All Trustees are required to: 1) maintain accurate records; 2) invest the funds as a reasonably prudent investor; file all appropriate tax returns and/or accountings; 3) comply with the terms of the trust document itself.
The Trustees do not always understand the need to comply with the above requirements. One of the most important things to do in representing the Trustee is to make sure that it is clearly documented that their responsibilities were clearly explained to them. Although Special Needs Trusts are discretionary in nature, there is no discretion on the duties outlined above.
If a Trustee cannot handle their duties, even with repeated assistance from their attorney, the attorney has an obligation to assure that the Trustee understands the seriousness of their failure to perform. If necessary, this may include a Petition to Withdraw that will hopefully trigger an appropriate response by the Probate Court.
Securing Public Benefits
Securing benefits and maintaining them is an essential duty of a Trustee of a special needs trust. However, sometimes the beneficiary may be ineligible for benefits; they may be working full-time, or a medical condition may have improved. In these cases, the Trustee should keep track of what is happening to determine when and if benefits should be pursued again. In the meantime, the trust continues as a spendthrift discretionary trust and can be administered as such without concern for the eligibility requirements for the various public benefit programs. Securing & maintaining benefits can be tricky for Trustees. They must become familiar with rather complicated rules to assure that the beneficiary does not lose all or some of their benefits. The special needs trust should have language giving the Trustee the power to hire professionals to assist them in performing their duties. It is essential that attorneys assisting in these matters are knowledgeable about the requirements.
Collecting Fees on Social Security Cases
Title II (SSDI) allows withholding of claimant's past due benefits for attorney fees, but not Title XVI (SSI benefits). However, one must obtain approval to charge or collect any fee for services under titles II and XVI of Act. It does not matter whether claimant or third party pays the fee, or whether funds have been withheld to pay the fee. There are two ways to get fees at the administrative level, a fee agreement approval or the fee petition process. If a fee agreement has been filed at the Agency, then judge just may approve fee agreement with final ruling.
Trust Administration with Public Benefits
The Trustee, beneficiary, representative payee and advocates need to work together. The representative payee and beneficiary must realize that even though they may not be the Trustee, they must provide information about the trust to the agencies providing benefits to the beneficiary. Furthermore, they need to keep the Trustee informed when the agency requests information. Once the trust is funded, the Trustee should provide a copy of the trust, and in the cover letter should explain why the trust is exempt. If the trust was created by Court Order, notice should have been provided of the hearing to any agency providing cash benefits to the beneficiary. However, if the beneficiary is receiving services from a community mental health agency (or their contract agencies) and has not been billed for the services, you may need to give them notice as a creditor if the person has had the money in their own name.
Trust Provisions to be Aware of
As Trustee, or an attorney representing a Trustee, particular attention needs to be paid to provisions of the trust that require the Trustee to do something. A) Annual Evaluation: This is a common provision in Special Needs Trusts that requests the Trustee or its agent to arrange for an annual evaluation of the beneficiary, addressing specific topics. B) Defending the Trust: It is now common to see a provision requiring the Trustee to defend the trust from attack from the "evil empires." C) Letter of Intent: If there is a dispute about a Trust, a Judge will look to give effect to the "intent of the Grantor/Settlor." The Trustee must make its best efforts to give effect to the specifics in the letter of intent.
Additional resources provided by the author
The information above is an abbreviated recap of an article with several attachments of examples of forms and documents. For the entire article, see the link listed below in pdf format.