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Settlement Protection Trusts: A Guide to Safeguarding Assets

Secure Your Financial Future With a Settlement Protection Trust

Looking to safeguard your assets? A settlement protection trust could be the solution you need. This legal arrangement protects your wealth against various risks, ensuring it remains intact for your beneficiaries. Understanding how a settlement protection trust works and its benefits is crucial for effective asset management. Discover the ins and outs of this trust structure to make informed decisions about protecting your financial legacy.

Defining Settlement Protection Trust

Primary Purpose

A settlement protection trust is a legal arrangement that safeguards funds received from settlements, ensuring they are used for specific purposes. It is designed to protect these funds from being mismanaged or depleted. However, it does not protect eligibility for means-tested government benefits, such as Supplemental Security Income or some Medicaid programs.

Specific Benefits

  • Asset Protection: The trust shields the settlement funds from creditors and lawsuits, preserving them for the beneficiary's intended use.
  • Financial Security: By managing the funds prudently, the trust provides long-term financial stability for the beneficiary.
  • Tax Efficiency: Settlement protection trusts offer tax advantages, minimizing the tax burden on the funds and maximizing their growth potential.
  • Control Over Funds: Beneficiaries have input on how the funds are invested and distributed, ensuring their needs are met effectively.
  • Medical Insurance Facilitation: These trusts prioritize medical insurance facilitation, ensuring that beneficiaries have access to necessary healthcare services without financial strain.

When to Consider a Settlement Trust

Right Circumstances

A settlement protection trust should be considered in situations where there are concerns about undue influence or the beneficiary's financial management abilities. It is crucial when safeguarding assets for individuals who may not have the capacity to manage substantial sums responsibly.

Approval Process

The approval process for personal injury settlements differs based on whether the beneficiary is a minor, incapacitated, or competent adult. Minors and incapacitated individuals require court approval for settlements, ensuring that their interests are protected. In contrast, competent adults have more autonomy in managing their settlement funds.

Public Benefits vs. Flexibility

In large settlements, beneficiaries often face a trade-off between preserving eligibility for public benefits and having flexibility in managing their funds. A settlement protection trust offers a solution by allowing beneficiaries to retain access to government assistance while providing structured distributions for their needs.

Steps to Setting Up a Trust

Requirements for Court Approval

To establish a settlement protection trust, certain steps must be followed. When dealing with minors or incapacitated individuals, court approval may be required. This ensures that the trust is set up in compliance with legal standards, safeguarding the interests of vulnerable beneficiaries.

Court approval involves submitting a petition outlining the details of the trust, such as its purpose, beneficiaries, and proposed management. The court reviews these documents to ensure that the trust serves the best interests of the minor or incapacitated individual.

Autonomy in Distributions

Setting up a settlement protection trust offers significant autonomy in distributions for competent adults who are not receiving means-tested public benefits. Unlike other trusts that may have restrictions on how funds can be used, this type of trust allows competent adults to have more control over how and when distributions are made.

This flexibility enables competent adults to tailor the trust's distributions according to their specific needs and circumstances. It provides them with the freedom to make decisions regarding their assets while still ensuring protection and security for their beneficiaries.

Safeguarding Settlement Assets

Preventing Impulsive Decisions

Protecting settlement assets is crucial to ensure long-term financial security for beneficiaries. A settlement protection trust (SPT) plays a vital role in safeguarding these assets by legally separating them from the beneficiary's control. This separation prevents hasty or impulsive decisions that could deplete the funds.

An SPT acts as a shield, preserving the financial resources awarded in a settlement for their intended purpose. Instead of receiving a lump sum, beneficiaries receive scheduled disbursements according to the trust's terms. This controlled distribution method promotes responsible money management and ensures that funds are used wisely over time.

  • Prohibits immediate access to large sums
  • Encourages disciplined spending habits

Trustee's Role

In addition to asset protection, trustees oversee various aspects of the trust, including tax preparation for the injured party. They work closely with financial advisors and legal professionals to manage tax obligations effectively and ensure compliance with relevant laws.

  • Manages tax-related matters
  • Collaborates with professionals for financial guidance

Final Remarks

The importance of a settlement protection trust cannot be overstated. It offers a robust shield for settlement assets, ensuring long-term financial security and peace of mind. By understanding the benefits, timing considerations, and steps involved in setting up such a trust, individuals can safeguard their assets effectively.

For those navigating settlements or seeking to protect their assets, considering a settlement protection trust is a strategic move. The outlined key benefits and steps provide a roadmap for establishing financial stability and protecting assets for the future. Take action today to secure your financial future with a settlement protection trust.

Frequently Asked Questions

What is a Settlement Protection Trust?

A settlement protection trust is a legal arrangement that helps protect assets from creditors, lawsuits, or other claims. It provides a secure way to manage and distribute funds for the benefit of the beneficiary.

When should one consider setting up a Settlement Trust?

Consider setting up a settlement trust when you want to safeguard assets for future generations, protect assets from potential risks like divorce or bankruptcy, or ensure controlled distribution of wealth according to your wishes.

What are the key benefits of a Settlement Trust?

Key benefits include asset protection from creditors, control over how and when assets are distributed, tax advantages, privacy in wealth management, and ensuring financial security for beneficiaries.

What are the steps involved in setting up a Settlement Trust?

The steps typically involve choosing a trustee, deciding on the terms of the trust, drafting the trust document with legal assistance, transferring assets into the trust, and ensuring compliance with legal requirements.

How does a Settlement Protection Trust safeguard settlement assets?

