Choosing a trustee for a Special Needs Trust is a BIG deal. A very big deal.
When you create a special needs trust for a loved one, you will probably name yourself as trustee to manage the trust while you are alive. Who will take over the trust when you are no longer around to insure your loved one's needs are taken care of?
Picking reliable people to manage the trust is crucial because trusts operate pretty much on the honor system. It's true that the law imposes a duty on trustees to honestly and faithfully carry out the trust's terms, but in most cases there is no court supervision.
Ideal Qualities for a Trustee
The job of a trustee requires a unique balance of care for the beneficiary, fiscal responsibility, ability to understand SSI and Medicaid laws, and more.
Willingness to Serve
Every trustee and successor trustee you name must be willing to serve, so talk to all potential trustees in advance. Clearly explain under what conditions they would serve and what their duties would be. Before you name your trustees in the trust, make sure they accept the role you assign to them. Otherwise, when it comes time for them to serve, they might decline.
You might consider giving them a letter describing their duties.
No Conflicts of Interest
A special needs trust must be managed for the benefit of the beneficiary. This means that the person serving as trustee must not act in his or her own interests—or the interests of others—when making investment and spending decisions.
In real life, however, it is not uncommon to name the same person as both successor trustee and remainder beneficiary, named to get the "leftover" trust property when the trust ends. This creates a conflict of interest because every dollar spent on the beneficiary is a dollar that the remainder beneficiary won't receive.
However, an honest and honorable trustee will make decisions based solely on the beneficiary's needs. And if you don't expect the remainder beneficiary to inherit anything—for example, if the trust funds just won't last that long—this may not be a big issue for you.
Familiarity and Empathy with the Beneficiary
For special needs trust to function smoothly, the person serving as trustee should have a good working knowledge of the beneficiary's needs. This relationship requires communication that is most likely to exist if the trustee has—or is able to develop—a close personal relationship with the beneficiary. A good relationship makes it easier to negotiate requests that the trustee may be reluctant to grant because they threaten to deplete trust assets. Also, the more familiar a trustee is with a beneficiary, the less likely it is that the trustee's decisions will be based on bias or misconceptions about people with disabilities that are all too common.
Closeness in Age to the Beneficiary
When you're choosing a trustee, you should do your best to find a trustee who will be around as long as the beneficiary needs the trust. This means you need to think about both the trustee's life expectancy and the life expectancy of the person with special needs.
If your ideal trustee is not the right age, you can give the trustee the ability to appoint a successor in the trust document. Another option is to empower a trust protector to name a successor.
Willingness to Get Help with Government Rules - Enter the Fiduciary
Each trustee you name will need to become familiar with the rules that determine eligibility for SSI and Medicaid - and how the special needs trust can be used to supplement the beneficiary's needs without violating these rules. Some of the basic rules can be understood fairly easily. However, unless the trustee already has some experience with the rules of the public benefits programs, it may be best to get help from a professional - enter the fiduciary. They can provide the expertise in public benefits counseling - or at the very least introduce you to somebody who can.
Financial Knowledge and Competence
Using trust money to provide for the special needs of a beneficiary is usually the fun part of being a trustee. Not so much fun is the business side of trust management: making reports, keeping records, filing tax returns, and making appropriate investment decisions.
If you're not sure whether the trustee you have in mind is up to the task, you could name a fiduciary with a solid reputation who can connect you with the appropriate people that make up your care team. Long-time fiduciaries will not only be able to refer you to some trustworthy professionals for your consideration, they often have them on their team!
AD Fiduciary has a reputation for outsanding long-term quality of life programs for those with special needs and disabilities. They learn the needs of your loved ones and carry out your wishes, resulting in a quality of life that is second to none.