Administering the California Special Needs Trust is the closest thing to having a special needs planner on call, 24 hours a d...Read more
Choosing a Trustee for a Special Needs Trust
- November 29th, 2023
When handled appropriately, special needs trusts can protect your loved one’s assets and provide for their needs over time while allowing them to receive government benefits. As the trustee plays an invaluable role in managing the beneficiary’s finances, protecting your loved one’s interests, and maintaining your loved one’s eligibility for benefits programs, selecting the correct trustee is crucial.
When establishing a special needs trust, consider the following:
- Dependable family members or other trusted individuals can serve as trustees, as they know the beneficiary and can protect the beneficiary’s interests.
- An independent trustee, such as a bank or trust company, can also manage the trust, lending specific financial knowledge.
- Special needs trusts can have co-trustees. Two family members can be co-trustees. A family member and an independent trustee can also collaborate, balancing personal connections and expertise.
- When a financial institution serves as a trustee, a family member can be a protector or advisor. Although this individual has no legal authority over the trust, the protector can advise the trustee about the beneficiary’s needs.
Choosing the Best Candidate
Given the power they will have to control your loved one’s funds and look after their wellbeing, the trustee you select must be honest and reliable. Although the law imposes a fiduciary duty on trustees to act ethically, there is little court oversight, leaving beneficiaries vulnerable to dishonest actors. To ensure unselfish decisions, the person should have no conflicts of interest and should not receive personal funds from the trust.
Understanding public benefits programs, such as Medicaid and Social Security, can help the trustee provide for the beneficiary’s needs while preserving eligibility for these programs. Few family members will come into the role completely understanding public benefits regulations. Those without experience with Medicaid or Social Security should be willing to learn how these rules will affect the beneficiary and how to manage the trust to ensure the beneficiary maintains eligibility. A special needs planning lawyer can explain the law and provide guidance.
In addition to solid ethics and a willingness to learn about public benefits programs, the trustee should be responsible, organized, and financially savvy. Handling investments, reports, records, and tax returns is part of the trustee’s role.
The right trustee will also understand and respect the beneficiary’s needs. The trustee should recognize the beneficiary’s autonomy and strive to allocate funds to support independence while protecting your loved one’s interests.
Start a Conversation
Before you or your loved one appoints a trustee, talk to the person you have in mind and ensure that the proposed trustee wants to — and can — take on the role. Consider the person’s health and life expectancy. The ideal trustee should be able to take on the role for the duration of the beneficiary’s life.
Including another trusted individual as a successor trustee can protect the beneficiary if the first trustee passes away or can no longer manage the trust.
Speak to a special needs planning lawyer to learn more about selecting the best trustee for a special needs trust.
Created date: 02/13/2007