Magazine article The Exceptional Parent

Choice of Guardian and Trustee Crucial to Success of Special Needs Trusts: Information of Interest to People Will, Disabilities and Other Special Needs and Their Families

Magazine article The Exceptional Parent

Choice of Guardian and Trustee Crucial to Success of Special Needs Trusts: Information of Interest to People Will, Disabilities and Other Special Needs and Their Families

Article excerpt

The success or failure of the Special Needs

Trust, as well as the well-being and future care of the trust beneficiary with special needs, often depends on who is chosen to serve as the beneficiary's guardian and selected as trustee for the trust. These choices are crucial to the prudent investment, management and distribution of trust funds, as well as to insure that the child with special needs leads as high a quality lifestyle as possible.

Since its inception more than 20 years ago, the Special Needs Trust has become a tool that is frequently used by parents and other caregivers to provide lifetime financial security for children and young adults with disabilities and special needs. These trusts, also referred to as "Supplemental Needs Trusts" or "Discretionary Trusts," were authorized by Congress in the Omnibus Budget Reconciliation Act of 1993 and allow the trust settlor, such as the parent of a child with a disability (the trust beneficiary), to provide supplementary support and care for their child without jeopardizing his or her eligibility for government needs-based benefits, such as Supplemental Security Income (SSI) and Medicaid.

The parents of the child often serve as his or her guardian because they are usually the individuals with the child's best interests at heart, and are also those most capable of knowing and understanding the child's desires and needs. As guardians, the parents establish the special needs trust for the child's benefit and must name a successor to act as the child's guardian when they are no longer able to do so. The successor guardian will be responsible for the distribution of trust benefits for the beneficiary, while the trustee continues to oversee the financial management of the assets.

Sometimes parents name the same person, such as a family member or close relative, to serve as both trustee and successor guardian. However, many attorneys that specialize in special needs issues advise against doing so because an individual may not provide the best trust management. An institutional trustee, such as a bank, offers the advantages of continuity and professional money management, investment and financial audit capabilities. Splitting the trust management responsibilities between family members and a corporation, as co-trustees, is therefore often recommended as the best of both worlds. The relative-trustee is usually the person best able to know the needs and desires of the special needs beneficiary, and the professional trustee is best able to administer the financial and legal aspects of the trust.

In setting up the special needs trust, the parents can pre-determine the level of responsibility for successor guardians and trustees. "Financial matters are secondary only to health care and the disability situation itself," says Jerry Hulick, Special Care Planner at The Washington Group in Fairfax, Va., a general agency of Massachusetts Mutual Life Insurance Company (MassMutual). "I encourage [parents] to set it up as a working model so they can see how it benefits the person with the disability," said Hulick. "What they're building is a long-term care vision. There are a lot of factors, depending on the individual needs of the trust beneficiary. You're going through the whole gamut of that person's lifestyle needs."

According to Hulick, the successor guardian must have regular contact with the beneficiary and be very familiar with the particular challenges of that person's disability and special needs. He says that special care planners work with families' banks, accountants, financial services professionals and lawyers, as well as social workers and health care providers, to develop solutions that meet the needs of the individual with a disability.

Firms such as The Washington Group can provide integrated services helping to coordinate the financial, legal and medical needs of the person with special needs. Parents may also consider naming an advocacy or disability organization as a successor trustee. …

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