Settlement planning empowers plaintiffs by giving them the tools to navigate through complex legal and financial decisions effectively.
Settlement planning attorneys guide clients through the legal and financial aspects involved in managing a substantial sum of money while preserving eligibility for essential benefits such as SSI and Medicaid. They often collaborate with other professionals like financial advisors, tax advisors, trust companies, and case managers, to create a comprehensive plan aligned with the client's goals. Through their expertise, they protect clients from potential pitfalls associated with large settlements, such as tax consequences, mismanagement of funds, and loss of public benefits.
Not only does a settlement planning attorney protect injured parties, or claimants, from significant financial loss, but they also protect litigation firms from liability if they neglect to effectively advise their client as to the settlement’s impact on their tax liability and public benefit eligibility prior to their client receiving settlement proceeds.
An attorney with particular expertise in settlement planning can also provide advice on sophisticated planning tools such as a Qualified Settlement Fund or Plaintiff Recovery Trust in addition to designing a settlement plan for complex matters involving many parties as in mass torts and class actions.
Asset preservation is essential to safeguard funds from unnecessary depletion or loss. Settlement planning attorneys use various strategies like trusts, annuities, and insurance to protect assets for future needs. By preserving assets, we ensure that the funds are available when required the most.
For instance, setting up a trust can help shield a portion of the settlement funds from immediate access while ensuring they remain intact for specific future purposes. Annuities provide a steady income stream over time, offering protection against overspending or financial mismanagement. Insurance products such as life insurance or long-term care coverage can further secure the resources for unforeseen circumstances, especially if the injured party requires lifetime care.
By focusing on asset preservation, we maintain financial stability and security for the long term. This approach enables us to meet our future needs without worrying about resource depletion due to imprudent spending or market fluctuations.
Comprehensive planning involves a detailed analysis of the individual's circumstances — such as healthcare needs, education expenses, housing, transportation, caregiving, travel, and entertainment — to create a holistic plan. For example, if a client requires specific home modifications due to injury, we ensure that these needs are factored into planning. By addressing financial, legal, and personal goals comprehensively, settlement funds are utilized effectively to enhance overall quality of life.
Financial analysis is crucial in determining an individual's current and future financial needs. Working alongside Certified Financial Planners helps us assess income requirements, budget considerations, and future expenses to develop realistic plans that align with each client's unique circumstances.
This involves strategic approaches to ensure optimal utilization of funds. We partner with financial advisors to carefully consider investment diversification, tax-efficient strategies, and asset allocation techniques. For example, we employ tax-efficient strategies to minimize tax liabilities on income generated from the settlement. By strategically planning, we aim to maximize the potential growth and longevity of settlement funds.
Often, there is a misunderstanding in the difference between a settlement planner and an attorney who does settlement planning. A settlement planner – also referred to as a structured settlement broker – assists injured parties in selecting a particular financial product, usually a structured settlement annuity. A settlement planning attorney is a lawyer who has no financial interest in the outcome of the settlement plan but has specific expertise in the process and can lead a team of other experts.
Structured settlement brokers must be licensed to sell insurance to sell structured settlement annuity products. This type of annuity is an insurance product that must be purchased by a defendant for the benefit of a plaintiff. The annuity payment stream is customized, and there is a guaranteed interest rate, or internal rate of return, and the entire payment is not taxable income to the payee. Brokers often work exclusively with either plaintiffs or defendants, and will outline the financial and tax advantages to the plaintiff when the defendant purchases these products on their behalf. However, there are downsides to these products as well.
The settlement planner is typically not a practicing lawyer. If they only hold an insurance license, they have no fiduciary duty to the client, meaning they have no obligation to act in the client’s best interests. Proposals may not disclose the internal rate of return of the funds or the broker's commission. The annuity payments are static and cannot be modified even if the client’s circumstances change. Without the added protection of a trust, clients can be subjected to aggressive marketing to sell their annuity payments for pennies on the dollar.
By contrast, a settlement planning attorney has no financial interest in the outcome of the settlement plan. If they do, they have a duty to disclose this to the client and put their license to practice law at risk if they fail to do so. A highly experienced settlement planning attorney usually has a probate and estate planning background. Some attorneys specialize even further to focus on planning for persons with disabilities, working with catastrophically injured individuals, and more complex litigation. These attorneys help lead a team of experts to craft an individualized holistic plan that is as flexible as possible with administrative checks and balances. They also oversee integrating other experts, such as structured settlement brokers, certified financial planners, case managers, tax experts, benefits coordinators, life care planners, lien resolution experts, trustees, and other professionals, to bring together additional resources for an injured party’s life after settlement that helps the funds last as long as possible while preserving government benefit eligibility.
