Don’t Accept the Position of Trustee of a Special Needs Trust Before You Answer These 5 Questions

If someone asks you to serve as trustee of a Special Needs Trust set up for someone with special needs, you should consider that a great honor. That means the family trusts and respects you. But, before you accept the job, you need to understand that it comes with great responsibility.  To understand that responsibility, ask yourself these 5 questions:

  1. Can I read the Special Needs Trust?

The Special Needs Trust is the document where you will find almost everything you need to know. It tells you what you should do with the money or property in the trust that you will be required to manage. Make sure that you can read the trust and fully understand it. If you have questions, ask to have an appointment with the attorney who drafted the trust.  If you ask to see the trust and are refused, you should definitely decline the position. That would be like accepting a job before you know what you are required to do.

  1. What are the goals of the Grantor—-the Person who Creates the Special Needs Trust

Special Needs Trusts are discretionary trusts that give the trustee a lot of latitude to make distributions for the benefit of the person with special needs. But, each grantor has different ideas about what types of purchases are appropriate. It is important that you ask the grantor about their goals and even ask him or her to put their intentions in writing in the form of a memorandum of intent.

  1. Will I have help?

Will you be on your own as the only trustee or will you be working with another person as co-trustee? If there is more than one trustee, how will the work be divided? If the co-trustee is a professional trustee like a bank or trust company, will they take charge of investments, accounting and tax issues and simply consult with you on questions about distributions? If you do not have a professional co-trustee, does the trust specify that you can hire attorneys, accountants and investment advisors as needed to make sure the Special Needs Trust operates properly?

  1. How long will my responsibilities last?

Special Needs Trusts last until the death of the beneficiary or until the trust funds run out. Since your position as Trustee of a Special Needs Trust could last for some time, you need to know the terms of the trust that describe the procedure for you to resign and how successor trustee(s) are named.

  1. Will I be compensated?

Often family members and friends serve as trustees without compensation. However, if the duties are demanding it is perfectly appropriate to expect compensation. Professionals generally charge a set percentage of the assets in the Special Needs Trust. If you are doing all of the work for a Special Needs Trust you should charge a similar fee. In situations where you pay others to perform functions such as investment management, distribution and accounting or you are acting as co-trustee, it may be appropriate to charge less than what the professional charge would be.

If the answers to these questions leave you in doubt, please do not accept the role of trustee. However, if you are willing to do the work and have a desire to help the individual with special needs, you will find that serving as trustee is rewarding. If you need help deciding, feel free to contact the Law Office of Sheri R. Abrams at (571) 328-5795 to schedule an appointment.