By Ryan F. Platt, MBA, ChFC, ChSNC, CFBS
Selecting a trustee for your child’s Special Needs Trust is an important decision. The trustee is the decision-maker regarding the assets (money) that you are leaving to provide all the support needs your child with exceptional needs may ever need!
It is most common that families will consider a close family member or friend to fill this role without much thought as to the specifics of the job responsibilities of a trustee. Before selecting a trustee, let’s define a trustee’s responsibilities. A trustee must act as Fiduciary and always act in the best interest of the beneficiary of the trust (i.e., a Loved One with a disability). In acting as a Fiduciary, they must have knowledge of the following four areas:
Understand the individual with the disability, including their needs, on a daily, monthly, and annual basis. They must be familiar with the person’s everyday life to ensure the money will be available for their needs.
Money management to ensure the assets or investments within the trust last as long as possible
Know the tax rules of Special Needs Trusts, and understand how to utilize them to be as tax efficient as possible
Understand Distribution rules of a Special Needs Trust so as to always ensure it continues to qualify as a Special Needs Trust because if the money in the trust is distributed incorrectly, it will place government benefits in jeopardy. This means they must know where to find and how to read and interpret the rules that govern Special Needs Trust in relation to the continuity of government benefits.
In explaining these four areas of responsibility to families, it is rare that a family member will know all four. It is also rare that parents want to leave the entire responsibility Special Needs Trust Management to another one of their children or another family member. If a family member or close family friend has a good relationship with your loved one, it may be best to involve them as a Trustee; however, they should be given support. This support can come in several designs:
Decide to have a Co-Trustee or Administrative Trustee, which is a formal arrangement with a Professional Trustee such as an Attorney, Accountant, or a Trust Company. If this is the decision, then that decision will be made official by naming that individual or organization in your Special Needs Trust document.
A less formal arrangement may be best for your family. If so, instruct your trustee to find themselves a Professional Advisor that they can use as a “Trustee Guide” that has experience in supporting Trustees of Special Needs Trusts.
If there are multiple trustworthy individuals, then a Trust Advisory Committee is an option. This committee can be comprised of family and friends, as well as professionals (such as your Special Needs Planner, accountant, or attorney). In this way, both personal and professional relationships are involved in ensuring your child lives the life you want and that their trust is managed in the correct manner.
The above are simply three designs, but depending on your family, you may decide on a plan that is not listed. The Trustee decision and how this position is designed is part of the flexibility in Special Needs Planning.
Contact a financial advisor who specializes in serving families with special needs for more information on how to prepare for the future. The team at A Special Needs Plan is driven by their purpose of Leading Families to Independence through an ongoing, multi-generational plan. We are passionate about families confidently moving forward.
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Ryan F. Platt, MBA, ChFC, ChSNC, CFBS, is a registered representative of and offers securities, investment advisory, and financial planning through MML Investors Services, LLC, Member SIPC. Securities and investment advisory services offered through qualified registered representatives of MML Investors Services, LLC, Member SIPC. A Special Needs Plan is not a subsidiary or affiliate of MML Investors Services, LLC or its affiliated companies. This article is not a recommendation or endorsement of any products.
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