Since the trustee is typically encouraged to employ professionals to assist in the administration of the trust, a trustee could, for example, hire a care manager or other qualified person to prepare an annual assessment of the beneficiary's needs to be reviewed by the trustee. The report should include both assessment of the beneficiary's current needs and recommendations for maximizing his or her quality of life. When administering a Special Needs Trust, a skilled attorney can help guide you in your decision-making process and avoid the termination of benefits. by Timothy L. Takacs, Certified Elder Law Attorney (© 2006 Timothy L. Takacs. Often in cases involving a self-settled special needs trust for a minor or incompetent person, the court will insist upon the appointment of an independent trustee. Even with as much as $1 million invested, it may well be necessary to scrimp and to use the trust funds quite sparingly. A Successor Trustee is named to step in to manage the Trust if the Grantor dies or becomes incapacitated. Similarly, distributions made for items covered by SSI (i.e., food and shelter) are considered “in-kind” income and reduce monthly SSI benefits. A trust is a legal document containing instructions directing the management and distribution of the resources placed in the trust. How and when distributions are made from the trust are also critical. SNT trustee duties include the work of managing trusts and investing assets but extend far beyond to include day-to-day details of special SNT trust administration rules, public benefits available to disabled persons under Social Security and Medicaid, and the special needs of disabled persons. The trustee of a special needs trust (SNT) has all of the duties of any trustee, plus specific added responsibilities due to the special needs of the beneficiary. Age, relationship and responsibilities are all critical factors. He or she also must adhere to any distribution guidelines the Grantor outlined in the trust. Theus, Grisham, Davis & Leigh, L.L.C. For special needs trust to function smoothly, the person serving as trustee should have a good working knowledge of the beneficiary’s needs. What is a Special Needs Trust? A Trustee who is unfamiliar with the rules dealing with Special Needs Trust distributions to a recipient of Supplement Security Income (“SSI”), Medi-Cal, Section 8 Housing and other government assistance programs can devastate a special needs beneficiary’s personal and financial situation. Successor trustees only begin to act when the trustee of a trust dies or becomes unable to manage financial affairs due to incapacity. The trustee also has sole responsibility for distribution decisions. A special needs trust (SNT) is established to hold funds that would otherwise disqualify the beneficiary from public benefits such as the Oregon Health Plan, SSI and Medicaid.. Many family members consider naming a relative as trustee of their child’s Special Needs Trust. Visitors to this website should consult with competent legal counsel. In Tennessee like many (but not all) states, an individual who is eligible for SSI benefits is automatically eligible for Medicaid/TennCare benefits. Finally, the trustee has fiduciary responsibility for the management of trust assets, even if he or she chooses to hire professional investment managers to make day-to-day investment decisions. As a trustee, you must also stay informed about changes in the beneficiary's benefits to make intelligent decisions as trustee. Let’s start with some explanations. Being the trustee of a Special Needs Trust is a job that comes with great responsibilities. In addition, the trustee of a special needs trust must administer the trust in a manner that is consistent with the rules of the Medicaid and/or Supplemental Security Income (SSI) programs. Learn how your comment data is processed. While trusts may look like they hold a lot of money, often when distributed over the lifetime of the beneficiary it’s not as much as is needed. Trustees of special needs trusts are paid the same way as trustees of other trustee. The trustee of a special needs trust has an important job. While the appropriate investment strategy depends, in part, on the beneficiary’s age and needs and the amount of assets that can be invested, the trustee generally must comply with the “Prudent Investor Act,” which requires that investment decisions be made responsibly and impartially. When searching for a Trustee to administer a Special Needs Trust (SNT), there are many options and nuances to consider. It can often be easier for an independent, professional trustee to say “no” than for a family member to do so. A Trustee's Responsibilities under a Special Needs Trust I am the Trustee - Now What. Understanding of the "income" and "resource" rules will make a big difference in maintaining the beneficiary's eligibility and benefit levels for the governmental programs. That would be a breach of the trustee's duties as the trustee is not carrying out the primary purpose of the trust. After a special needs trust is properly drafted, signed and funded, the trustee plays a very important role. The Revised Uniform Fiduciary Access to ... Theus, Grisham, Davis & Leigh launched three years after the Wright brothers took flight and two years before Henry Ford introduced the Model T. Yes, we are THAT old – 110 years to be precise. Have you heard about special needs trusts, but want to learn more? Investing the Trust Property Appropriately. What Are the Responsibilities of an SNT Trustee? Sometimes, one may also need to know about Special Trustees and Trust Protectors. Louisiana Medicaid Eligibility for Long Term Care: Income and Asset Limits. Be sure to obtain and keep copies of all correspondence from each benefit agency. Being appointed and serving as a trustee is a very serious undertaking. This relationship requires communication that is most likely to exist if the trustee has—or is able to develop—a close personal relationship with the … The trustee must fully understand and follow SSl’s distribution guidelines, which vary by state. This is because the Trustee will have control over the Trust assets and responsibility for its day-to-day operations. Monroe, Louisiana 71201, Telephone: 318-388-0100 A Third Party Special Needs Trust is one of the most common trusts used to help care for and provide for the needs of a disabled person. Thus, it must be administered properly to