Trust Administration and Conservatorships

In Michigan, families may use trusts or conservatorship to help manage a loved one’s financial, legal, and personal affairs when they cannot do so themselves or require long-term nursing care. Trusts and conservatorship can help families protect a loved one’s benefits and assets and ensure they receive the care and support they need.

Understanding Trusts

A family estate plan for an older family member or one with special needs may involve establishing trusts. A trust is a legal relationship in which a trustee holds and manages assets for the benefit and protection of one or more beneficiaries, per the authority conferred by the trust document. A trustee can manage or invest trust assets and pay income or principal to beneficiaries under the trust’s terms. The trustee owes the beneficiaries a fiduciary duty when managing the trust, which includes acting for the beneficiaries’ benefit and acting impartially when dealing with conflicts among beneficiaries.

Trusts can provide asset protection and financial and tax benefits to older or incapacitated individuals. Common types of trusts that can serve these roles include:

• Medicaid Trusts – Medicaid trusts frequently help older adults meet the asset and income thresholds to qualify for Medicaid benefits that help pay for long-term elder care or nursing home care. These trusts can also protect Medicaid recipients’ assets and facilitate passing them to loved ones after death.
• Special Needs Trusts – Families with loved ones who have special needs may establish trusts to protect their loved ones’ eligibility for means-tested government benefits, especially if the individual receives a large payment like a personal injury settlement or inheritance. These trusts can also provide limited income to help increase the individual’s quality of life.

Understanding Conservatorship

In a Michigan conservatorship, a court will appoint an individual 18 or older to serve as the conservator for an incapacitated adult. A court may deem an adult “incapacitated” when they cannot care for themselves or their property. For example, they may be unable to arrange medical care, manage their finances or property, or pay bills.

Families may seek conservatorship when an incapacitated family member does not have a durable power of attorney or healthcare proxy appointing someone to manage their affairs during their incapacity. Courts prefer to appoint a designated attorney-in-fact, spouse, adult child, parent, or live-in relative to serve as an incapacitated person’s conservator.

Choosing Trusts vs. Conservatorship

Choosing between a trust or conservatorship depends on a loved one’s circumstances. For example, an individual capable of handling their affairs or participating in decision-making regarding their financial, legal, and personal matters may need a trust to help them manage and protect their assets. However, when an individual cannot manage their affairs, a conservatorship can give a trusted family member, friend, or advisor the authority to protect that individual’s rights, interests, and safety.

Contact an Estate Planning Attorney Today

If you’re considering setting up a trust or petitioning for conservatorship for an older family member or an incapacitated or disabled loved one, reach out to an experienced attorney. They can go over your family’s options and the suitability of various estate planning tools. Contact Bingham Legal Group PC today for a confidential consultation with our legal team to learn how we can help you plan for your loved one.