Choosing a credible and reliable trustee is one of the most important steps in establishing a special needs trust. While you want your trustee to have extensive management experience with regard to accounts, bills, taxes and other areas, it’s also critical to work with someone who has a personal commitment to interests and needs of the beneficiary – whether that’s you or your loved one.
When it comes down to making the big decision, how do you know you’ve found a credible and trustworthy trustee? There are a few key factors to consider.
Competence, Knowledge, and Experience
The purpose of a special needs trust is to supplement (but not replace) a disabled person’s government benefits by paying for non-covered services or equipment. The trust pays medical service providers directly, and it can even pay for common needs like a cell phone, transportation, insurance, and other things the government benefits do not cover. The trustee should be highly capable of allocating money to these needs as efficiently as possible.
Furthermore, missteps when managing a trust can cause a beneficiary to become disqualified from Medicaid, Supplemental Security Income, and other needs-based benefits. Proceeds from a settlement related to a disability are often not enough to provide the necessary ongoing medical care related to the injury. To ensure the beneficiary keeps his or her government benefits eligibility, the trustee must have extensive knowledge of these programs and how to satisfy the requirements for keeping them.
Because of the careful planning a special need trust requires, your trustee should have extensive financial knowledge and experience in these areas.
No Conflicts of Interest
A trustworthy trustee will make decisions solely based on the best interest and needs of the trust beneficiary. The trustee should never act in his or her own interests when making financial decisions regarding the allocation of trust funds.
The trustee should also have no problem with Trust Protector language in the trust agreement that allows the professional trustee to be removed, no questions asked. This keeps the family as the client.
Personal Connection with the Beneficiary
A trustee is expected to serve the needs of the beneficiary for the lifetime of the trust. It’s critical then to choose a trustee who is ready and willing to communicate often in order to best understand his or her changing needs. The ability to build a good relationship is important.
An Independent Trustee versus a Professional Trustee
When establishing a special needs trust, you’ll need to choose between an independent trustee and a professional trustee. Our experience is that although most banks would love the business and the fees on managing the assets, they are rarely suited for the complexity of these trusts. Trust companies that are independent of major financial institutions are typically best. Some states allow individuals to be trustees, CPA, lawyers and other fiduciaries. Most of these professionals are solo practitioners or have very small offices, and they may charge per hour more than a professional trustee. Having worked with both, our preference is to see a professional trustee who has year over year proven that customer service is job #1, and that they are priced accordingly.
How Much Will My Trustee cost?
Hiring a professional trustee will cost a on average 0.35 to 0.75% of 1%. On a $500,000 trust, that would average out to $2,500. For this, the family is the CEO, and has the trustee working for them for distributions, verifying purchase agreements, validating nursing contracts or agency workers and guaranteeing that Medicaid will continue eligibility. We see the professional trustee as a valued partner in the family planning, and a critical piece of the planning puzzle.
Getting Advice when You Need It
Building a successful and effective special needs trust requires experience of an entire team, so the best place to start learning about the process and decision points are by speaking with a loyal settlement planner.
Our firm has consulted on the creation of hundreds of special needs trusts of all kinds. Contact the experienced settlement planners at Milestone Consulting to plan your loved one’s future. We believe a settlement planner dedicated to civil justice and the trial bar must live by their reputation, and our experts are ready to help.
We also invite the families of disabled individuals to join our Facebook community, where members share stories and advice to support one another.
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).