If you are the parent or grandparent of a child with special needs, you may decide to incorporate a Special Needs Trust into a special needs planning component within your comprehensive estate plan. If so, selecting the right Trustee for your Special Needs Trust (SNT) is a pivotal step in the process and can pose considerable challenges. Your chosen Trustee will have diverse responsibilities, including overseeing the SNT’s day-to-day operations, dispensing funds to the beneficiary, managing trust assets, and meeting financial obligations. To help you choose the right Trustee, the Los Angeles attorneys at Schomer Estate & Wealth Advisors discuss factors to consider when appointing a Trustee for a Special Needs Trust.
What Should I look for in a Trustee for a Special Needs Trust?
When you create an SNT you must appoint a Trustee who will significantly contribute to the success – or failure – of your trust. With that in mind, care should be taken when deciding on a Trustee. Some things to consider when appointing a Trustee for your SNT include:
- Knowledge of Public Benefit Programs. An essential attribute of a Trustee is a comprehensive understanding of the intricate rules and regulations governing public benefit programs. Programs like Medicaid, Supplemental Security Income (SSI), and Section 8 housing impose complex guidelines that Trustees must navigate to ensure the beneficiary’s continued eligibility. A Trustee’s familiarity with these programs or their willingness to collaborate closely with a special needs planning attorney is indispensable.
- Time Commitment. Administering a Special Needs Trust demands a significant time commitment. Trustees may find themselves engaged in diverse responsibilities, including routine financial tasks, monitoring government benefits, arranging housing accommodations, facilitating medical care, and serving as a liaison between the beneficiary and various service providers. Consequently, a Trustee must possess the capacity and willingness to dedicate the requisite time to fulfill these obligations effectively. A Trustee is entitled to a reasonable fee for the time spent administering the trust; however, sufficient time must be available which can be a problem if the Trustee already has a full-time job and/or family.
- Considering a Professional Trustee. Professional Trustees offer expertise in trust administration, financial management, and legal compliance, making them valuable candidates for trusteeship. With a professional Trustee at the helm, beneficiaries can benefit from specialized knowledge in navigating public benefit programs, making sound investment decisions, and executing tax-efficient strategies. Moreover, professional trustees can mitigate family conflicts that may arise from managing the trust and ensure impartial decision-making aligned with the beneficiary’s best interests.
- Outsider Management of Trust Assets. Entrusting an outsider with the management of a loved one’s special needs trust can evoke concern. To address this concern, co-trusteeship arrangements can be established, wherein a family member collaborates with an independent Trustee. This arrangement combines the familial insight and emotional connection of a relative with the professional expertise and impartiality of an outsider, fostering a balanced approach to trust management. Additionally, appointing a trust protector empowers stakeholders to oversee Trustee actions and intervene if necessary, providing an additional layer of oversight and reassurance. Your estate planning attorney can provide further information about these options.
- Consider a Pooled Trust. Pooled trusts offer an alternative approach to trust administration, particularly suited for beneficiaries with modest trust sizes. Administered by nonprofit organizations, pooled trusts pool together the assets of multiple beneficiaries, enabling economies of scale in investment management and reducing administrative costs. Furthermore, pooled trusts afford beneficiaries access to a broader range of investment opportunities and may provide additional support services not available through individual trusts. By participating in a pooled trust, families can leverage the collective resources and expertise of the trust’s administrators while contributing to a supportive community dedicated to serving individuals with special needs.
Do You Need Help Selecting the Right Trustee for Your Special Needs Trust?
For more information, please join us for an upcoming FREE seminar. If you have questions about choosing a Trustee for a SNT, contact the experienced Los Angeles special needs planning attorneys at Schomer Estate & Wealth Advisors by calling (310) 337-7696 to schedule an appointment.
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