Should I Choose a Family Member to be Trustee of a Special Needs Trust?
This article is a part of True Link’s Guest Expert Series. We have interviewed leaders knowledgeable in disability planning, Elder Law, and trust administration and will be sharing their expertise with you in a series of videos and posts. Note: this article is not intended to provide investment, legal, tax, accounting or medical advice. Before making decisions involving investing, legal, tax, accounting or medical concerns, you should consult appropriate professionals regarding your speciﬁc situation.
When establishing a Special Needs Trust (SNT) for someone with disabilities, one of the first decisions you need to make is who will act as trustee. Common options include hiring a professional attorney, working with a bank or trust company, using a nonprofit pooled trust organization, or appointing a family member to serve in this capacity.
Many people are drawn to the final option – choosing a loved one or friend who you already know and trust to take on this responsibility. But experts caution that there are a couple things you’ll want to consider before you decide what’s best for your situation.
Consideration 1: The Potential Impact on Family Relationships
“Often families just automatically want to choose siblings to be the trustees, [but…] even in really healthy relationships, money can create a lot of conflict,” Kathy Vitello, Director of Operations at PLAN of Massachusetts and Rhode Island (a Pooled Special Needs Trust non-profit organization) explains.
This becomes even more relevant when an individual is considering taking on the role of guardian. “Sometimes it’s hard to just be a parent or a sibling, or a loved one, a friend, while you’re also in the role of guardian, because you’re telling someone what to do; their rights have been taken away, and now the guardian is the person who’s making decisions. That’s troubling for both sides of the table,” Wyoming Guardianship Corporation’s (a Pooled Special Needs Trust non-profit organization) Executive Director Emily Smith articulates.
Hiring a professional to administer a trust (or act as guardian/conservator) can take some of the pressure and tension out of the equation. As Vitello shares, “siblings can maintain really healthy relationships, and the person with a disability will feel like they have an advocate on their side.”
“Advocate” is an important word here. Choosing to appoint a professional trustee doesn’t mean loved ones and friends aren’t involved in the beneficiary’s life, but rather that they can focus on the person and their wellbeing. The role of beneficiary advocate (or “trust protector”/”trust advisor”) is critical and provides an opportunity for someone to engage and influence trust decisions though supported decision making alongside the person with a disability. Charnise Mothershed, the Chief Operating Officer of Secured Futures (a Pooled Special Needs Trust nonprofit organization) talks more about the role of a beneficiary advocate in this video:
Consideration 2: The Complexity of Special Needs Trusts
Another challenge of appointing a family member as trustee is that they may not be familiar with the rules and regulations involved in managing and administering an SNT. As Ann Koerner, President and Founder of National Care Advisors details, “This is a complex task. You have to understand the Social Security rules; you have to understand how Medicaid works; you need to understand employment law[...]; you need to understand investments.”
This doesn’t mean you should never choose a family member as trustee, but, rather, if you choose to go this route, you want to be intentional about bringing in the right experts to support you. This might mean outsourcing the employment of caregivers to ensure you’re following wage and labor laws, or working with an investment manager, such as True Link Financial Advisors, who understands the ins and outs of complex trusts like SNTs.
Want to watch these videos on Vimeo? Here are the links to the guest expert videos related to this topic:
- Tradeoffs of Choosing a Family Member as Special Needs Trustee - Kathy Vitello, Director of Operations at PLAN of Massachusetts and Rhode Island
- Considerations when Hiring a Professional Guardian of the Person - Emily Smith, Executive Director, Wyoming Guardianship Corporation
- A Beneficiary Advocate's Role in Special Needs Trust Planning - Charnise Mothershead, Chief Operating Officer, Secured Futures
- SNT Administration: Professional or Family Member Trustee - Ann Koerner, President and Founder of National Care Advisors
If you liked this post, you may want to check out our article on Estate Planning Tips for Parents of Children with Disabilities.