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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.  It also serves to preserve the beneficiary’s means-tested government benefits.  It’s important to understand that a beneficiary’s special needs trust benefits could be put into jeopardy if the terms of the trust are violated.

The trustee of a special needs trust serves a very important role: he or she is responsible for protecting the beneficiary’s interests.  Therefore, it is important that the trustee of a special needs trust is aware of the responsibilities of the role.

If you are the trustee of a special needs trust, your responsibilities include the following:

  • Understanding the Benefits: As trustee of a special needs trust, you must be able to fully understand the benefits that the beneficiary is receiving. For example, if the special needs beneficiary is receiving Medicaid or SSI (Supplemental Security Income), you will need to understand the specific restrictions pertaining to what the beneficiary is allowed to receive.
  • Ensuring Proper Distributions are Made: Once you understand the benefits of a special needs trust, you can ensure that the proper distributions are being made from the trust. As trustee, you need to confirm that the distributions follow the restrictions and terms of the special needs trust.  Make sure you understand the language in the trust that allows or prohibits you to make certain distributions in order to maintain government benefits for the beneficiary.
  • Following Tax Reporting Requirements: As trustee, in addition to ensuring that distributions are made properly, you must follow all tax reporting requirements. You are required to file the trust income tax returns according to reporting guidelines.  If taxes are not filed in a timely manner or if they are not filed properly, the beneficiary will be penalized.
  • Investing Assets Properly: It is your duty as trustee to invest the trust assets in a way that will result in the best growth and make the best use of the trust assets.  You may decide to hire a qualified financial professional to ensure this is being accomplished.  As trustee, you must also maintain accurate records of all distributions made as well as any of the other transactions.

 

If you are the trustee of a special needs trust, please take the duties outlined above seriously; as trustee you are held to a fiduciary standard.  If the trust is mismanaged in any way, the beneficiary could be subject to financial harm.

If you are the trustee of a special needs trust and have questions about your responsibilities, we can help.  To discuss your specific needs and find out how our special needs trusts attorneys in Pittsburgh can help you, please call us at Fingeret Law at 412-254-8533 or contact us online.