Magazine article The Exceptional Parent

Choosing a Trustee for Your Child's Special Needs Trust

Magazine article The Exceptional Parent

Choosing a Trustee for Your Child's Special Needs Trust

Article excerpt

When parents and their legal counsel have determined that a special needs trust is the best way to preserve means-tested government benefits like Supplemental Security Income (SSI) and Medicaid for their child, they still have some important matters to decide: Who should administer the trust as trustee? Who should monitor the trustee's performance? Who should advise the trustee about their child's special needs? There is no single right answer to these questions because the best choices depend on a wide variety of factors and the realities of each family's situation. This article will attempt to help parents make the best choices for their child. Because a special needs trust must be carefully drafted and administered with great skill, one person or institution rarely has all the skills needed to do the job. Choosing a team to administer a special needs trust may often be the best approach.

There are a Variety of Special Needs Trust Jobs that Need Filling

* Trustee. Who should be trustee with complete discretion to make distributions that do not jeopardize means-tested government benefits, while improving the beneficiary's quality of life? Should the trustee be a financial institution like a bank or trust company, an attorney or accountant, a parent, sibling or other individual, or a non-profit pooled trust? Should there be co-trustees? If individuals are named, who will serve as successor or substitute trustee if the original trustee is unable to serve?

* Trust Protector. Special needs trusts sometimes name a "trust protector" to monitor the chosen trustee's performance, appoint a new trustee if necessary, and have the authority to ask a court to modify the trust to comply with changes in the law. If a trust protector will be used, who should be named? Should it be the attorney, the family accountant, a parent or sibling of the beneficiary? If that person can no longer act, who should serve as successor trust protector?

* Advisor or Advisory Committee. Special needs trusts may also name a "trust advisor" or an "advisory committee" to advise the trustee about the disabled beneficiary's special needs. This position could be filled by the beneficiary's parents, other family members, longtime caregivers, the manager of a group home where the beneficiary resides, a member of the local ARC or NAMI chapter, a case manager, or the beneficiary's guardian. Who should serve 50 years down the line when the child is a senior citizen? There are many factors to consider.

Factors to Weigh When Making Choices

1. The Beneficiary's Age, Circumstances, and Prognosis. This is information that parents know best. What is the nature of the child's disability? What is the child's current living arrangement and what may be the child's future living plans? Does the child have the mental capacity to monitor trust accountings in the long run or must others be assigned to that role? What is the child's estimated life expectancy? What government benefits is the child currently receiving? What benefits might the child be eligible for in the future and what is the relative importance of those programs to the child's well being? These factors can influence the choice of trustee, trust protector, or trust advisor.

For example, if a child requires 24/7 care and lives at home, the caregiver parents may simply not have the time or energy to effectively serve as lead trustee. The parents could also have a conflict of interest regarding trust distributions; for instance, it can sometimes be difficult to distinguish between those home improvements and services that are solely for the benefit of the beneficiaries who have a disability and those that also benefit the parents or the disabled child's siblings. By contrast, if an adult child with a disability is firmly situated in a group home and the parent's main role is supervisory, the parent may well be the best person to serve as initial trustee, perhaps with younger family members as successor trustees, so long as all individual trustees are clearly authorized to pay for any needed professional assistance regarding trust taxes, government benefits, or investment matters. …

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