Should I Replace My Special Needs Trust Successor Trustee?

Dealing with a special needs trust (SNT) when funds are low and health is failing can feel like being stuck between a rock and a hard place. Since you’ve already ruled out professional trustees (too expensive) and pooled trusts (not a fit), you are looking for a way to ensure accountability without breaking the bank.

Here is a breakdown of your best options for securing the trust’s future while protecting the beneficiary.

1. The Trust Protector Solution

If you end up appointing a friend or family member but don’t fully trust their financial or legal expertise, you can appoint a trust protector.

A trust protector is a third party (often an attorney or a trusted friend) who doesn’t handle the daily money management but has the power to:

• Remove and replace the trustee if they aren’t doing their job.
• Audit the books to ensure money isn’t being mishandled.
• Resolve disputes between the beneficiary and the trustee.

This adds a “check and balance” system so the family member isn’t acting in a vacuum.

2. Co-Trusteeship: Strength in Numbers

Instead of putting one person in charge, you can appoint two co-trustees. For example, you might pair a family member who knows the beneficiary well with a more fiscally responsible friend.

• Pros: They keep each other honest; if one gets sick, the other is already up to speed.
• Cons: They must be able to work together, as disagreements can freeze trust activity.

3. Directed Trust Modernization

In many states, you can structure the SNT as a directed trust. This splits the trustee's duties into two roles:

• Distribution advisor: A family member who decides what the beneficiary needs (e.g., a new wheelchair or a trip).
• Administrative trustee: Someone who just handles the paperwork and tax filings.

By splitting the role, you make the job less daunting for a friend or family member, which might help you find a more reliable candidate.

4. Seek a Micro-Professional or Solo Practitioner

While big bank trust departments have high minimums (often $500,000 to $1 million+), some solo practice attorneys or certified professional guardians act as trustees for smaller amounts on an hourly basis. It’s worth calling local specialized firms to see if they offer unbundled services or lower-fee management for sunset trusts (trusts that are winding down).

Important Legal Step: Check the Trust Document

Before you do anything, read the successor trustee section of the existing trust. It usually outlines the specific process for:

1. Resignation: How the current trustee formally steps down.
    
2. Appointment: Who has the power to name the new person (is it the current trustee, the beneficiary, or the court?).

Note: If the trust document is silent on what to do when no one is left to serve, you may need a petition for instructions from a local probate court. A judge can then appoint a successor or approve your choice.