From Our “Ask a Question” mailbag: “I am setting up a Special Needs Trust for my son in my Will. I am trying to decide if I should pick my daughter or a bank as the Special Needs Trust Trustee. Who should I pick as the Special Needs Trust Trustee?”
Selecting the right Special Needs Trust Trustee is vital. You have been providing care for your son during your lifetime, and now you are forming a Special Needs Trust for his benefit. The trust itself is only a piece of paper. The Trustee takes your place as the person who uses the funds for your son’s care.
The Special Needs Trust Trustee Has Complex Responsibilities.
A Special Needs Trust, or as it is sometimes called a Supplemental Needs Trust, provides an entity to hold assets for a Special Needs Person. The Trustee is the person or entity who carries out these terms and determines how to distribute trust assets to for the Special Needs person’s benefit. The trustee also invests the trust’s funds and files the trust’s federal and state income tax returns. These are not easy tasks and require experience and unique skills. Be honest with yourself; is your daughter is up to the task? Putting the wrong person in charge can prove disastrous.
Further, the trustee must keep a constant watch on the ever changing rules that govern your son’s government benefits. A mistake could unintentionally disqualify your child from benefits. One last consideration is the strain placed on your son and daughter’s relationship by having her control his funds. Some siblings can handle that stress and others cannot.
Consider Hiring a Corporate Special Needs Trustee And Naming a Family Member as “Protector.”
I like an option that names a corporate trustee as the Special Needs Trust Trustee. A corporate trustee can be a bank or trust company. Some corporate trustees specialize in serving as Special Needs Trust Trustees. I like this option when a family member serving as Protector compliments the corporate trustee. A Protector is a person given the power to remove and replace the trustee without cause. In your case, your daughter could be the Protector. She then verifies trust assets used for your son’s care. Further, she monitors the corporate trustee’s fees.
As Protector your daughter would not be responsible for taxes, investments, nor would she be telling your brother “no” to his requests for funds. Also, as Protector should she determine that the bank or trust company was not providing good service, she could easily fire and replace them. No court or lawyer needed. This way your daughter can look out for her brother, but not have all the Trustee’s responsibility and liability.
In conclusion, I would be happy to brainstorm options to determine which trustee is the best fit for your son. That is what we do! Contact our office for a free consultation if you have further questions about Special Needs Trusts or any other Estate Planning issues.
Wills, Trusts, Probate, and Estate Litigation it’s all we do!
Peter Klenk, Esq.