Trustee of a Special Needs Trust

[Buckeye]

A disabled, life-long friend will soon (months) have her Special Needs Trust funded as her mother passed away at the end of July. This is a 3rd party Special Needs Trust that can be treated as a Qualified Medical Trust for tax purposes.

I have agreed to be her trustee. Her sister was named in the trust document as the trustee but her sister wants nothing to do with the responsibilities of a trustee. Her sister will be resigning and naming me as the trustee.

For a month, I have been reading everything I can find. It won't be an easy task but it will be manageable as the nature of the responsibilities fits my experience and personality. The trust will probably be funded with $250k-$300k, not a ton of money to last the rest of her life (she is 58). Once the trust is funded, there will be resources to consult experts as required but I will learn as much as I can in order to preserve her funds.

I was wondering if anyone has walked this path already and had some tips.

[Bamaman]

Hopefully the terms of the trust will be clear enough to take the pressure off you as executor.

A Special Needs Trust cannot be sued for medical bills or any other debt or judgement obtained against her personally--isolates her legally.

[Buckeye]

Quote:

Originally Posted by Bamaman Hopefully the terms of the trust will be clear enough to take the pressure off you as executor. A Special Needs Trust cannot be sued for medical bills or any other debt or judgement obtained against her personally--isolates her legally.

Luckily, the trust is written with adequate flexibility to provide the best situation for my friend, the beneficiary. Typically, a trustee shouldn't pay for things (like housing and food) that reduce her benefits, but luckily the trust allows for such payments if it's ultimately in her best interest. If the trust was written such that I could never make a choice that would reduce her benefits, we could get to a situation where she is homeless and starving but I'm allowed to pay for horseback riding lessons!

After several more hours of reading today, I'm interested in experiences with the review of a special needs trust by the SSA. There should be no issues because the trust was created by a legit (expensive, experienced trust attorney) and it contains all the right requirements in terms of making the funds not under the control of or available to the beneficiary.

The more complicated part will be managing the relationship with social security which (to me) means proper reporting. Luckily, my friend has been receiving benefits for over 10 years and knows the reporting ropes well.

[Bamaman]

Often the Special Needs Trust is there to protect someone that could be easily influenced by outsiders that might try to take control of their assets (steal.) Sometime insurance premiums, apartment rent and utilities might come out of the trust.

The attorneys that setup such trusts are very specialized--not something you'd want a general run of the mill attorney to execute. I'd like to see a copy of a Special Needs Trust for education purposes. We have a 31 year old daughter that's easily manipulated and is very naïve. We're considering setting one up for our 8 & 11 year old grandkids.

[Buckeye]

Quote:

Originally Posted by Bamaman Often the Special Needs Trust is there to protect someone that could be easily influenced by outsiders that might try to take control of their assets (steal.) Sometime insurance premiums, apartment rent and utilities might come out of the trust. The attorneys that setup such trusts are very specialized--not something you'd want a general run of the mill attorney to execute. I'd like to see a copy of a Special Needs Trust for education purposes. We have a 31 year old daughter that's easily manipulated and is very naïve. We're considering setting one up for our 8 & 11 year old grandkids.

The Special Needs Trust (SNT) is specifically structured to ensure someone on SSI and/or Medicare does not lose their benefits when the trust is funded. The requirement that the beneficiary NEVER has control of the money in the trust might be more restrictive than you need. The SNT (and other trusts, I'm sure) does protect a beneficiary from being taken advantage of, unless you get an unscrupulous trustee!

I looked at what it would cost my friend to have a professional trustee and the fee charged by the company I looked at was 2.5% of the balance annually. Fees for accountants and lawyers for any other questions or issues (taxes) during the year would be extra as far as I could tell. That's a big burden on the trust funds, IMHO.

If you want to read an understandable book on SNT's, try this one from NOLO. There is a trust template in the book and you are given a link to an electronic template.
https://www.amazon.com/Special-Needs...s%2C177&sr=8-1

Here is an online example by NOLO.
https://www.nolo.com/legal-encyclope...ds-trusts.html

[joeea]

Quote:

Originally Posted by Buckeye Once the trust is funded, there will be resources to consult experts as required but I will learn as much as I can in order to preserve her funds.

That's good.

It's important that sufficient funding is in place to get expert help as needed. Your fiduciary role means that you are required to do the best you can for her, and sometimes that begs for knowledge you aren't in a position to provide. Don't hesitate to get that help, particularly in the beginning.

It's a wonderful thing you are doing here, taking on that burden for your friend's benefit. Many folks wouldn't be willing to assume that responsibility. I applaud you for that.

