When creating a special needs trust, your loved one’s future well-being and quality of life are a top priority. One of the most significant decisions in this process is choosing a trustee for a special needs trust. After all, the purpose of this legal tool is to give your loved one the quality of life they deserve, even when you are no longer around to do so. A special needs trust is an invaluable instrument for those who want to safeguard the needs and happiness of their special needs loved one, but like any instrument, the person using it needs to be proficient so that everything plays out harmoniously. Failure to choose the right individual to fulfill this role can have devastating consequences, and undermine the quality of life your loved one deserves.
This blog is the first part of a two-part series. In this part one, we will explore who you can select as a trustee for a special needs trust. In part two, we will outline the responsibilities of this type of trustee. Let’s dive in so you can see what your options are!
Choosing a Trustee for a Special Needs Trust: Who Is Eligible
Understanding the options available for who you can appoint to this position is important when you are in the process of choosing a trustee for a special needs trust. You can choose virtually anyone to take on this responsibility. Many people choose:
- Dependable family members or other trusted individuals who are at least 18 years old, know the beneficiary, and will protect their interests.
- An independent, professional trustee who has considerable experience and financial knowledge in managing trusts.
- Co-trustees, such as a family member and a professional trustee, who collaborate and share the burden while balancing personal connections and expertise.
It is paramount to choose someone with an extensive understanding of the laws that govern trusts and government benefits, as well as someone with the financial acumen to manage the trust assets and funds and maximize the care and quality of life your special needs loved one derives from them.
Because of this, hiring a professional trustee to at least serve as the co-trustee is essential to avoid costly mistakes that could cause your special needs loved one to lose government benefits by, for example, using the special needs trust to pay for the wrong things.
The margin for error is slim. Even the smallest mistake can have enormous consequences.
Also, if you appoint a family member or friend and they have no idea of how to balance their fiduciary duties with their obligations to the beneficiary and regulations that govern managing the special needs trust, this is a hazard to them as well.
If they lack the specialized skills necessary to perform this role, they could be held personally liable for damages, meaning they might face financial and legal repercussions.
“These trusts are unique, and the laws that govern them are complex. Simple ignorance or lack of expertise can have far-reaching consequences on your special needs loved one. For example, if a trustee distributes cash directly to the beneficiary, this is against the regulations and could result in them being disqualified from receiving government benefits. Alternatively, if a beneficiary is already receiving Supplemental Security Income (SSI), they cannot put the distributions toward food and basic shelter expenses. The average person does not know these things, so working with a professional in some capacity is crucial for everyone involved.”
– Marcia L. Campbell, CPA and Professional Trustee
Related Article: What is a California Special Needs Trust?
When Choosing the Trustee for a Special Needs Trust, Always Work With a Professional.
Clearly, choosing a trustee for a special needs trust is not a decision you can take lightly. You need someone with extensive experience in trust law, ample financial acumen, considerable integrity, and the temperament to communicate with you and your special needs loved one. The only individual who possesses all of these traits will, ultimately, be a professional trustee.
We sincerely hope that this blog was helpful. Remember to come back next week to check out the second part of this series, in which we will explore the responsibilities of a trustee!
