Special Needs Trust Attorneys – Protecting Benefits While Providing for Loved Ones

A special needs trust (also called a supplemental needs trust) allows a disabled individual to receive financial support beyond the basic benefit limits of public assistance, without sacrificing eligibility. These trusts are essential for someone who qualifies or may qualify for Medicaid, SSI, or other need-based government programs.

There are two common types of special needs trusts:

• Self-funded (first-party) special needs trust: Established with assets that belong to the disabled beneficiary, often required when a person receives a large settlement or inheritance.
• Third-party special needs trust: Created and funded by someone other than the beneficiary—typically a parent, grandparent, or relative—so the trust property never belongs to the disabled person.

Each type follows different legal rules, and each must be carefully drafted to preserve benefits, distribute “supplemental” services (not basic support), and meet both federal and Michigan requirements. 

At Mihelich & Kavanaugh, PLC we help families determine which trust type fits best, draft the necessary trust document, navigate funding requirements, and advise on administration so the beneficiary can enjoy an improved quality of life without losing public benefits.

Designing a special needs trust requires attention to both legal detail and human needs. Some essential planning considerations include:

• Preserving public benefit eligibility: The trustee must manage distributions so they are “supplemental” (non-food and non-shelter), ensuring payment for items that do not disqualify the beneficiary from SSI or Medicaid. For example, a trust might cover travel or personal care items, but not basic utilities or food. 
• Selecting a capable trustee: Given the complexity, the trustee must have discretion, sound judgment, and an understanding of benefit-program rules—any mistake could jeopardize benefits for the beneficiary.
• Funding and asset transfer strategies: Whether it’s asset placement, inheritance from a will, or a settlement, the method of funding matters. We guide families through how to funnel assets into the trust without unintended tax or eligibility consequences.
• Drafting the right trust language: The trust document must clearly state that the trust is for a person with disabilities, set the disabled person as the beneficiary, and provide the required payout language and remainder provisions.
• Planning for beneficiaries with long-term needs: Many special needs trusts are designed to support someone for decades—our lawyers help structure distribution plans, coordinate with healthcare and education professionals, and build in flexibility for changing needs.

With proper design and ongoing management, a special needs trust becomes an invaluable asset—a safety net that allows your loved one to receive supplemental support while maintaining their essential benefits.

Our process is clear, supportive, and tailored to your family’s unique situation. When you engage Mihelich & Kavanaugh, PLC for special needs trust planning, we:

1. Initial consultation: We review your loved one’s current benefits, financial situation, family dynamics, and long-term care needs.
2. Trust drafting and planning: We draft a trust specifically tailored to preserve benefits and provide for supplemental support, whether self-funded or third-party.
3. Funding strategies and tax coordination: We advise on how to properly fund the trust—through direct gifts, an inheritance, insurance proceeds—or via structured settlement—and coordinate with estate, gift, and income-tax planning.
4. Trustee guidance and administration planning: We help you select or train a trustee, outline guidelines for distributions, and establish records and practices that protect benefits eligibility.
5. Review and coordination: We ensure the trust works alongside your will, power of attorney, healthcare directive, and overall estate plan so nothing falls through the cracks.
6. Ongoing updates and monitoring: Because the legal and benefits landscape changes, we provide periodic reviews to help you adjust trust terms, funding, or administration as needed.

With our experienced legal support, families gain peace of mind knowing their loved one is protected, their estate plan is accurately aligned, and their legacy is built on stability, not crisis.

Even well-intentioned plans sometimes fail due to errors in structure or administration. Common pitfalls include:

• Funding the trust incorrectly or leaving assets outside the trust, which may cause loss of benefits or re-calculation of eligibility.
• Distributions treated as “support” rather than “supplemental,” triggering disqualification from need-based programs.
• Trustee decisions made without proper documentation or explanation, exposing you to review or liability.
• Failing to coordinate the trust with other elements of your estate plan, resulting in unintended tax or benefit consequences.
• Relying on generic forms or online templates rather than legal counsel knowledgeable in both estate and disability-benefit law.

At Mihelich & Kavanaugh, PLC our attorneys combine expertise in estate planning, trusts, and Michigan benefit law to ensure your special needs trust fulfills its promise—providing supplemental support while preserving benefits and delivering long-term protection.

Protecting a loved one with special needs is more than planning—it’s peace of mind. At Mihelich & Kavanaugh, PLC, we are committed to helping Michigan families create and manage special needs trusts that honor their values, preserve public benefits, and relieve lifelong worry.

Call our office today or fill out our secure online contact form to schedule a consultation. Let us help you build a trust-based foundation for your loved one’s future—one that grants independence, safeguards benefits, and assures stability.