Being a trustee is a huge responsibility that requires careful attention to detail. In a special needs trust where a beneficiary is mentally or physically disabled, the responsibilities of the trustee are much greater and require extra consideration.
The trustee of a special needs trust faces many challenges which may include:
  1. Housing: First, housing provisions must coincide with the public benefits being received by the beneficiary. In some instances the trust’’s provision of housing may reduce the benefit amount of social security income (SSI) that is being received by the beneficiary. It may be a justified tradeoff, but this must be carefully considered. Other situations may be better served by purchasing a residence through the trust and utilizing the SSI benefits of the beneficiary to pay the rent. Additional housing considerations include maintenance costs, utility expenses, additional residents, etc.
  2. Vehicles: One of the first requests made to newly funded special needs trusts is often for a vehicle. The first consideration a trustee must make after a vehicle request is whether or not it is best for the beneficiary. Additional issues that will need to be addressed include: gas expenses, insurance costs, maintenance/repair costs, and titling.
  3. Vacations: Many special needs trusts are set up to handle recreation and vacations for the specified beneficiary. Transportation, food and lodging costs can be covered for the beneficiary and a companion through the trust, but a doctor’s letter should carefully document the need for a companion. Special consideration must be taken when planning due to the possible limitation of cash purchases. When planned appropriately, all costs may be pre-paid or directly paid through the trust, although this may limit the types of vacations/accommodations available.
  4. Caregivers: Special needs trusts trustees should consider tax rules for employees vs. independent contractors. As an employee of the trust, the caregiver would need FICA and income taxes withheld. The trustee would also need to cover workers comp, unemployment taxes, liability issues for injuries on the job, etc. Issues should be addressed through discussion with a tax advisor/payroll service and/or the home insurance provider (for liability issues).
  5. Family of Caregivers: Compensation of family members as caregivers is a common issue for special needs trusts. This issue should be addressed and included in the trust agreement documentation. Some considerations are the qualifications of the family member providing the care as well as any additional certifications that may apply. For compensation purposes, consider the current market rate for comparable care giving services. A particularly sensitive area is the differentiation between parental/spousal time/attention and care covered by the special needs trust. Having a specific employment agreement in place from the beginning may be imperative to avoid these points of contention.
  6. Cash Needs: In many cases, if there is no one available to do the shopping for the beneficiary, they will need access to funds for small purchases which may be able to be reimbursed from the trust. This may be difficult, but there are options that can provide an appropriate solution depending on the situation at hand. For example, gift cards, debit cards, credit card or establishing accounts accessible to the beneficiary at individual stores. Each poses its own difficulties and needs to be approached cautiously to avoid future difficulties.

As the trustee of a special needs trust, you have additional responsibilities. For additional assistance in setting up a trust or in the administration of a trust contact the Legacy Lawyers. At The Legacy Lawyers, we are dedicated to your peace of mind.