I am trying to decide on a trustee for my son’s Special Needs Trust. What should I be thinking about?
I commend you on thinking about who will be your best choice as trustee. I find that so many families just choose the closest relative or closest friend without much thought as to the specifics of the job responsibilities. Before you choose, you should know what a trustee needs to do.
A trustee’s responsibilities fall into four major areas:
- Understand your child’s life, and needs, on a daily, monthly, and annual basis;
- Comprehend money management to ensure the assets or investments within the trust last as long as possible;
- Know tax rules of Special Needs Trusts, and understand how to utilize them in order to be as tax efficient as possible; and
- 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, your son’s government benefits will be placed in jeopardy.
As I explain these four areas of responsibilities to families, it is rare that a family member will have knowledge of all four. If you have a family member who has a good relationship with your child, then you should have them involved as a trustee; however, you should provide them support. This support can come in several designs:
- You can decide to have a co-trustee, which is a formal arrangement with a professional trustee such as an attorney, accountant, or a trust company. If this is the direction you decide, then you will make that official by naming that individual or organization in your Special Needs Trust document.
- You can also decide on a less formal arrangement and instruct your trustee to find themselves a professional advisor that he/she can use as a “Trustee Guide” that has experience in supporting trustees of Special Needs Trusts.
- If you have multiple people you trust, you could institute a Trust Advisory Committee. This committee can be comprised of family and friends, as well as professionals that you trust (such as your Special Needs Planner). In this way, you will have both personal and professional relationships involved in ensuring your child lives the life you want and that your trust is managed in the correct manner.
The above are simply three designs, but depending on your family, you may decide on a design that is not listed. The trustee decision, and how this position is designed, is part of the flexibility of this type of trust that you need to determine.
For more information on how to prepare for the future, be sure to contact a financial advisor who specializes in serving families with special needs. A Special Needs Plan is driven by what they call Unleash L.I.F.E.™—L.I.F.E. meaning Lasting Independence For Everyone™. This is accomplished with education, action, and support in the creation, implementation, and continued monitoring of a specifically designed lifelong and integrated plan for your family of parents, caregivers, your loved one with special needs, and their siblings.
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Ryan F. Platt MBA, ChFC, ChSNC, is a registered representative of and offers securities, investment advisory, and financial planning through MML Investors Services, LLC, member SIPC. A Special Needs Plan is not subsidiary or affiliate of MML Investors Services, LLC or its affiliated companies. This article is not a recommendation or endorsement of any products.
This article was featured in Issue 66 – Finding Calm and Balance