A settlement protection trust safeguards settlement assets by legally separating them from personal ownership, providing protection against creditors' claims or lawsuits, ensuring controlled distribution according to the trust terms, and offering tax benefits for estate planning.

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Revocable Living Trust Michigan: Comprehensive Guide & Benefits

Considering a revocable living trust in Michigan? Understanding the ins and outs of this legal tool is vital for effective estate planning. From probate avoidance to ensuring your assets are distributed per your wishes, a living trust can offer significant benefits. Dive into this guide to grasp the essential information you need to make informed decisions about establishing a living trust in Michigan.

Understanding Living Trusts in Michigan

Definition of Living Trust

A living trust is a legal document that holds your assets during your lifetime and distributes them after your death. Unlike a will, which goes through probate court, a living trust allows for the seamless transfer of assets to beneficiaries.

Benefits of Living Trust in Michigan

  • Avoiding Probate: A living trust in Michigan helps bypass the lengthy and costly probate process, ensuring privacy and efficiency. It also helps avoid probate if you own property in another state.
  • Incapacity Planning: With a living trust, you can appoint a trustee to manage your affairs if you become incapacitated, avoiding the need for court intervention.
  • Flexibility: Living trusts offer flexibility as they can be amended or revoked during your lifetime based on changing circumstances.

Key Elements for Creating a Valid Living Trust in Michigan

  1. Trustee Appointment: Designate a trustworthy individual or institution as the trustee responsible for managing the trust assets.
  2. Asset Funding: Transfer ownership of assets into the trust by re-titling them under the trust's name to ensure they are included in the estate plan.
  3. Beneficiary Designation: Clearly outline who will inherit specific assets upon your passing to avoid confusion or disputes among beneficiaries.

Creating a Living Trust in Michigan

Setting Up

To create a living trust in Michigan, first gather all necessary information about your assets and beneficiaries. Next, connect with an experienced attorney who can draft a trust document outlining how you want your assets managed and distributed after your death.

When setting up your living trust, consider seeking legal advice to ensure that all aspects are properly addressed. Remember to review and update your trust regularly to reflect any changes in circumstances or beneficiaries.

Choosing a Trustee

Selecting the right trustee is crucial for the success of your living trust. Ensure they are reliable, organized, and capable of managing finances responsibly. A trustee has a fiduciary duty, which means they have an obligation to act in the best interests of the person they are acting for, not in their own. 

Michigan fiduciary duties are outlined in the Estates and Protected Individuals Code (EPIC), and these duties are similar across most states, such as the duties of loyalty, impartiality, preserving trust property, keeping good records, prudently investing assets, informing beneficiaries, no commingling of assets, and no self-dealing.

Often family members will automatically choose the oldest child, or another responsible person they trust, to perform these duties. However, it is a job, and the more complex the assets and type of trust, the more a professional trustee should be considered, especially if there is a history of family discord. 

Role of a Notary

A notary plays an essential role in the creation of a living trust in Michigan by validating the trust document through notarization. This step ensures that the document is legally binding by validating the identity of the person creating and signing the trust agreement. 

Necessity of a Michigan Living Trust

Estate Planning

Creating a living trust in Michigan is essential for effective estate planning. It allows individuals to dictate how their assets should be distributed upon their passing, ensuring their wishes are carried out accurately. Unlike a will, a living trust bypasses probate court, expediting the transfer of assets to beneficiaries.

A living trust offers flexibility and control over one's assets during their lifetime and after death. This legal document provides clear instructions on asset distribution, reducing the likelihood of disputes among family members regarding inheritance. By establishing a living trust, individuals can ensure their loved ones are provided for according to their specific intentions.

Avoiding Guardianship and Conservatorship

One significant advantage of having a living trust is the ability to avoid guardianship or conservatorship proceedings. In the event of incapacity or disability, the appointed successor trustee can manage the trust assets without court intervention. This not only streamlines decision-making processes but also protects the individual's interests by avoiding expensive potential court conflicts associated with these appointments.

Avoiding Probate

A living trust in Michigan offers the advantage of bypassing probate, ensuring a smoother transfer of assets after death. Distribution to heirs can occur much more quickly, often within weeks instead of months or years. Taking the time to establish a living trust ultimately saves time and money for beneficiaries, as probate proceedings can be lengthy and costly.

Another key benefit is the privacy that a living trust provides compared to the public nature of a will. While wills become public record upon probate, exposing personal and financial details to anyone who wishes to access them, living trusts remain private documents. This confidentiality shields sensitive information from public scrutiny and maintains the privacy of asset distribution arrangements.

Preventing Court Control of Assets

Avoiding Interference

A living trust in Michigan helps prevent court control over assets by allowing for the direct transfer of ownership upon the grantor's passing. This bypasses the need for probate court involvement, ensuring a smoother and more private asset distribution process.

Risks of Court Control

Without a living trust, assets in Michigan may be subject to court supervision, potentially leading to delays, increased costs, and lack of privacy. The involvement of the attorney general or state authorities can further complicate matters and limit autonomy in asset distribution.

Autonomy and Flexibility

A living trust offers individuals greater autonomy and flexibility in managing their assets during their lifetime and after death. By specifying detailed instructions within the trust document, grantors can ensure that their assets are distributed according to their wishes without external interference. They have the power to adjust or amend the terms of the trust at any time per their changing circumstances.

This also means they can manage their financial security without interference. Grantors retain ownership and control of various assets like retirement accounts, personal property, real estate, and more. This level of control ensures that their wishes are carried out effectively.

Estate Taxes and Living Trusts in Michigan

Tax Implications

Estate taxes in Michigan can significantly impact the assets you leave behind. By establishing a living trust, individuals can potentially reduce or eliminate these taxes.

