What Are the Responsibilities of a Trustee of a Special Needs Trust?

A special needs trust can be an invaluable legal tool for parents of adults with special needs. A special needs trust allows a party to provide financial support to an individual with special needs without affecting the beneficiary’s eligibility for needs-based governmental programs such as Medicaid or Social Security benefits. Like other trusts, special needs trusts are managed by a trustee. Just what do special needs trustees actually do? Below, we discuss the most fundamental duties of the trustee. Reach out to a knowledgeable West Palm Beach special needs trust attorney with any questions.

Disburse Funds to the Beneficiary in Accordance With the Trust

Special needs trusts are structured such that funds can only be disbursed for specific reasons. If funds were distributed directly to the beneficiary without limitation, those disbursements would be counted as income, adversely affecting the beneficiary’s eligibility for certain programs.

The trustee is responsible for reviewing the trust document in advance of any disbursement, ensuring that the disbursement falls within the appropriate categories of expenses, and then executing the disbursement. The trustee should also consider the effect on governmental benefits prior to any distribution, beyond the letter of the trust document; in some cases, an expense may still be worth covering, even if it counts as income or otherwise affects the beneficiary’s financial profile.

A trustee who violates the terms of a trust or otherwise harms the interests of the beneficiary can be removed as trustee and may face other penalties and liability.

Protect the Trust Assets

Trustees are responsible for maintaining the trust’s assets while they have yet to be disbursed for proper expenses. Trustees do not typically make individual investment decisions, but they are responsible for choosing appropriate financial advisors, overseeing investment activity on a general level, and ensuring there is nothing untoward or dangerous occurring with the trust funds.

Bookkeeping

The trustee is responsible for maintaining the trust’s assets. That includes keeping an accounting of all trust assets, investments, and disbursements. The beneficiary and other interested parties may have the right to request an accounting of the trust on occasion. Proper information must be recorded, distributed to the relevant parties upon request, and ready to provide to a court or auditor where necessary.

Tax Reporting

Trustees are responsible for ensuring the trust’s income tax returns are appropriately filed. Trustees typically retain an accountant and/or tax attorney to handle the filings in order to ensure everything is handled appropriately.

Manage or Disburse Funds Upon Termination of the Trust

If the beneficiary passes away or the trust is otherwise terminated, the trustee is responsible for overseeing the final distribution of trust assets in accordance with the trust documents.

Protect Your Loved Ones and Plan For Your Future With Help from a Special Needs Trust and Medicaid Planning Attorney

A special needs trust attorney at Shalloway & Shalloway can help you protect your family, creating an estate and special needs plan suited to your individual needs and circumstances. We will evaluate your situation to determine the best type of will, trust, or other legal tool that may benefit your family the most. Contact the passionate and thorough West Palm Beach estate planning attorneys at Shalloway & Shalloway at 561-686-6200.