[Buckeye]

Quote:

Originally Posted by joeea That's good. It's important that sufficient funding is in place to get expert help as needed. Your fiduciary role means that you are required to do the best you can for her, and sometimes that begs for knowledge you aren't in a position to provide. Don't hesitate to get that help, particularly in the beginning. It's a wonderful thing you are doing here, taking on that burden for your friend's benefit. Many folks wouldn't be willing to assume that responsibility. I applaud you for that.

Once her trust is funded (current balance is $0) and we get into a groove, it will be much less work. The learning curve has been huge. It would have been impossible to learn so much so quickly without the internet. It would have been nice to just spend a couple of hours with an elder law attorney but no one will answer questions without spending a couple of hours reviewing the trust. It appears experienced elder law attorneys charge $300+ an hour. One we talked to said a $2,000 retainer would be required. Maybe later.

Things are far more complicated and stressful than they need to be because the brother managing the estate has decided to only make one disbursement to all the heirs AFTER the family home is sold. There are CD's (probably about $1 million to be split between 5 kids) and the family home which will probably sell for $600,000+ very quickly as the home is in Seattle in a primo location.

My friend is living in the family home and had been taking care of her mother until her death. She was given 90 days to move out. Her brother hasn't decided whether the family home will be sold now or in the spring (leaving it empty for months). My friend has to be out of the family home by the end of October but she might not have a funded trust for another 5-6 months. Her brother's choices would be guaranteeing his sister would be homeless if she didn't have friends who will step in. This brother has tons of money and a very well-paying job so he doesn't need his inheritance right away. My friend lives on about $800 a month SSI plus some SNAP and her Medicaid.

Like I said, the situation is being made much more difficult for her than it needs to be.

[joeea]

Quote:

Originally Posted by Buckeye Once her trust is funded (current balance is $0) and we get into a groove, it will be much less work.

Hopefully you are right and can DIY.

Quote:

It appears experienced elder law attorneys charge $300+ an hour.

That could be money well spent to protect the life savings and income stream of your friend, if help is needed.

Quote:

Like I said, the situation is being made much more difficult for her than it needs to be.

And hopefully this won't impact her trust.

[bolt]

Quote:

Originally Posted by Buckeye Once her trust is funded (current balance is $0) and we get into a groove, it will be much less work. The learning curve has been huge. It would have been impossible to learn so much so quickly without the internet. It would have been nice to just spend a couple of hours with an elder law attorney but no one will answer questions without spending a couple of hours reviewing the trust. It appears experienced elder law attorneys charge $300+ an hour. One we talked to said a $2,000 retainer would be required. Maybe later. Things are far more complicated and stressful than they need to be because the brother managing the estate has decided to only make one disbursement to all the heirs AFTER the family home is sold. There are CD's (probably about $1 million to be split between 5 kids) and the family home which will probably sell for $600,000+ very quickly as the home is in Seattle in a primo location. My friend is living in the family home and had been taking care of her mother until her death. She was given 90 days to move out. Her brother hasn't decided whether the family home will be sold now or in the spring (leaving it empty for months). My friend has to be out of the family home by the end of October but she might not have a funded trust for another 5-6 months. Her brother's choices would be guaranteeing his sister would be homeless if she didn't have friends who will step in. This brother has tons of money and a very well-paying job so he doesn't need his inheritance right away. My friend lives on about $800 a month SSI plus some SNAP and her Medicaid. Like I said, the situation is being made much more difficult for her than it needs to be.

I'd research a number of Estate/& SNT particular focused attys.
They are costly & particular documents are necessary
SNTs require special language, replacement of executor clauses, and other clauses to safeguard the client. etc. I read about the 3 types yrs back.iirc.
Look at Nolo's SNT literature & book.
https://store.nolo.com/products/spec...d&utm_term=+-+

Whats that sayin that most stories have 3 sides. There's your side, theres their side, and then theres the truth. SSI suggests little work history.

One or both might be paycheck to paycheck, plus payday loans, leases, etc.
Sounds like both didn't plan well. SSI suggests not.

Theres little use putting off the inevitable. I've seen one kid live in a 7 kid families home inheritance asset for nothing for years, after the parents died having lived there since birth except when someone else was supporting them.
They had to be evicted.
It helps everyone move forward & reviews additional opportunities sooner than later.

Best wishes..

[ivinsfan]

Buckeye, I'm seeing shades of the "no good deed goes unpunished" story here.

From some of the things you've posted it seems like the lawyer would a necessity, not a luxury. It sounds like a minefield and now you have a "difficult" brother trustee involved. Why does her sister not want the job, that's some food for thought right there.

The annual fee charges might be money well spent. Could you help be her eyes and ears while she deal with the professionals? You can learn a lot on the internet but you can't learn to deal with what you don't know and might hurt you. Good luck you are a good friend.