Transferring assets held within a living trust may also receive favorable tax treatment, providing beneficiaries with more substantial inheritances.

Strategies for Tax Reduction

Proper trust planning is essential for reducing estate taxes in Michigan. By setting up specific types of trusts, such as irrevocable trusts or charitable remainder trusts, individuals can strategically lower their tax liabilities.

Utilizing techniques like gifting assets during one's lifetime or leveraging life insurance policies within a trust structure are effective ways to minimize estate taxes.

Complementing Your Trust with a Will

Role of a Will

A will plays a crucial role in complementing a living trust for comprehensive estate planning. The trustee of a living trust deals with assets owned by the trust that are transferred into it during one's lifetime, usually through deeds, re-titling assets, or naming the trust as a beneficiary. However, there are times when one may forget to deed a property to the trust or change a beneficiary designation and, therefore, have to go through probate. 

A will, as part of a trust-based estate plan, will “pour” the probate assets into the trust to then be administered according to the trust terms. This ensures that all assets are accounted for and distributed according to the individual's wishes upon their passing. This dual approach of utilizing both a living trust and a will provides an extra layer of protection and clarity in estate distribution.

Importance of Regular Updates

Three elements of change require one to regularly revisit their estate plan: changes in the law, changes in relationships, and changes in assets. Regularly updating your estate plan to reflect changing circumstances is essential. Failing to update these documents could result in unintended consequences or outdated provisions being enforced during estate distribution. By keeping these documents current, individuals ensure that their wishes are accurately represented even as life events unfold.

Closing Thoughts

A living trust in Michigan offers a robust solution for individuals seeking to safeguard their assets, avoid probate, and maintain control over their estates. By understanding the intricacies of creating and managing a trust, one can effectively protect their wealth and ensure a smooth transfer of assets to beneficiaries. The flexibility of combining a living trust with a will further solidifies an individual's estate plan, providing comprehensive coverage for various scenarios.

To reap the full benefits of a Michigan living trust, it is crucial to consult with legal professionals specializing in estate planning. At Michigan Law Center, we’re here for you. Let us help you take proactive steps today to secure your legacy and protect your loved ones' financial future. Embrace the power of a well-crafted living trust to navigate the complexities of estate management with confidence and peace of mind.

Frequently Asked Questions

What is a living trust in Michigan?

A living trust in Michigan is a legal arrangement where your assets are placed into a trust during your lifetime, managed by a trustee (often yourself), and transferred to beneficiaries upon your death without the need for probate.

How can I create a living trust in Michigan?

To create a living trust in Michigan, you typically need to draft a trust document outlining the terms, appoint trustees and beneficiaries, transfer ownership of assets to the trust, and ensure it complies with Michigan state laws.

Why is having a Michigan living trust necessary?

Having a Michigan living trust helps avoid probate, maintain privacy (since trusts are not public record like wills), provide flexibility in managing assets during incapacity, and enable smoother distribution of assets to beneficiaries after death.

Can I prevent court control of my assets with a Michigan living trust?

Yes. By creating a revocable living trust in Michigan, you can prevent court control over your assets because the trustee manages them according to your instructions without involving the probate court.

Should I compliment my Michigan living trust with a will?

While not mandatory, it is advisable to have both. A will can cover any assets inadvertently left out of the trust and designate guardians for minor children. It acts as backup documentation supporting the provisions outlined in your living trust.

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Wills and Trusts Attorney: Estate Planning Made Easy

In need of legal guidance for wills and trusts matters? An experienced estate planning attorney can provide expert advice on planning, asset distribution, and ensuring your wishes are carried out. These professionals specialize in drafting documents like wills, trusts, and powers of attorney to protect your assets and loved ones. With their knowledge and experience, you can navigate complex legal processes with confidence and secure your legacy.

Estate Planning Made Easy

Key Assets

Key assets in estate planning include properties, investments, savings accounts, and valuable possessions. Providing a clear list of assets helps streamline the distribution process for your beneficiaries.

Beneficiaries

When planning your estate, you must thoughtfully determine the beneficiaries who will inherit your assets and how they should receive them. This can be family members, friends, or even charitable organizations. Clearly outlining who receives what ensures that your wishes are carried out effectively.

Healthcare Wishes

Another key aspect of estate planning is determining your healthcare wishes. In the event you become incapacitated, having a healthcare directive in place ensures that your medical preferences are known and respected by your loved ones and healthcare providers.

Fiduciary Selection

A fiduciary is the legal term for someone who acts on behalf of another. In completing your estate plan, you will be asked to nominate an individual and alternates to serve in different roles, such as an agent for managing your health care, an agent for managing financial and legal matters, a personal representative to handle probate matters, and a trustee to administer your trust. 

Choosing the best person to serve in each role is paramount. Your situation may call for a professional to be involved. An experienced estate planning attorney can help provide guidance on how to choose the right person or organization that suits the role that is needed, as well as create checks and balances. 

Creating Your Estate Plan

Drafting a Will

A will is used to clearly outline how you want your assets distributed after your passing. Be specific about who should inherit what, including personal belongings, real estate, investments, and other valuable possessions.

Ensure to appoint an executor in the will who will be responsible for carrying out your wishes and handling the distribution of assets according to your instructions. This individual plays a vital role in executing your estate plan smoothly and efficiently.

Establishing a Trust

Establishing a trust allows you to set aside assets for specific purposes or beneficiaries. Unlike a will, a trust can provide more control over how and when your assets are distributed. It also offers benefits such as avoiding probate, maintaining privacy, and potentially reducing estate taxes.

