A special needs trust or a supplemental needs trust is a trust, typically established by parents for their disabled child, that is created to provide financial care for that child without jeopardizing any government benefits that they may be entitled to or simply because that child cannot manage money. Parents will set up the special needs trust so that after they die there is money and a trustee in place to care for that child. In the special needs community, the biggest concern for parents is who will care for their child like they do after they are gone. After all, parents know their special needs child the best. This thought process often leads parents to name one of their other children or another family member as trustee for their special needs child’s trust.
Should we name a Sibling as Trustee?
Other than the parents, who else knows the child best? Their siblings! Families often assume that siblings will take on the role of Trustee for their special needs sibling and this is a common solution that works for many. However, this is not always the best solution and we encourage families to consider some important possibilities and ask themselves some questions before defaulting to a sibling.
Things to Consider:
- Putting someone in charge of their sibling’s money can create new complications, even if they have the best relationship.
- The child in charge of the trust may inherit from that trust one day when their special needs sibling dies, this can cause great conflict.
- This may handcuff the trustee child, they may never feel like they can go on vacation, move, or do what’s best for themselves if they are constantly worrying about what is best for their sibling.
Questions to Ask:
- Is the sibling the best helper for the special needs person? (Helper, not who knows them the best.)
- Who can best serve the complex needs of our child and advocate for them after we, as parents, are gone?
- Does the sibling want to be the trustee and advocate for their sibling or are they just being agreeable?
- Is the sibling familiar with the public benefits programs that the special needs child is on or could qualify for?
- Does the sibling have time to do the job properly?
- Can the sibling hire and lead a team of advisors to make the best decisions for the trustee?
Who would make the best Trustee?
Because being an advocate for a special needs person and dealing with government benefits is often fraught with steep learning curves and frustration, it may be better to leave that task to a professional. Licensed professional fiduciaries and corporate trustees will often take on the task of administering a special needs trust and often their fees are well worth paying because they have often already administered a special needs trust and don’t need to reinvent the wheel for each client. They frequently have contacts or proven processes in place with government agencies and can often be more effective than a family member who is starting new.
Choosing a professional trustee does not mean that you cannot have the siblings of the special needs child involved. There are many ways they can be involved, but not be tasked with administering the trust. We discussed earlier that the sibling is often the person who knows the special needs child best after the parents. There are many ways through a special needs trust to keep those siblings involved. They can be involved in decision-making for their siblings, the professional trustee can report to those siblings so they are aware of everything going on, and the siblings can even have the power to remove and replace a trustee if they feel that the trustee is not the best fit for their special needs sibling. You can even keep the siblings involved by allowing them to name a fiduciary to act as Trustee when the trust needs administering.
Speaking with your estate planning attorney to make sure that your child’s special needs trust is set up properly is an important part of your estate plan. Circumstances and people are constantly changing, and you can often update the special needs trust like you would your revocable family trust, depending, of course, on whether that special needs trust is still revocable. It is encouraged to do some deep thinking about whom you would want to be the trustee for your special needs child. As always, we strongly advise discussing your choices with whomever it is that you want to name as trustee of your child’s special needs trust so that you are making the best decision for the whole family.
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