2890 N. Main Street, Suite 206 • Walnut Creek, CA 94597

Special Needs Planning – Making the Trust Work Over Many Years – Part 2

In our last post we began a discussion of the various roles that must be filled in the planning and administration of a SNT, contrasting that with a conventional estate planning trust.  Here we will continue discussing the roles that must be filled in the planning of a Special Needs Trust.

As we’ve mentioned before, a unique feature of most Special Needs Trusts is that they must be designed to last a long time, for the beneficiary’s whole life.  And by “last a long time” we mean accomplish the grantor’s goals for a long time.  Among the problems that can arise in laws that affect the success of the trust can and do change.  If the law changes in such a way that the SNT as written no longer preserves the beneficiary’s eligibility for a needed government benefit, that is a huge problem.  What can be done in the planning of the Special Needs Trust to solve this problem before it arises?

, Special Needs Planning – Making the Trust Work Over Many Years  –  Part 2

The most common solution is to include provisions for the role of Trust Protector.  The Trust Protector’s job is not defined in any California statute or case law.  The job of the Trust Protector is whatever the trust document says it is.  A job that is commonly assigned to the Trust Protector is modifying the trust when that becomes necessary because laws or circumstances have changed.  The Special Needs Trust can name a person who will serve as Trust Protector when needed or it can specify a person who will appoint a Trust Protector when needed.  The Special Needs Trust will then also explain the procedure the Trust Protector must follow to modify the trust.

Another job that is also often assigned to the Trust Protector is the removal and replacement of the trustee.  As time goes by the beneficiary and other family members may have trouble working with the trustee for a variety of reasons.  It could be a personality clash or it could be that the trustee is not performing the job of the trustee adequately or competently.  In such cases it is very important that someone has the authority to remove the trustee from that position and appoint a replacement.

The Trust Protector can be a trusted relative or a family friend.  The responsibility of the Trust Protector can be limited to acting only when called upon to act rather than having to be constantly monitoring the trustee’s performance or changes in the laws.  The main benefit of including Trust Protector provisions in a SNT is flexibility.  Special Needs Trusts are usually irrevocable trusts and as such, without a Trust Protector, can usually only be modified with court approval.  That is a cumbersome, expensive process and there’s no guarantee that the court will grant the request for modification.  For these reasons a Trust Protector role is much less common in conventional estate planning while the role is often created in planning a Special Needs Trust.

Another role that is often built into a Special Needs Trust is a Trust Advisory Committee.  Like a Trust Protector, this is a role that is not defined by California Law but rather by the Special Needs Trust document itself.  The Trust Advisory Committee can consist of any number of members, who can be friends, family members, professionals or a combination.  The Trust Advisory Committee can be given the authority described above in the discussion of the Trust Protector’s job – to modify the trust or to remove and replace the trustee.  In that case there would be no need for a Trust Protector.

A common use of the Trust Advisory Committee, however, is to enable it to work with the trustee in making important decisions that affect the Special Needs Trust beneficiary.  These committee members are often people who know the beneficiary well and are familiar with the beneficiary’s needs, likes and dislikes, in a way that the trustee, who may have only recently met the beneficiary, is not.

As with a Trust Protector, the Special Needs Trust document must discuss clearly and with sufficient detail who the members of the Trust Advisory Committee will be, how they will make decisions (by majority vote? unanimously?), how vacancies on the committee will be addressed and what the extent of their decision-making authority is.  Both Trust Protectors and Trust Advisory Committee roles can greatly enhance the likelihood of a Special Needs Trust accomplishing the grantor’s goals over the entire life of the beneficiary.

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Walnut Creek, CA 94597

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