If you are the trustee of D4A trust and legal guardian of disabled person for whom trust was created,what would or could the penalty be if portion of monies spent cannot be substanciated?
I think there would need to be much more info to really answer this question: Being that expenses for the beneficiary's care are charged against the trust anyway at the beneficiary's death there would certainly be a lien against the trust for these perhaps "improper" distributions; there could also be a cause of action against the trustee called a surcharge (a judgment against the trustee personally). This is very general in nature as one would have to know the exact terms of the trust and the type of spending involved. I would advise hiring an attorney to advise the trustee.
This is not legal advice nor intended to create an attorney-client relationship.
Estate Planning Attorney
Since a d4A trust exists to provide for the special needs of an incapacitated person, the Trustee is accountable to all interested parties, including the State who is providing the benefits of support to the incapacitated person. First, as Trustee, I would use my best efforts to substantiate all expenditures of trust funds. The penalties depend upon the specific facts of your case and the laws of whatever the "situs" of the Trust is.
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