Consider the type of trust that aligns with your goals. This could be a revocable living trust for flexibility during your lifetime or an irrevocable trust for asset protection and tax advantages.

Designating Powers of Attorney

Designating powers of attorney is essential for ensuring someone can make financial and healthcare decisions on your behalf if you become incapacitated. By designating powers of attorney, you empower trusted individuals to manage your affairs according to your wishes when you are unable to do so yourself. It's advisable to choose individuals who are reliable, trustworthy, and capable of handling these responsibilities with diligence and care.

Understanding Wills and Trusts

Wills vs. Trusts

Wills are legal documents that outline how probate assets should be distributed after death, while trusts manage assets during life and after death. A will goes into effect only after you die, whereas a trust can be utilized to manage your assets if you become incapacitated.

The Probate Process

  • Probate is the legal process of validating a will and distributing assets according to its terms.
  • It involves court supervision, which can lead to delays in asset distribution and incur additional costs.

Avoiding Probate with Trusts

  • Establishing a trust allows for the transfer of assets outside of probate court proceedings.
  • This offers privacy by keeping details of asset distribution confidential compared to wills that become public record through probate.

Navigating the Probate Process

Gathering Documents

Gather all necessary documents for probate, including the will, death certificate, and financial statements. Ensure you have a clear understanding of the deceased person's assets and debts to facilitate the probate process smoothly.

Notifying Creditors

Notify all creditors about the death to begin settling outstanding debts. This step is crucial in ensuring that debts are properly managed before distributing assets. Settling debts promptly can prevent complications during asset distribution and help streamline the overall probate process.

Distributing Assets

Distribute assets according to either the terms outlined in the will or as per state law if there is no will available. Ensure fairness in distributing assets among beneficiaries. Consider seeking legal advice from a wills and trusts attorney to make informed decisions regarding asset distribution, especially when minor children are involved.

Estate Planning Expertise

Common Questions

Estate planning in Michigan often raises several questions among individuals. Understanding the intricacies of wills and trusts can be overwhelming. Seeking guidance from a wills and trusts attorney helps clarify doubts and ensures decisions align with state laws.

Resource Guidance

Accessing reliable resources is crucial for effective estate planning. In Michigan, individuals can benefit from online tools, community seminars, and legal aid clinics to enhance their understanding of asset protection strategies. These resources empower clients to make informed decisions about their estates.

Client Communication

Establishing a robust client relationship involves transparent communication regarding legal terms and decisions. A skilled attorney simplifies complex concepts, ensuring that everyone involved comprehends the implications within minutes of discussion. This clarity fosters trust and peace of mind for families navigating estate planning complexities in Michigan.

Smooth Estate Settlement Process

Clear Communication

Effective communication with beneficiaries is crucial for a smooth estate settlement process. Clearly outlining the details of the will or trust can prevent misunderstandings and conflicts.

Professional Guidance

For complex estates, it is advisable to seek professional guidance from a probate and estate planning attorney. Their expertise can navigate intricate legal matters and ensure all aspects of the estate are properly handled.

Prompt Dispute Resolution

In cases where disputes arise among beneficiaries, it is essential to resolve any conflicts promptly and fairly. Engaging in mediation or legal intervention can help reach amicable solutions and prevent prolonged disagreements.

Achieving Peace of Mind in Estate Planning

Regular Review and Updates

Regularly reviewing and updating your estate plan is crucial to ensure it aligns with your current wishes and financial situation. Changes in laws or personal circumstances may necessitate adjustments to your wills and trusts. Set a reminder to review your plan annually.

Open Communication with Loved Ones

Discussing your wishes with loved ones can prevent confusion and disputes after death. Clearly communicate who will inherit what assets, especially for sentimental items. This transparency can provide clarity and avoid potential conflicts among family members.

Secure Important Documents

Securing important documents in a safe place is essential for an efficient estate settlement process. Store documents such as wills, trusts, insurance policies, and property deeds in a fireproof safe or a secure location known to trusted individuals. Make sure these documents are easily accessible when needed.

Getting Started with Your Estate Plan Today

Schedule Consultation

Begin by scheduling a consultation with an estate planning attorney to discuss your wishes and legal options. This initial meeting typically lasts 30 minutes. Arrive prepared with questions about wills, trusts, and other estate planning tools. The attorney will guide you through the process based on your unique circumstances.

Organize Information

Gather all your financial and personal information before meeting the attorney. This includes bank statements, property deeds, insurance policies, and a list of beneficiaries. Having these documents ready streamlines the planning process and ensures that nothing important is overlooked.

Take the First Step

By taking this crucial step, you are securing your legacy for future generations. It is essential to have a clear plan in place to protect your assets and provide for your loved ones after you're gone. Don't wait until it's too late. Start the estate planning process today to safeguard your family's financial future.

Closing Thoughts

In navigating the complexities of estate planning, securing a wills and trusts attorney is paramount. Understanding the nuances of wills, trusts, and probate processes can be overwhelming, but with Michigan-specific expertise, achieving a smooth estate settlement process becomes feasible. 

By taking the first step today towards creating an estate plan tailored to your needs, you pave the way for peace of mind in knowing your legacy is protected. Your future self and loved ones will thank you for the foresight and care invested in securing their financial well-being. 

Frequently Asked Questions

What is the importance of having an estate plan?

Having an estate plan ensures that your assets are distributed according to your wishes, minimizes family disputes, and can help reduce tax burdens on your heirs.

How do wills and trusts differ in estate planning?

