Do I Need A Professional Trustee For My Special Needs Trust?

Discussing Special Needs Trust

Discussing Special Needs Trust

Serving as a trustee requires administrative and technical skills in addition to strong interpersonal communication skills. Identifying the appropriate trustee is difficult in general; a Special Needs Trust presents additional challenges. While most families will name a relative to serve as the trustee of their family’s Special Needs Trust, they are often unaware of the specialized knowledge needed to succeed in the role. In many cases, it makes sense to have a family member involved in some capacity in the care of the individual with special needs. However, the Special Needs Trust beneficiary is almost always best served when a professional trustee with the specialized skills is named as the trustee or co-trustee.

In considering trustees to name for your Special Needs Trust, we suggest evaluating your alternatives with respect to the following characteristics: administrative skills, communication skills, investment skills, knowledge of public benefits rules and regulations, available time to serve, desire to serve, and ability to stay informed of legal and policy changes as they relate to Special Needs Trust administration.

All trustees owe a fiduciary duty to their beneficiaries. The fiduciary duty requires them to act in the best interests of the beneficiaries. The basic fiduciary requirements are as follows: maintain detailed records, never co-mingle trust assets with the trustee's personal assets, invest the trust assets prudently, and file all required income tax and distribution reports on time.

Most trustees retain the right to delegate certain obligations of the trustee. These include the preparation of income tax returns, the management of the investments, and the annual accountings. While these roles can be delegated, the trustee always retains the fiduciary responsibility to confirm that they are done correctly.

It is essential for families to discuss their intentions of naming relatives as trustees before the Special Needs Trusts are implemented. The results improve significantly when candid conversations are held in advance rather than after the parents pass away and the family member is informed that he or she is the trustee with no time to prepare for the role.

The reality is that few family members will possess all the necessary characteristics to be a successful trustee.  Similarly, most large bank trust companies are not skilled in handling Special Needs Trusts and are not structured to provide the level of care and contact most families want.   Often, the optimal solution will be to pair a family member who possesses a strong relationship with the beneficiary and a professional trustee. Click to continue…

These recommendations are provided solely as a reference and are not intended to replace counseling from qualified professionals. Please contact Oak Wealth Advisors if you would like more information about our services for families with special needs members.