This post is part of a month-long series about special needs trusts. We welcome you to contact our comprehensive settlement planning firm, Milestone Consulting, with any questions or to seek advice about whether establishing a trust is right for you.
Selecting a trustee is a critical and sometimes difficult decision when you’re establishing a special needs trust. Below, we take a look at the common candidates to be designated as trustee and some of their advantages and disadvantages.
A trustee can technically be anyone who is “legally competent,” over the age of 18, and able to manage his or her own affairs. A trusted and intelligent loved one, equipped with the capability required to get familiar with the ins-and-outs of government benefit programs, may be a good choice.
If you’re setting up a special needs trust for your child, you might be hoping to designate yourself (or your spouse) as trustee. It’s a natural choice when your own child’s welfare is the goal, but many courts discourage this route for fear of conflicts of interest. There’s also a great amount of fiscal responsibility, attention to detail, and legal knowledge required to manage a trust properly; if you’re already caring for child with special needs, this added responsibility might be too much to handle.
An Independent Trustee
Some people turn to independent trustees, which are people or firms for-hire that manage trusts. Many attorneys, accountants, investment companies and banks offer this service. Expertise and autonomy are the benefits of hiring a professional. Independent trust management entities are also required by law to comply with statutes and ensure that the beneficiary’s interests are kept at the forefront of every decision.
A bank can serve as a trustee for a special needs trust. However, trust companies associated with large financial institutions are rarely the best choice. Not only do big banks charge high trustee fees and operate at unfavorable expense ratios, most national firms are ill-equipped to act with the flexibility needed in the complex and ever-changing world of special needs trusts. It’s always best to find a trustee who possesses both financial expertise and the time to communicate often.
Trusts can have several co-trustees. One option is to appoint both an independent trustee and a trusted family member to administer the trust together, combining the expert’s experience and technical know-how with your loved one’s personal knowledge and concern.
If the trust is for a loved one, another idea is to appoint yourself or a family member as a “trust protector,” which refers to a person designated to watch over the trust in the long-term. Trust protectors can be granted special powers per the trust document, from mediating conflicts between trustees and the beneficiary to replacing an unsatisfactory trustee.
Making The Right Choice
Picking a trustee for a special needs trust is one of the most significant choices a family can make. After all, trustees are granted far more than the right to manage and distribute assets. Whether it’s for you or for a loved one, the trustee will be tasked with an even greater goal: supporting the beneficiary’s future. If you’re considering a special needs trust, we welcome you to contact our settlement planning firm, Milestone Consulting, to get on the right track.
A West Point graduate where he served as captain and military aviator, John Bair continues his commitment to our country through his efforts within the settlement planning industry. He has represented families of victims lost in the Flight 3407 crash, offered pro bono services to the families of 9/11 victims and drafted the first consumer protection bill for plaintiffs (H.R. 3699).