Wills specify how assets are distributed after death, while trusts allow for ongoing management of assets before and after death, potentially avoiding probate.

When should I consider hiring a wills and trusts attorney?

It is advisable to consult with a wills and trusts attorney when you have significant assets, complex family situations, or wish to minimize taxes on your estate.

What is the probate process and why should I be aware of it?

Probate is the legal process of administering an individual's estate after their passing. Understanding probate helps ensure efficient asset distribution and minimizes delays for beneficiaries.

How can Michigan-specific expertise benefit my estate planning needs?

Michigan-specific expertise ensures that your estate plan complies with state laws, maximizing the protection of your assets and minimizing potential challenges during the settlement process.

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Grasping Settlement Planning: Our Comprehensive Guide to Maximizing Your Financial Future

Understanding Settlement Planning

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.

Strategic Importance

Plaintiff’s Perspective

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. 

Attorney’s Role

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 & Long-Term Security

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.

Services Offered

Comprehensive Planning

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. 

Maximizing Settlement Funds

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.

Settlement Planner vs. Settlement Planning Attorney

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.

Ongoing Support

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. 

Conclusion

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.

Frequently Asked Questions

What is settlement planning?

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. 

Why is settlement planning important?

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.

What services are typically offered in settlement planning?

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.

How does hiring a settlement planner impact one's financial future?

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. 

How does settlement protection work in the context of settlement planning?

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.

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Choosing the Right Michigan Attorney for Estate Planning

Choosing the Right Michigan Attorney for Estate Planning

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.

Understanding the Role of a Michigan Estate Attorney

Legal Services & Expert Guidance

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.

Key Considerations When Choosing an Estate Planning Attorney

Specialization in Estate Planning Law

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.   

Communication Style and Client Relationships

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.

Seeking Referrals for Trusted Estate Planning Professionals

Seek Referrals

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.

Research Online Reviews

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.

Assessing the Experience and Expertise of Estate Attorneys

Years of Experience

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. 

Expertise in Drafting Plans

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.

Essential Questions to Interview a Prospective Estate Attorney

Approach to Updating and Maintaining Estate Plans

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.

Strategies for Minimizing Family Disputes

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.

Understanding Fee Structures and Cost Expectations

Upfront Consultation Fees

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.

Billing Structure for Services

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.

Evaluating the Attorney's Professional Affiliations and Certifications

Legal Associations

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.

Finalizing Your Decision on a Michigan Estate Planning Attorney

Reviewing Gathered Information

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.

Choosing Michigan Law Center

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.

Frequently Asked Questions

What are the primary responsibilities of a Michigan estate attorney?

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.

How can I assess the experience and expertise of an estate attorney?

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.

What should I consider when evaluating fee structures and cost expectations for an estate attorney?

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.

Why is seeking referrals important when looking for a trusted estate planning professional?

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.

What are some essential questions to ask a prospective Michigan estate planning attorney during an interview?

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.

lawyer showing client tablet in officeA parent holding their smiling child in a swimming pool
Our Comprehensive Guide to Estate Planning: Key Components, Tools, and Strategies

Our Comprehensive Guide to Estate Planning: Key Components, Tools, and Strategies

Estate planning is crucial for organizing the distribution of our assets and ensuring our financial affairs are in order. It involves making decisions about inheritance, managing property, and preparing for potential incapacity. Estate plans provide peace of mind by outlining clear instructions for the distribution of assets and can help avoid conflicts among family members after an individual's passing. Understanding the laws and titles involved is essential to ensure that our wishes are carried out as intended. By taking proactive steps in estate planning, we can secure our family's future and bring clarity to a potentially complex event.

Understanding Estate Planning and Its Purpose

Comprehensive Approach

Estate planning is a comprehensive approach to managing our assets during our lifetime and after death. It involves creating legal documents that outline how we want our assets to be distributed and who will make decisions on our behalf.

Estate planning allows us to have control over what happens to our assets, and ensures they are managed according to our wishes even if we become incapacitated or after we pass away.

Protecting Loved Ones and Peace of Mind

Estate planning aims to protect our loved ones and ensure our peace of mind. By creating a clear plan for the distribution of assets, we can prevent disputes among family members and ensure that those we care about are provided for in the way we intend. For example, we can include provisions for minor children or individuals with special needs by offering them financial security and guardianship arrangements if necessary. An estate plan can also help protect children from misspending their inheritance, help protect it from being subject to creditors, or help protect it from future ex-spouses.

By clearly outlining the distribution of assets in advance through estate planning, we can minimize potential conflicts among family members after we are gone. This not only provides peace of mind during our lifetime but also ensures harmony among our heirs.

Minimizing Taxes

A significant benefit of estate planning is minimizing taxes and costs associated with asset transfer. Through proper estate planning, we can take advantage of strategies that help reduce tax liabilities on inherited assets. By doing so, more wealth can be passed on to our loved ones instead of being diminished by hefty tax bills.

Moreover, effective estate planning allows us to address potential expenses related to probate court proceedings and other legal formalities after death. This means there will be fewer financial burdens on those who inherit from us since unnecessary costs have been minimized through careful planning. For example, we can opt for a pre-paid funeral or make charitable donations to reduce our estate’s tax burden and costs.

Key Components of an Effective Estate Plan

The Importance of a Will

Having a will is crucial. This legal document ensures that our assets are distributed according to our wishes after we pass away. For example, if I want my vintage record collection to go to my niece and my savings to be split equally between my siblings, I need a will in place.

A will also allows us to name an executor who will carry out these instructions and settle any outstanding debts or liabilities with our estate. By clearly outlining everything from beneficiaries to specific items or amounts, we can prevent potential disputes among family members and creditors. This expedites the probate process. 

