It’s common to name yourself as the trustee for a special needs trust when you first create it. However, it’s important to plan for the care of your loved one for when you’re no longer around. Naming a successor trustee ensures that the trust will be in good hands when you’re no longer able to manage it. However, choosing a trustee for a special needs trust can be a challenging task that requires careful planning.
Who Can Be a Trustee of a Special Needs Trust
Although it’s common to name a family member or close friend as the trustee of a special needs trust, those aren’t the only options. Administering a trust can be a lot of work. Sometimes family members don’t have the time or understanding to do so. When no family member is willing or able to serve as trustee, it often makes sense to rely on financial institutions or non-profit organizations for trust administration.
It’s also common to name multiple people as co-trustees. Doing so allows you to pair an individual close to the beneficiary and a professional trustee with more experience managing trusts. This can relieve each trustee of some of the responsibility, ultimately ensuring that the beneficiary’s needs are met.
Alternatively, you might name a married couple related to the beneficiary as co-trustees. If something were to happen to either of the co-trustees, the other would still be able to manage the trust without further complications.
Responsibilities of a Trustee
The primary responsibility of a trustee is to look out for the financial well being of the trust’s beneficiary. Trustees must understand the public benefit programs for which the beneficiary qualifies. They are also responsible for managing the trust in such a way that the beneficiary maintains eligibility to these programs.
Trustees handle the investments of the trust assets, tax reporting, tax returns, and all of the trust’s accounting and bookkeeping. To do so, they must consider both the beneficiary’s existing and anticipated needs. Determining these needs will require contact with family members, caregivers, government benefits programs, and other important people and organizations in the beneficiary’s life.
It’s important that potential trustees understand and accept the responsibilities of the role. It’s also important to avoid conflicts of interest when possible. Often, trustees are named as the remainder beneficiaries, meaning they’ll inherit remaining assets when the trust ends. Doing so gives the trustee a financial incentive to limit the use of the trust’s funds and should therefore be avoided when possible.
Making a Decision
Choosing the right trustee for a special needs trust provides a peace of mind that’s invaluable. You should discuss the matter in detail with any individuals, financial institutions, or non-profits you’re considering for the job. Setting up a pooled trust to be managed by a non-profit is often a wise decision. Doing so ensures that the trust is managed by experienced professionals and allows the trust to take advantage of growth opportunities that would otherwise not be available.
If you’re considering setting up a special needs trust in Chicago or the surrounding areas, Life’s Plan can help. Give us a call at 630-628-7189 to speak with an experienced professional who can guide you through the process. We know how difficult these decisions can be. So we will do all we can to help you understand your options for providing your loved one with the care they deserve.