Last week, a user asked this question on the Parents Caring for Special Needs Kids Facebook community page:
How are moms with special needs kids finding good trustees for their special needs trusts? Seems like there are a lot of different avenues, but it’s a big decision to make.
I provided the following answer, and I think it is an important one for parents to know when planning a special needs trust.
Finding the best trust partner is like hiring a CEO for your child. There isn’t a more important decision. Our team at Milestone Consulting has vetted hundreds of organizations, and they are especially not all created equally.
The most important step in planning is working with someone you trust. If you are considering creating a special needs trust, designating the “trust protector” is the first critical step. This legal position within the special needs trust gives that person the ability to hire and fire. Most of our clients who are parents with kids designate themselves as trust protector, and designate very close trusted family for this position. This dynamic sets up the business relationship for the parents. This prevents an entrenched or cumbersome relationship down the road. Don’t like your trustee, just remove them.
If your child is not on Medicaid, and you think he/she may never need to be, you may still want to create a special needs trust and designate this in your will. It’s the only way to insure the right people are caring for your children if something happens to you.
Choosing the right trustee will depend on a few factors, namely:
- Where you live,
- How much in assets, if any, will be in trust this year, and
- Whether your child is on Supplemental Security Income (SSI) and Medicaid.
If you are involved in a lawsuit, or are still considering one, knowledge of special needs trusts and Medicaid will be an important educational component.
Even if you have great healthcare coverage and don’t even think you will need Medicaid, it is a conservative and safe precaution to have your child’s assets, and/or your assets from your will, pay into a special needs trust. These trusts can operate like traditional support trusts, proving fraud protection, spending oversight and lifetime protection to support either the parents directly, or their designated guardians.
Depending on the amount of assets, many times an individual professional, like a CPA or local lawyer, can serve as trustee and keep the costs down year over year. Once there are significant assets (generally over 100k), a professional trustee will make the most sense.
Costs and taxes are two major considerations in planning properly. Any trustee should have experience in working with an investment trustee like our firm, who knows how to work closely with families and who has the greatest amount of experience dealing with the challenges these awesome kids present now and then. Typically, banks are poor trustees. They lack the experience and rarely have longevity of staff to provide a compassionate and welcoming service experience.
I hope these considerations have been insightful to the Facebook community. Consider joining Parents Caring for Special Needs Kids on Facebook if your loved one has special needs. We welcome you to jump in and join the conversation.
About the Author
John Bair is an experienced settlement planner and financial consultant. He helps families develop strategies to provide lifelong financial support for children with disabilities, catastrophic injuries, special needs, and congenital abnormalities. Read more about John’s work and his firm, Milestone Consulting, at http://milestoneseventh.com/.
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).