Often, people assume a will prevents probate. It does not. Instead, a will is a guide for the probate court on how you wish your assets to be distributed after you are gone. A trust is the primary tool for avoiding probate.

Utilizing Trusts

In addition to wills, trusts are another essential tool in effective estate planning. They offer various benefits such as managing and protecting assets during our lifetime and ensuring their smooth transfer upon death. By setting up trusts, we can control how and when our assets are distributed while potentially minimizing estate taxes. 

For instance, if we have minor children or individuals with special needs who require ongoing financial support, establishing a trust can ensure that they receive the necessary care and resources even after we are gone. Moreover, trusts provide privacy since they do not go through probate court proceedings like wills do.

Powers of Attorney and Advance Healthcare Directives

Apart from wills and trusts, powers of attorney play a vital role in estate planning. These legal documents enable someone we trust to make financial or healthcare decisions on our behalf if we become incapacitated due to illness or injury. 

A durable power of attorney allows us to appoint an agent who will manage our financial affairs if we become incapacitated. It's comforting to know that someone we trust will handle bill payments, investments, or property transactions if we're unable to do so ourselves.

Likewise, a healthcare power of attorney is vital as it designates someone to make medical decisions on our behalf if we're unable to communicate our wishes due to illness or injury. This ensures that medical treatments align with what we would have wanted while providing peace of mind during challenging times.

Naming Beneficiaries for Retirement Accounts and Life Insurance Policies

Another critical aspect of estate planning involves naming beneficiaries for retirement accounts and life insurance policies. Doing so ensures that these assets bypass probate court and directly pass on to the designated individuals or entities upon our passing. This simple step can save time and money while ensuring that our loved ones receive the intended inheritance promptly.

Common Estate Planning Tools and Strategies

Revocable Living Trusts

A revocable living trust is a popular estate planning tool that allows for the management and distribution of assets while avoiding probate. This means that our loved ones can access these assets without having to go through the lengthy and costly probate process. With a revocable living trust, we can also make changes or revoke it if our circumstances change throughout our lifetime, providing flexibility.

For example, let's say we own multiple properties in different states. By placing these properties into a revocable living trust, we can streamline the transfer of ownership to our heirs without the need for separate probate proceedings in each state. This saves time and money for our beneficiaries.

Another benefit is privacy. Unlike wills, which become public record after going through probate, trusts provide confidentiality as they are not subject to public scrutiny.

Gifting Strategies

Gifting strategies can help reduce the size of an estate for tax purposes. By gifting assets during our lifetime, we can lower the overall value of our estate that may be subject to estate taxes upon our passing. For instance, giving monetary gifts or transferring property to family members now reduces the taxable value of what remains in our estate later on.

However, it is crucial to consider potential gift tax implications when employing gifting strategies. The IRS has annual gift tax exclusion limits that should be considered when making substantial gifts.

Life Insurance

Life insurance is another essential component of estate planning. It provides liquidity to cover estate taxes or provide for loved ones after death. In this way, life insurance ensures that there are funds available to settle any outstanding debts and expenses without requiring liquidation of other assets intended for inheritance by beneficiaries. Moreover, life insurance proceeds generally pass outside of probate directly to named beneficiaries promptly after death.

Providing for Loved Ones with Special Needs

Trusts not only safeguard assets but also ensure that our loved ones with special needs are taken care of even after we are gone. For instance, establishing a special needs trust for a family member with disabilities can provide ongoing financial support for them without affecting their eligibility for government assistance. Our firm is uniquely qualified to assist families and individuals with these types of trusts.

Overcoming Misconceptions and Getting Started with Your Estate Plan

Importance for Everyone

Estate planning is not just for the wealthy. Many people mistakenly believe this, but it is crucial for individuals of all income levels. Organizing our affairs and ensuring that our wishes are carried out in the event of incapacity or death is not exclusive to any one economic status.

It is also important to understand that estate planning is an ongoing process, not something we do once and forget about. As life changes, so should our estate plan. This means regularly reviewing and updating documents to reflect any major life events such as marriage, divorce, births, deaths, or significant changes in financial status.

Taking Action Early

Procrastination often prevents us from getting started with estate planning. We might think we're too young or don't have enough assets to worry about it yet. However, starting early allows us to make decisions without feeling rushed or pressured by unexpected circumstances.

Partnering with an experienced estate planning attorney can also alleviate some of the stress associated with this process. They can guide us through the necessary steps and help tailor a plan specific to our needs while addressing any questions or concerns along the way.

Conclusion

Estate planning is crucial for securing our financial legacies and ensuring that our loved ones are taken care of according to our wishes. Proactive planning offers peace of mind and safeguards for our family's future.

With this in mind, we should take steps to initiate or review our estate plans. Seeking professional guidance and leveraging the insights shared can help us navigate the complexities of estate planning with confidence.

Frequently Asked Questions

What is Estate Planning?

Estate planning involves making arrangements for the management and distribution of your assets after your death. It typically includes wills, trusts, powers of attorney, and other legal documents to ensure that your wishes are carried out.

Why is Estate Planning Important?

Estate planning allows you to specify how you want your assets distributed and who should manage them if you become incapacitated. It can also minimize taxes and legal fees, provide for loved ones, and support charitable causes.

Which Documents are Essential for an Estate Plan?

Key documents include a will, power of attorney for finances, advance healthcare directive (living will), and possibly a trust. These documents outline how you want decisions made on your behalf if you're unable to make them yourself.

