Bisnar Chase 2019 attorneys

How to Choose a Special Needs Trustee?

Special needs trusts are constructed on behalf of beneficiaries who have physical or mental disabilities to ensure that they can continue to enjoy property that is intended for them, and to prevent losing government benefits that are essential to their livelihood.

If a client with a disability, or someone acting on behalf of this person, acquires a personal injury award, then the settlement may be put into a special needs trust. Because the nature of a special needs trust is to help financially protect an individual who may not be able to oversee their own funds or assets, taking care while choosing a trustee is very important.

It is of particular interest to consumer attorneys to understand the ways a special needs trustee can function and who a trustee may be. The person who can serve may be a responsible family member or friend, a bank or a private professional trustee. The beneficiary nor his or her spouse are eligible to serve as trustee because they are viewed as one and the same by Medicaid and SSI and can not have authority to direct distributions from the trust.

The special needs trustee must be an honest, well organized individual with common sense and good business skills. They must be mentally and physically able to deal with all of the interpersonal issues that may arise during the administration of the trust including dealing with investment, legal tax and accounting. It is also important that the trustee know when and how to seek assistance from a certified financial planner or a certified public accountant, should financial advice be needed.

Two of the most important things to consider when choosing a special needs trustee are: do they understand the beneficiary's special needs and government benefit programs thoroughly in order to act in the beneficiary's best interest? And, do they have the time to handle all of the tasks that are included in being a trustee?

Some trustees may need to report regularly to court on the trust administration and be bonded for the amount of assets in the trust along with annual interest and the amount of recovery on the bond.

All in all, there is a large amount of responsibility in store for a special needs trustee. If the trust is large -- over a few hundred thousand dollars -- or if there are no family members or close friends who can act as trustee, one may want to consider a professional administration by private professional fiduciary bank to oversee the trust. A special needs planning attorney has knowledge of these professionals and can provide advice on the costs and cost effectiveness of working with them. Should one hire a special needs planning attorney, it is a good idea to engage with him or her early-on to ensure that are fully familiar with your situation and a good fit.

See more advice on Special Needs Trusts.

Have a question that wasn't answered here?