Choosing the Right Trustee for a Special Needs Trust

By Rachael K. Pierce, Esq.
Vice President and Trust Officer
Washington Trust Wealth Management

Choosing a trustee for a special needs trust is one of the most important decisions you will make in your estate plan. A trustee is not simply responsible for writing checks. This role carries significant legal, financial, and administrative responsibilities that can become increasingly complex over time. Selecting the right trustee requires careful thought about who has the skills, time, and objectivity to protect your loved one's long-term financial security and quality of life. (This is Part 2 of a series on providing for a loved one with special needs. See Part 1: Planning for a Loved One with Special Needs: Financial Security and Quality of Life.)

The Role Is More Complex Than Many People Realize

A special needs trust is designed to provide financial support without jeopardizing eligibility for important government benefits, such as Supplemental Security Income (SSI), Social Security Disability Insurance (SSDI), and Medicaid. To accomplish that goal, every distribution must be made carefully and in accordance with applicable rules.

That means a trustee will be responsible for:

• Understanding how distributions may impact eligibility for benefit programs such as SSI, SSDI, Medicaid, and housing programs. 
• Making appropriate distributions that preserve public benefits. 
• Coordinating with the beneficiary or guardian regarding other available programs and services such as an ABLE account (an account that allows qualifying disability-related expenses to be paid while preserving eligibility for public benefits) or in-home support personnel.
• Managing and investing trust assets. 
• Preparing or overseeing tax filings for the trust and coordinating with the beneficiary or guardian for payment of the beneficiary’s individual taxes. 
• Keeping accurate records and tracking documentation.
• Planning for the beneficiary's changing needs over many years or even decades. 

For someone without experience in trust administration, these responsibilities can quickly become overwhelming.

Love Does Not Always Equal the Right Skill Set

Many parents naturally look first to a sibling, relative, or close family friend as trustee. After all, these are the people who already know and love the beneficiary. But being devoted to someone does not automatically prepare a person to navigate trust law, tax requirements, investment decisions, or public benefits regulations.

An individual trustee may suddenly find themselves trying to understand all these aspects of trust management while balancing their own career and family obligations and possibly also settling a parent’s estate. Even well-intentioned trustees can make costly mistakes if they are not familiar with these specialized areas.

Family Dynamics Can Become Complicated

Serving as trustee can also place a family member in a difficult position. A trustee has a legal obligation to act in the beneficiary's best interest and to follow the terms of the trust. That sometimes means saying “no” to requests for money or limiting distributions that could interfere with government benefits or jeopardize the trust's long-term viability.

Those decisions can strain even the strongest family relationships. A sibling who serves as trustee may suddenly feel less like a brother or sister and more like a financial gatekeeper, causing resentment if a beneficiary feels requests are being unfairly denied, even when the trustee is simply fulfilling legal and fiduciary responsibilities.

Consider All Your Options

For some families, an individual trustee is still the right choice, if, for instance, a family member is an attorney, an accountant, or an investment advisor. Others may benefit from appointing a professional trustee, such as a bank trust department or other corporate fiduciary, that has experience administering special needs trusts. Another option is to combine the strengths of both by naming a professional trustee alongside a trusted family member, allowing each to contribute different expertise.

The most important thing is recognizing that choosing a trustee is not simply about selecting someone you love or trust personally. It is about selecting someone who can successfully carry out a complex ongoing responsibility, one that could last for a lifetime and directly affect your loved one's financial security and independence.

Taking the time to make that decision thoughtfully can help ensure your special needs trust fulfills its purpose for years to come.

Washington Trust Can Help

Washington Trust Wealth Management has experience administering special needs trusts, providing compassionate, and independent oversight of your trust assets. Rachael Pierce, the mother of a grown daughter with special needs, is an attorney and trust officer with Washington Trust Wealth Management with decades of specialized experience in advocating for and assisting members of the special needs community. Rachael can work with you and your attorney partners to create a special needs plan for your loved one, which could include creating a trust, opening an ABLE account, and choosing the right trustee. Working together, we’ll help you provide your loved one with the financial security and quality of life you wish for them.