How Do Trusts and Powers of Attorney Factor into Estate Planning?

Trusts allow you to transfer assets to beneficiaries without going through probate court while maintaining control over the assets until certain conditions are met. Powers of attorney designate someone to make financial or medical decisions on your behalf if necessary.

When Should I Start Estate Planning?

It's never too early to start estate planning. Life is unpredictable, so it's best to have a plan in place as soon as possible. Reviewing and updating your estate plan regularly ensures that it aligns with changes in laws or personal circumstances.

How Often Should I Review My Estate Plan?

You should review your estate plan at least every three years or whenever there is a change in your family (including the quality of relationships), a change in what you own, or a change in the law.

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Medicare: Top 10 Tips

1. Enroll in Medicare at the right time.

  • For most individuals, enroll (through Social Security) the later of:
  • The three months before you turn 65 or
  • At you or your spouse’s retirement if you receive group health insurance coverage through you or your spouse’s employer.

Note: You actually have the seven months surrounding your 65th birthday to enroll in Medicare. For example, if your birthday is April 15th, you can enroll starting January 1st until July 31st, but you should enroll before April 1st if you want Medicare coverage in April. Retirees technically have eight months to enroll after retirement.

  • If you do not enroll at the earliest opportunity, you may:
  • Receive lifetime financial penalties on your Part B and Prescription Drug Plan (Part D) premiums;
  • Only be able to enroll in Medicare in certain months; and
  • Be subject to underwriting for Medicare Supplemental Plans (a.k.a. Medigap Plans). (In Michigan, the Blue Cross / Blue Shield’s Legacy plan is an exception to this underwriting rule.)

2. There are two distinct Medicare options: Original Medicare or Medicare Advantage.

  • Original Medicare (a.k.a. Traditional Medicare): Part A + Part B + Prescription Drug Plan (Part D) + a Medicare Supplemental (a.k.a. Medigap) plan to cover Parts A and B copays / deductibles. Approximately three-fourths of Medicare beneficiaries have some form of Original Medicare.
  • Original Medicare with a supplemental plan (particularly policies C or F) is about the most comprehensive medical coverage currently available in the United States.
  • Medicare Advantage (a.k.a. Medicare Health Plan or Part C): These plans are similar to employer sponsored health plans and every plan is different. The plans typically include prescription drug coverage and most have a network (or preferred providers). Approximately one-fourth of Medicare beneficiaries have a Medicare Advantage plan, but this number is growing.
  • These plans are generally cheaper if you are healthy, but can cost more or prove to be overly restrictive if you need more than routine medical care.

3. For Michigan residents, always remember that Blue Cross / Blue Shield’s Legacy Medicare Supplemental (a.k.a. Medigap) Plans are options.

  • As a nonprofit, Blue Cross / Blue Shield offers two affordable supplemental plans: Plan A at $39.88/month and Plan C at $121.22/month regardless of age or health status.
  • There is no underwriting to qualify for these plans.
  • Note: You may not qualify for these plans if your previous employer contributes to your premiums or contributes to a health retirement account. Also, premiums will go up if you move out of Michigan.

4. The ten standard Medicare Supplemental (a.k.a. Medigap) policies are the same from state to state and from insurer to insurer. Shop price!

  • What policies A, B, C, D, F, G, K, L, M, and N cover is the same across states and insurers. Most policies are priced based upon your age.
  • You typically have little interaction with these plans other than paying your premium. Generally: if Medicare pays, the policy pays.
  • These plans are basically commodities and you should shop for the cheapest plan. For example, in Michigan, the price for Policy C for a 65 year old ranges from $107 to $301 according to Medicare.gov for essentially the same policy. A person paying $301 is likely paying almost $200 a month more than he or she should be paying.

5. Review Prescription Drug Plans and/or Medicare Advantage Plans each year between October 15th and December 7th only at http://www.Medicare.gov.

  • Do not rely on information from insurance companies or private vendors to pick plans. Use the government’s website at http://www.Medicare.gov and click “Compare Drug and Health Plans.”
  • I like to say that Prescriptions Drug Plans and/or Medicare Advantage Plans are one-year marriages – you divorce each other every year and decide whether or not to remarry. The insurance company can change the details of the plan and you can leave the plan each year.
  • Do not automatically pick the cheapest plan without reviewing any plan limitations. For example, does your doctor accept the Medicare Advantage plan? Are there any restrictions on the prescriptions you take?

6. Medicare is not a long-term care plan and most Medicare plans do not cover routine dental, vision, hearing, or foot care.

  • Other than up to a hundred skilled nursing / rehabilitation days after three nights in a hospital, Medicare does not cover assisted-living, general home assistance, or nursing home care.
  • Note: Some Medicare Advantage plans will provide limited dental or vision coverage, but be careful about overvaluing the benefits of these plans.

7. Do not simply rely only a plan’s prescription formulary – make sure there are not additional restrictions on the prescriptions you need.

  • In addition to making sure a prescription is on a plan’s formulary, make sure you know whether or not the plan places further restrictions on your prescriptions by requiring:
  • Prior Authorization: Before the plan covers the prescription, you must get it approved by the plan.
  • Quantity Limits: The plan will only cover a certain number of pills a month. Hint: If you need more pills than the plan will cover, ask your doctor to see if it is possible to increase a pill’s dosage.
  • Step Therapy: Before the plan will cover this prescription, you have to try another prescription first. This can be a particularly difficult restriction for those on mental health medications.