prevent that negative consequence. Those duties include, but are not limited to, the duty to carry out the terms of the trust agreement, the duty of loyalty to the beneficiary, the duty to act and invest prudently, the duty not to delegate trustee responsibility and the duty to maintain book and records and keep the beneficiaries reasonably informed of the trust administration. In Tennessee, the Department of Human Services (DHS) administers the Medicaid program pursuant to an agreement with the federal government. Most special needs trusts are third party special needs trusts, and they are taxed as a pass-through entity. All trustees are responsible for: • Appropriate investment of trust property • Bookkeeping and accounting of trust activities • Communication with trust beneficiaries • Tax reporting for the trust • Appropriate distribution of trust property to the beneficiary or beneficiaries, taking into account both current and future needs. The terms of a Special Needs Trust actually set forth the trustee's responsibilities to the trust beneficiary. It reviews the SSI rules so you can understand if, when, In some cases, the best option for the trustee of a special needs trust may be a sibling of a child with special needs who is capable of handling the trust when the parents can no longer do so. Whether an independent trustee can be removed is an important question. Disclaimer: The materials on this website are intended for general informational purposes only. Special Needs Trusts are designed to supplement, not replace, the kind of basic support provided by government programs like Medicaid and Supplemental Security Income (SSI). Since tax rules vary by state and type of SNT, it is critical for the trustee to know when potential tax reductions may warrant making distributions to or for the beneficiary. This article is not intended to, and does not create, an attorney client relationship with Weiss, Tom & Trapanese, LLC or any of the firm's lawyers. Here at CCT, we are often asked what disbursements can be made from a special needs trust. Some prefer a trusted friend or family member serve in this role. Rents, dividends, interest, and any realized gains on sale must be reported. Being named trustee of a special needs trust is a great honor as well as a huge responsibility. With regard to taxes, the trustee is responsible for notifying the IRS that the SNT has been signed and requesting an employee identification number (EIN) that will be used on tax returns. Trustees have a long list of responsibilities, including a fiduciary responsibility to make sure the trust’s assets are in a sound investment plan with the right risk profile that meets the needs of the beneficiaries. Failure to learn about a change in benefits can have catastrophic results to the trust beneficiary. The trustee’s failure to carry out these responsibilities could lead to a termination of income benefits and medical coverage for the beneficiary. Required fields are marked *. An SNT can be funded to provide for things like long-term medical care, rehabilitative care, daily dietary needs, and nourishment. This website is not intended as an offer to represent you. The trustee also must prepare and file annual federal and state fiduciary income tax returns, reporting any income the trust earns, whether in the form of interest, dividends or capital gains. These records will be needed if Social Security or the Department of Human Services wants verification of the expenditures the trustee has made. SSI and Medicaid should have the address of the trustee , as well as the beneficiary's address, as sometimes the trust beneficiary fails to advise the trustee of a notice received concerning the public benefits. A trust is a binding legal contract. As trustee, if you don't satisfy these rules, then your actions can cause the beneficiary to lose some or all of his or her public benefits. In either case, it is important that you understand your duties and responsibilities. In the case of a special needs trust, in addition to these standard trustee responsibilities, trustees of special needs trusts have to be aware of public benefit rules and probably have a greater responsibility than other trustees to look into the general welfare of the beneficiary. Due to these demands, many families find that a professional trustee is better prepared to act as trustee or as co-trustee with a family member. If you have been named as a trustee, you may already be acting in this capacity. The Responsibility of a Special Needs Trust Trustee. The trustee must act prudently at all times for the benefit of the trust beneficiaries. Professional trustees, such as banks, trust companies, and some attorneys, are equipped to handle details like establishing accounts for the management of trust assets, handling trust record keeping, hiring and overseeing the activities of any service providers (such as tax reporting), making distribution decisions and investing trust assets. This will help in determining the applicable rules on eligibility, reporting, and appeals. As a trustee, your responsibilities and obligations are to the trust document. For example, if the special needs beneficiary is receiving Supplemental Security Income (SSI) or Medicaid, there are certain restrictions on what is … Our attorneys are able to assist fiduciaries in fulfilling their statutory obligations. Special Needs Trusts: Trustee Responsibilities A special needs trust is often established so that the beneficiary can have access to funds that are left to him or her during their lifetime or that are left to him or her from an estate. However, some families choose to go with a professional special needs trustee, as they have extensive experience in handling all issues associated with a Special Needs Trust. Since a trustee is managing someone else's monies, good record keeping is a must. When the trust outlines specific investment guidelines, however, those take precedence over Prudent Investor Rules. The trust document should clearly delineate the responsibility of each of the trustees. The terms of a Special Needs Trust actually set forth the trustee's responsibilities to the... Duties of as Trustee. ©2019 Law Offices of Weiss, Tom & Trapanese, LLC |, 502 Valley Road, Suite 104, Wayne, NJ 07470, Estate Planning Consideration for Children from a 1st Marriage, Living Wills, POLST Forms, DNR, DNI and DNH Orders, The Differences Between an Eviction and