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Children with disabilities present a unique challenge for parents who are looking to engage in estate planning. For one, you will want to optimize your estate to use, enhance, and enrich assets for your child. At the same time, maintaining their enrollment in public benefits programs is no doubt going to be essential.

To ensure you meet both of these objectives requires careful planning. The experienced attorneys at Kommer Bave & Ciccone LLP can prepare a special needs trust to accomplish these and other goals you may have for your child.

How a Special Needs Trust Works

Qualifying for means-tested assistance programs, such as Supplemental Security Income (SSI) or Medicaid, typically requires benefits recipients to meet strict financial criteria. A special needs trust can help an individual with disabilities meet these stringent rules. This is because the assets held in this type of trust are not directly available to the child.

A trustee of a special needs trust provides benefits to the child via the trust. Parents should select this trustee with great care. The trustee will act as the child’s money manager, ensuring proper supervision of their finances in the event that the child’s parents pass away.

A letter of intent can also be a powerful tool that helps to guide the trustee in making decisions that will best serve the child’s unique needs. (Learn more about what details you should consider including in a letter of intent for a child with a disability.)

Choosing a Trustee for a Special Needs Trust

In most cases, your child will benefit from you selecting a dependable individual to serve as their special needs trustee. You may wish to select a person who is not a family member and who would be independent in carrying out this role.

You have a range of options, including the following:

• A parent, sibling, or another relative (which, again, can be risky)
• An experienced estate planning attorney or special needs planning attorney
• A financial institution or a trust company
• A nonprofit organization, particularly one with special needs experience
• Co-trustees, such as a trust company, acting in conjunction with a family member

Each of these options can have advantages and drawbacks. Keep close counsel with your estate planning attorney or financial advisor before you select a trustee.

When to Set Up Your Special Needs Trust

The creation of your special needs trust can happen while you are living or at the time of your death.

Parents often set up the trust while alive; this is known as a living trust (or inter vivos trust). A living trust boasts certain advantages, such as:

• avoiding probate;
• permitting other family members (for example, grandparents) to make trust contributions; and
• giving a co-trustee the opportunity to experience what it is like to administer the trust.

Alternatively, a last will and testament can incorporate creating the trust, known as a testamentary trust.

Why Special Needs Trusts and Estate Planning Are Important

Verbally telling your family how to care for your child is insufficient. In the absence of a will or trust, the state in which you live may determine the outcomes of your estate’s distribution. This situation is not a viable option for a child with special needs or any of your children.

Receiving proper legal guidance on the appropriate trusts to use in your estate plan is crucial to your child’s future. Do not attempt to craft these legal documents on your own, use existing forms, or copy an online internet template. Each child with special needs requires careful considerations unique to them and the challenges they face.

With so much at stake, be sure to seek out the qualified attorneys at Kommer Bave & Ciccone LLP. Our attorneys have expertise in the area of special needs planning, and can tailor your estate plan to best suit your wishes as well as the specific needs of your child. Protecting public benefits such as SSI and Medicaid will help safeguard your child’s well-being into the future. Establishing a special needs trust through the estate planning process is a key way to achieve this goal.

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Choosing the right person to serve as trustee of a special needs trust (SNT) is a key task when creating such a trust. It may also prove to be one of the most challenging. Trustees are responsible for the following:

• managing the day-to-day operations of the SNT,
• making distributions to the trust’s beneficiary,
• investing the trust’s assets, and
• paying the trust’s bills.

This, in turn, helps ensure that the special needs trust’s beneficiary remain eligible for public benefits programs.

The law is not particularly strict about who may serve as trustee. The trustee must be over 18 years of age and capable of managing their own affairs. They can be the child’s parent or other relative or a trusted friend. Or they can be a professional such as a lawyer, accountant, trust company, bank, or private professional fiduciary.

Here are five important questions to ask yourself when deciding on who should serve as a trustee for a special needs trust:

1. Is the potential trustee knowledgeable about public benefit programs?

It can prove crucial for a trustee of a special needs trust to be familiar with the different types of public benefit programs. They will be responsible for ensuring that the special needs trust beneficiary remains eligible for their public benefits.

Many government benefits like Medicaid, Supplemental Security Income (SSI), and Section 8 housing have complicated rules governing SNTs. The trustee of a special needs trust must know these rules well. Or they at least need to work closely with a special needs planner who can explain the consequences of their actions as trustee.

2. Does the trustee have time to carry out their duties?

Serving as the trustee of an active special needs trust can seem like a full-time job. Depending on the needs of the beneficiary, the trustee could indeed spend a good deal of time on any number of tasks. These may include the following:

• paying bills,
• monitoring government benefits,
• helping to secure housing,
• paying for medical care, and
• serving as a link between the beneficiary and a variety of service providers.

Sometimes, trustees find that they cannot perform all the necessary tasks in a timely manner. Or they feel they are sacrificing their family life or other professional obligations to fulfill their duties as a trustee. If this is the case, it may be time to look for a professional trustee.

3. Should you consider a professional trustee?

Professional trustees can be an attorney, accountant, trust company, investment firm, bank, or private professional fiduciary. With a professional serving as a trustee, you can rely on the expertise of that individual or institution. They will have a deep understanding of public benefits programs, investments, money management, and tax planning. Another advantage is that you may stand to gain some emotional distance. The disadvantage is that a professional trustee must be compensated, which will be a cost to the trust.

Sometimes, a beneficiary may have certain demands for trust distributions that can cause significant problems for family members. Again, having a professional trustee in place can help you avoid these kinds of family complications.

4. How comfortable are you giving control over the trust to an outsider?

Perhaps you feel uncomfortable with the idea of an outsider managing your loved one’s special needs trust. Keep in mind that it is possible to appoint a family member and an independent trustee as co-trustees. This way, you can rest assured that there is one trustee who is familiar with the beneficiary and has their best interests at heart. At the same time, the co-trustee can help carry out the tasks necessary to meet the public benefit programs’ requirements.

Another option is to appoint a trust protector. A trust protector has the powers to review accounts and to hire and fire trustees. In addition, a trust advisor can help instruct the trustee on the needs of the beneficiary.

5. Is a pooled trust an option?

A pooled trust may serve as a good option for some families. Nonprofit corporations administer these types of trusts, which pool together the resources of many beneficiaries. Pooling trust resources can reduce administrative fees and increase the total funds available for investment. These types of trusts also may permit beneficiaries access to better investment opportunities.

Because a pooled trust accepts contributions from many beneficiaries, the trust is able to make more stable investments. It also can provide additional management services that a conventional special needs trust might not be able to afford. If your loved one’s special needs trust is modest in size, it may benefit from the low costs of a pooled trust. Also appealing to many families is the fact that the nonprofits managing these trusts support others with special needs.

Consult With a Special Needs Planning Attorney

The Special Needs Attorneys at Kommer Bave & Ciccone are well-versed in the nuances that go into selecting a trustee of a special needs trust. Meet with our qualified special needs planners today to help you make the best plan for you and your family.

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