8. If you disagree with a health provider, consider appealing!

  • Hospitals and skilled nursing facilities are paid based on the diagnosis – not the number of days that you have been in the facility. Thus, the hospital/facility makes more money the less time you are there. Your defense: appealing.
  • There are several layers of Medicare administrative appeals. Statistically, beneficiaries win half or more of their appeals at the first level.
  • Appeals can be particularly important if a person needs to be in a hospital for three nights to qualify for skilled nursing / rehabilitation benefits.
  • Key appeal criteria: is the service “reasonable and necessary in the diagnosis or treatment of an illness or injury.”

9. Fight to be “admitted” to a hospital – not placed on “observation status.”

  • Hospitals may place individuals on “observation status” for days instead of formally “admitting” him or her to the hospital. The problem: the three night stay required for skilled nursing coverage does not start. This has cost many families tens of thousands of dollars.

10. There may be financial assistance to help pay for Medicare or for prescription drugs.

  • Medicare Savings Programs: In Michigan, apply at your local Department of Human Services office. Benefits may be available if income is less than $1,226 / individual ($1,655 / married couple) and assets are less than $6,680 / individual ($10,020 married couple) excluding a $1,500 burial account allowance.
  • Extra Help For Prescription Drugs: Apply through Social Security. (Very easy to do online at Social Security’s website.) Benefits may be available if income is less than $16,335 / individual ($22,065 / married couple) and assets are $12,640 / individual ($25,260 / couple).

Questions? Get answers from independent resources.

  • Each state has a SHIP (State Health Insurance Assistance Program), which will counsel individuals on Medicare decisions. Michigan’s SHIP is the Medicare / Medicaid Assistance Program (MMAP), which is run out of the Area Agencies on Aging. Call MMAP at 1-800-803-7174. You may also call 1-800-Medicare.
  • Good websites for Medicare information include: Medicare.gov (http://www.medicare.gov), the Medicare Rights Center (http://www.medicarerights.org), and the Center for Medicare Advocacy, Inc. (http://www.medicareadvocacy.org.)
  • Or call or e-mail me, Christopher W. Smith at (586) 803-8500 or at christopher@michiganlawcenter.com

Comparing Costs of Original Medicare and Medicare Advantage

Original Medicare Medicare Advantage or “Health Plans”
Part A Monthly Premium* $ Part A Monthly Premium* $
Part B Monthly Premium $ Part B Monthly Premium $
Supplemental Insurance (“Medigap”) $ Monthly Health Plan Premiums $
Co-Insurance / Deductibles (if any) $ Est. Health Co-pay / Co-Insurance Costs $
Monthly Prescription Drug Costs $ Monthly Prescription Drug Costs $
Monthly Prescription Drug Premiums $ Monthly Prescription Drug Premiums** $
Total Monthly Costs $ Total Monthly Costs $

* Most people do not pay a Part A Premium because they or a spouse earned 40 credits in Social Security-covered employment.

**If prescription drug premium is not part of the Medicare Advantage plan.

A parent holding their smiling child in a swimming pool
Nomination of Trustee

After deciding a special needs trust is appropriate, one of the most difficult choices parents make is the nomination of the trustee. Often a family member, especially a parent, will want to serve in that capacity. They have choices depending on the amount going into the trust, from trust department of banks to legal counsel, non-profit corporations, professional fiduciaries and family or friends.

If the trust is large enough, trust departments of banks will compete for the opportunity to act as trustee, especially in this economic market. There may be an opportunity to reduce the fiduciary fees they would charge for the opportunity to act as trustee. There are national banks and even life insurance companies that market their expertise to special needs planners. One advantage to a bank is that as a large institution it may provide better customer service in a predictable heavily regulated manner. In addition, rarely does a bank have to file a surety bond, which saves the trust from otherwise having to pay premiums. However, if there is a difference of opinion between the beneficiary and the bank trustee, it may be very difficult to move the trust to a different trustee. Courts often favor local banks over national corporations, especially if they do not have a physical presence in the state. Some other choices for professional fiduciaries are non-profit organizations which may specialize in special needs trust administration or may offer such services through grant programs, like ARC of Macomb in Michigan. Often, the drafting attorney will be willing to serve as trustee or has knowledge of other attorneys and organizations specializing in this type of trust administration. A judge or Guardian ad Litem may have special knowledge or experience with a particular professional fiduciary, and may appoint them despite other recommendations or family preference.

Most often family members or lay people, in general, are not the best option. The policies regarding allowable distributions change frequently and vary state to state. You can pay a family member for care services in some states, as you can in Michigan, but not others without penalty. In addition, there are tax considerations and investment issues to consider. Special needs trusts are complex to administer, and professional administration, even in light of the costs involved, is usually for the best. Potential family members as Trustees usually fall into two categories: the busy professional or the unsophisticated but willing. Neither are good choices. The busy professional is just that. Too busy. The willing but unsophisticated person is not a good choice as the potential for mistakes without professional guidance is too great a risk. In addition, if a bond is required the client may have trouble qualifying. Bond companies look at credit scores as a strong indicator of an individual’s fitness to serve as trustee, and if there are blemishes they will decline the application. If there is no court supervision or bond, there is no recourse for the disabled beneficiary if a family member improperly distributes funds or mismanages investments, causing a loss of benefits or loss of principal. The plaintiff or their next friend may not have full control over the nomination of trustee. The Guardian ad Litem, trial court judge or probate court judge may not agree with the nomination and may appoint a different party altogether. The wants and needs of the beneficiary should be given priority, balanced with accountability, professionalism, experience, costs and advocacy abilities of the potential trustee.

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The Third-Party Pooled Trust: An Alternative Planning Tool to Help Avoid the Biggest Mistakes in Special Needs Planning

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.