an Ejectment. Being named the Successor Trustee is a big responsibility that brings along extensive duties. You are a Trustee of a Special Needs Trust: What Do You Do Now? All trustees are responsible for: • Appropriate investment of trust property • Bookkeeping and accounting of trust activities • Communication with trust beneficiaries • Tax reporting for […] 3139 Mercedes Drive DHS county offices administer the Medicaid program locally. What this means is that the trust has to file a tax return each year showing the income that it earned. To avoid compromising public benefits eligibility, distributions generally should be made directly to providers of goods or services, rather than to the beneficiary. Your email address will not be published. One who holds property for another is considered a fiduciary. To do this properly, a trustee should have some knowledge of the SSI rules on assets and income. Used with permission.) The federal Social Security Administration (SSA) operates the Supplemental Security Income (SSI) program. An important responsibility of the trustee is to fully understand the benefits that the special needs beneficiary is receiving. While a trustee may have substantial discretion over the trust funds, in exercising that discretionary authority, a Special Needs trustee must also administer the trust so as to supplement (but not supplant) any benefits the trust beneficiary receives from the SSI and Medicaid programs. Special Needs Trusts pay for comforts and luxuries–special needs–that could not be paid for by public assistance funds. What Happens to your Digital Assets and Accounts when you die. Under current federal law, SSI is intended to pay f… The trustee’s fee must be reported on the annual accounts the trustee provides to beneficiaries. We hope that you will gain some insight from the information provided in this article: A special needs trust (SNT) is … Every trustee is a fiduciary and every trustee has certain duties which must be strictly adhered to. These materials do not, and are not intended to, constitute legal advice. A critically important part of the trust process is selection of a trustee, who will make decisions regarding the investments, distributions and all other aspects of managing the trust for the benefit of an individual with disabilities. It also serves to preserve the beneficiary’s means-tested government benefits. The primary purpose of a Special Needs Trust is to preserve government benefits for disabled beneficiaries. One commonly used tool is the special needs trust (SNT), created to protect assets, while maintaining eligibility for means-tested government benefits. For a Special Needs trustee, assuring that public benefits are kept can be tricky because it requires that you know and understand the rather complicated eligibility rules. Facsimile: 318-322-8813. Needs Trust! Whether you are seeking a trustee or thinking about accepting a request to act as one for a family member, your first move should be to contact an experienced special needs and elder law lawyer. A special needs trust (SNT) is a useful resource to provide for the long-term care of someone who is disabled or has special needs throughout their life. Your email address will not be published. On top of these responsibilities, the trustee of an SNT must also: • Inquire into the needs and welfare of the trust beneficiary • Make certain that the beneficiary maintains her eligibility for public benefits programs • Report to the agency or agencies administering such programs, and • Work with the family members, teachers, social workers or others providing support for the trust beneficiary. Being appointed and serving as a trustee is a very serious undertaking. The trustee of a special needs trust (SNT) has all of the duties of any trustee, plus specific added responsibilities due to the special needs of the beneficiary. A trustee is probably not going to be picking individual … Our attorneys are experienced in dealing with the creation of Special Needs Trusts and their administration. The trustee should also have some basic knowledge about the different rules SSI has for "income" and "resources." The Social Security Administration has promulgated what is known as the Program Operations Manual (also known as POMS). Managing A Special Needs Trust At Betterment. For example, they can be done on a monthly basis, with an annual review in preparation for the accounting and filing income tax returns. The trustee pays her own bill like any other bill. One of the most significant abilities of a trustee is often the necessity of saying “no” to a request for trust funds. This site uses Akismet to reduce spam. Others might feel a licensed Professional Fiduciary is more preferable. Every trustee is held to a high standard of performance, considerably higher than the performance acceptable for one's own affairs. In Special Needs Planning. The trust will instruct the trustee that they are only to use the special-needs trust funds on the beneficiary (the person who has a disability). A Supplemental Needs Trust, sometimes called a Special Needs Trust, but referred to interchangeably or simply as an “SNT,” is a valuable legal tool available to assist persons with disabilities in maximizing their resources and enhance their quality of … The person creating or funding the trust is the grantor. Trustees are fiduciaries – by law, they have a legal duty to comply with the trust instructions. The essential purpose of a special needs trust is usually to improve the quality of an individual’s life without disqualifying him or her from eligibility for public benefits.Therefore, one of the central duties of the trustee of a special needs trust is to understand what public benefits programs might be available to … Third party special needs trusts Third party special needs trusts are generally either considered “complex trusts” or “qualified disability trusts” for income tax purposes and the trust itself is responsible for reporting its own items of income, deduction, and credit. This article assumes the beneficiary of your trust receives Supplemental Security Income (SSI) and Medicaid. Anyone establishing a Trust needs at least to be knowledgeable about who Trustees are, what they do, and how to select them. When making distributions, the trustee must ensure that the records are kept in an organized fashion and done timely. 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