Selection of Trustees for a Special Needs Trust

Careful attention should be given in deciding who to name as the trustees of your special needs trust. These can be family members, friends, professional advisors or others. Trustees should be people who you trust implicitly and who have some financial savvy. This does not mean that you must name a financial advisor to be trustee of the trust, but the person named should be someone financially responsible who will use appropriate professional advisors. Another important criteria is to name a trustee who has your values so the decisions made in the care of your child with special needs are consistent with the decisions you would have made for your child.

One or more people can be named as trustees of a special needs trust. If more than one individual is selected, it is important to consider if unanimity should be required by the trustees or if majority vote rules should apply. If two or four individuals are named as trustees, consideration should be given to naming a tie-breaker who can resolve any disputes between trustees. This will quickly and efficiently resolve any deadlock without the need for court involvement.

In addition to selecting initial trustees, you should consider who you want to name as successor trustees if the initial trustee dies, resigns, becomes incapacitated or is otherwise unable to serve. If the creators of a special needs trust are married, and the trust is created during lifetime (and not at death through a Will), one spouse can be trustee of the trust and one spouse can be the grantor (the creator of the trust and person responsible for making gifts to the trust). The trustee can (if desired) be given the power to remove and replace successor trustees and to name new successor trustees.

In all cases, the last named trustee should be given the power to name successor trustees to hopefully avoid a situation where nobody is available to serve as trustee and a court appointed trustee is required.

Where there is no one individual or group of individuals who a family feels can adequately serve as trustees of a special needs trust, an institution can be named as trustee. This can be a financial institution (such as a bank or trust company) or an entity such as Plan/NJ which is specially designed to handle these situations.
 

As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.

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