Settlement planning isn't a one-time task. It's an ongoing process requiring continuous monitoring and adjustments over time. Ongoing support from trust administrators ensures that our plan remains relevant as personal and legal circumstances change. Regular reviews allow us to make necessary modifications and maintain our long-term financial security.
Settlement planning is not just about money. It is about shaping your future. With proper planning, we can make informed choices that align with our long-term goals. Seeking the guidance of a settlement planning attorney ensures that funds are used wisely for our well-being and future, particularly for persons who have catastrophic injuries or those who also depend on government benefits to meet their basic needs.
Settlement planning provides support during these critical decision-making processes. We don't have to navigate this alone. Settlement planning teams are there to aid in these life-changing decisions. They offer expertise and advice on managing funds responsibly and making choices that will positively impact our lives in the long run.
Settlement planning involves creating a comprehensive legal and financial plan for individuals who have received or are expecting to receive a large sum of money, often from a litigation settlement. It aims to create a legal framework with checks and balances that maximizes the longevity of the funds, coordinates the funds with government benefits, and enhances the person’s quality of life.
Settlement planning helps individuals make informed decisions about their finances, protect their assets, and secure their future. It takes into account various factors such as taxation, government benefits, healthcare needs, and family dynamics to create a tailored plan.
Services may include legal analysis, financial analysis, investment management, tax planning, estate planning, special needs trust establishment, life care planning, public benefit preservation and coordination strategies, and guidance on structured settlements. These services are designed to address the unique financial challenges that come with receiving a substantial sum of money.
Hiring an experienced settlement planning attorney can significantly impact one's financial future by providing personalized guidance in managing and preserving the funds received from a legal settlement.
Settlement protection involves implementing measures such as trusts to safeguard the funds received from legal settlements against potential risks like unforeseen expenses or public benefits loss. This ensures that the individual continues to benefit from their award over time.
Looking for an estate planning attorney in Michigan? Navigating the complexities of estate planning and probate can be daunting but having the right legal guidance can make this process simple. Whether you need assistance with wills, trusts, or estate administration, a skilled estate planning attorney can provide invaluable expertise and support, ensuring your compliance with Michigan's estate laws and the protection of your assets.
Michigan estate planning attorneys specialize in managing wills, trusts, and probate matters, such as asset distribution and guardianship issues. These professionals help individuals navigate the nuances of estate planning, providing clients with peace of mind and security of their assets after they pass away. Moreover, these attorneys assist in minimizing tax liabilities for beneficiaries by employing various strategies within the confines of Michigan's tax laws.
Another aspect of an estate planning attorney's role is offering expert guidance on establishing durable powers of attorney and healthcare directives. These documents ensure that an individual's medical decisions are legally binding even if they become incapacitated. Without proper power of attorney documents in place, your loved one will be forced to open probate proceedings to manage your affairs and make decisions on your behalf.
Estate planning attorneys can also advise clients on selecting suitable guardians for minor children or individuals who cannot care for themselves. Their expertise helps individuals make informed decisions about appointing responsible guardians who can effectively manage the care and well-being of their loved ones.
When seeking a good estate planning attorney, it's crucial to consider their specialization and experience. An attorney who solely practices estate planning will possess the expertise and experience necessary to navigate even the most complex familial and financial situations. For example, they have specialized knowledge on how to handle blended families, large assets, and inheritance tax laws; knowledge that a general practitioner may not possess. These attorneys will have a strong understanding of Michigan state laws pertaining to estates, wills, trusts, and probate in order to best serve their clients and the distribution of their assets.
If you need guidance in planning for a loved one with disabilities, choosing an attorney with enhanced knowledge, resources, and experience is crucial. Planning in these situations calls upon more than just good document drafting, but knowledge of public benefits, and other resources to bring together a complete plan. The more specialized your family's needs, the higher degree of expertise is needed in a planner.
Assessing an attorney's communication style and approach to client relationships is important when selecting the right estate planning attorney. A good estate planning lawyer should be able to explain complex legal concepts in plain language while maintaining open lines of communication throughout the process.
Furthermore, pay attention to how comfortable you feel interacting with the attorney during initial consultations. A compassionate yet professional demeanor can make a significant difference in ensuring that your wishes are accurately reflected in your estate plan.
When seeking a Michigan estate planning attorney, start by asking for referrals from friends, family, or financial advisors. These individuals may have firsthand experience with reputable professionals who specialize in estate plans and can provide valuable insights.
In addition to personal referrals, take the time to research online reviews and testimonials about different estate planning attorneys. Look for consistent positive feedback that highlights their expertise in creating wills, establishing trusts, and offering sound legal advice.
Asking your network of contacts for recommendations can help you identify potential candidates. Moreover, exploring online resources such as review platforms and legal directories can offer further insight into the reputation and track record of various estate planning professionals.
When choosing an estate planning attorney, it's beneficial to assess their years of experience in handling estate planning cases. An attorney with many years of experience is likely to have encountered various complex scenarios, which has refined their skills and knowledge in the field.
