Who should be the trustee of your special needs trust? It's probably one of the biggest decisions you're going to make when creating a special needs trust for your children.
It's one of the most personal decisions you're going to make when it comes to your child with special needs related to your special needs trust. The trustee's job is to administer your inheritance to make sure to protect your child financially, and to make sure that they have enough money for the times when they need it.
Some of my clients come to me with a clear idea of who they want to be the trustee of their trust, but a lot of people don't. There can be a lot of different places you can look to find the right trustee for your trust.
Common Trustee Choices
Some common choices are:
- Other family members, like a brother or sister who could act as an aunt and uncle for your child and also be a trustee?
- Friends who are good with money and who have the capability to really watch over your child if you were to be gone.
- Corporate trustees ~ these are companies that specialize in being trustees for people with special needs.
- Professional fiduciaries ~ for a fee, they will act as the trustee.
Characteristics of a Good Trustee
There are a few characteristics that I think are important when you consider trustees for your special needs trust:
- Make sure that they understand that they will be exercising their discretion and issuing distributions for your child.
- It's very helpful if they understand the public benefit system. If your child's receiving government benefits, the trustee should be knowledgeable with them and know how to distribute money from the trust so as not to violate any rules or regulations.
- If you have somebody who's good with investments or works with a financial advisor it would be your hope that not only inheriting the money, but your child can also have that money grow and protect and last as long as it possibly can for them.
- An area that is not totally necessary, but it's helpful, is to understand taxes. If you have somebody acting as trustee for your child, your child is going to have tax issues. At the end of the year as they get older and there's income coming in the trust, there may or may not be a tax consequence to them. So you want to make sure that the trustee is at least comfortable dealing with tax issues.
- They can keep good books and records, especially if the government tries to come in and claim that they've received distributions that would mean that your child is no longer entitled to government benefits. Somebody with good books and records should be able to take care of that problem.
- Someone who can advocate for your child. You want somebody who understands their needs what they need the distributions for and how to provide them with the best possible life. You want somebody who will advocate for them if the government's going to come after their benefits or if somebody is going to deny them something. You want that advocate who would be there just like you would be if you could do it for them.
Successor Trustees
After you're done picking the trustees, your job is not actually done. We also want to make sure we pick successor trustees, those are trustees that can step in if your initial trustee is unable to act. For example, let's say you select your brother and he actually dies before you. We want to make sure there's other trustees available so that your child has not left without somebody to guide them.
Next Steps
Work with your accountant, your financial adviser, work with an attorney to help you create a special needs trust. Work with the care manager for your children. Make sure that we have an entire ecosystem around them that's ready to step in if something happens to you. Now if you don't have a special needs trust set up or you have one and you're not sure it's what you really want, let's set up a complimentary Legal Strategy Session to review your special needs trust or why you and your family could use one. There's no reason to not protect your legacy and protect your child.
