If you have a relative who has special needs, you may want to include a special needs trust in your estate plan. This type of trust gives your loved one access to funds to use on supplemental expenses without harming his or her eligibility for means-tested government benefits, like Supplemental Security Income or Medicaid.
When forming your special needs trust, you must carefully select a trustee to manage it. After all, the success of your trust may depend on the efforts of your trustee. At a minimum, you can expect the trustee to perform a few critical functions.
Preparing paperwork
A large part of managing any special needs trust is staying on top of the paperwork. Your trustee is responsible for the trust’s tax and other reporting obligations. Consequently, you should choose a trustee who pays close attention to detail.
Investing funds
While you may fund your special needs trust initially, you also want it to grow over time. Your special needs trustee should have an investment strategy. Even if the trustee delegates investment duties to someone else, meeting investment goals is one aspect of the trustee’s job description.
Approving disbursements
To remain eligible for means-tested government programs, your loved one may not use disbursements from the trust to pay for the same expenses program benefits cover. Your trustee should be familiar with program rules and only approve acceptable disbursements.
Ultimately, it is the responsibility of the special needs trustee to look out for the interests of both your loved one and the trust. If your relative or the special needs trust requires something reasonable, it may be the job of the trustee to make it happen.
Kevin Tharpe
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