Years of experience can be reflective of an estate planning attorney's expertise in drafting comprehensive estate plans. A skilled attorney will be well-versed in creating tailored plans that align with your specific needs and objectives.
For example, estate planning attorneys are knowledgeable on different types of trusts, such as special needs trusts, that take into consideration an individual’s specific circumstances. Their specialized knowledge enables them to provide valuable advice and guidance when structuring an effective plan for your life and assets.
When interviewing a Michigan estate attorney, it's crucial to inquire about their approach to updating and maintaining estate plans over time. A reliable attorney should have a proactive strategy for ensuring that your estate plan reflects any changes in your life circumstances or the law. For example, they might suggest regular reviews of your estate plan every few years or after major life events such as marriage, divorce, or the birth of children.
It's important to understand how the attorney will keep track of changes in laws that may affect your estate planning. You could ask if they provide newsletters, seminars, or other forms of communication to keep their clients informed about relevant legal developments.
Another essential question is related to the prospective attorney's strategies for minimizing potential family disputes over inheritances. A skilled Michigan estate attorney should be able to discuss various methods for reducing conflicts among beneficiaries. They might mention techniques such as clear and detailed communication with all parties involved, using trusts instead of wills for certain assets, or incorporating specific language in documents to clarify intentions.
You can also ask about their experience in resolving family disputes related to estates and how they have successfully navigated these delicate situations in the past.
When hiring a Michigan estate attorney, it's beneficial to inquire about upfront consultation fees. Some attorneys may offer free initial consultations. Generally, a free consultation is a time to determine whether you and the attorney are a good fit for your needs. Some firms charge for their time and legal advice may be given. This is an essential aspect to consider when choosing an attorney, as it allows you to gauge their expertise without incurring significant costs.
It's important to discuss the possibility of ongoing retainer costs with your prospective attorney. By understanding the nature of these costs, you can better prepare for any financial commitments that may arise during your working relationship.
Discussing the billing structure for various estate planning services offered by an estate planning attorney is something to consider. Some attorneys charge flat fees for specific services, while others bill hourly. Understanding this structure will provide valuable insights into how much you can expect to pay based on the legal support required.
It's also advisable to clarify any additional expenses related to document preparation or court representation. These details are crucial in managing your expectations and avoiding unforeseen financial burdens down the line.
When seeking a Michigan estate attorney, one may take into account their affiliations with reputable legal associations related to estate planning, if they speak or write for legal publications, or have taken on leadership roles in their professional community. Attorneys who are members of organizations such as the American Academy of Estate Planning Attorneys or the National Academy of Elder Law Attorneys (NAELA), or a specialty section of the State Bar often demonstrate a commitment to staying updated on industry best practices and legal developments.
Attorneys' involvement in these associations can provide clients with assurance that they are receiving representation from professionals who prioritize ongoing education, ethical standards, and comprehensive understanding of estate laws.
Researching an attorney's involvement in community organizations or educational seminars further demonstrates their dedication to staying informed about evolving legal landscapes. This active participation showcases a commitment to continuous learning and engagement within the field of estate planning law.
Before finalizing your decision on a Michigan estate planning attorney, review all the information you've gathered. Consider factors such as their professional affiliations, certifications, and experience. Look at client testimonials or reviews to gauge their reputation and success rate in handling estate planning cases.
When reviewing potential attorneys for your estate planning needs, take into account any specific requirements you may have. For instance, if you have a complex family situation or own substantial assets, look for an attorney who has dealt with similar cases successfully.
Consider reaching out to Michigan Law Center for your legal needs. We specialize in various aspects of estate planning and can provide personalized guidance based on your unique circumstances.
Michigan Law Center offers comprehensive services ranging from creating wills and trusts to special needs planning. Our team is well-versed in navigating intricate family dynamics and addressing clients' concerns about preserving assets for future generations.
A Michigan estate attorney assists individuals in drafting wills, establishing trusts, and planning for end-of-life matters. They also provide guidance on minimizing estate taxes and ensuring assets are distributed according to the client's wishes.
You can evaluate an estate attorney's experience by reviewing their track record with similar cases, assessing their years in practice, and checking for any specialized certifications or affiliations with reputable legal organizations.
When considering fee structures, it's essential to understand whether the attorney charges hourly rates or flat fees. Inquire about any additional costs such as court fees or administrative expenses to accurately gauge your financial commitment.
Seeking referrals from friends, family members, or other trusted professionals can provide valuable insights into an attorney's reputation and level of service. Personal recommendations often offer peace of mind during the selection process.
During interviews with potential attorneys it is crucial to inquire about their approach to complex estates, how they handle disputes among beneficiaries, their strategies for minimizing tax liabilities within estates, and their communication style with clients.