What's the difference between a trust and a conservatorship (re: a developmentally disabled person)?
Laguna Niguel, CA |
My brother has addiction and mental health problems and currently has a court-appointed conservator (for his estate, not his person). It has been suggested that we change it to a trust. What are the pros and cons of each?
A special needs trust is probably what you are considering. A special needs trust is a trust that allows assets to be held for or distribute payment to or on behalf of someone (adult or child) with special problems such as mental and/or physical limitations. This type of trust would allow your brother to still qualify for SSI and MediCal, for example, without regard to the size of the trust. Anyone such as a grandparent, for example, can also provide in their own estate plan that any inheritances from their estate be directed to a special needs trust rather than directly to your brother. Since your brother is already under a conservatorship, you are probably aware that there are ongoing costs associated with it. Additionally, the conservator is required to account to the court, usually yearly, regarding all assets of the conservatee (your brother), all income earned by the trust, and expenditures made. There are also visits, unusually yearly, by the Probate Investigator assigned to your brother's case. If your brother is living in a group home or facility, that director must also report to the court. In the main, the special needs trust does not require court supervision over the running of the special needs trust, including the management of assets. The trustee should be advised to maintain an accounting of the trust similar to the one already used in the conservatorship. The trustee would also need to make sure that the trust taxes and other obligations are paid as due. Before a conservatorship can be terminated, however, the court would need to be satisfied that terminating the conservatorship is in your brother's best interest. The court would need to be confident that your brother's needs would be met and that the trustee is competent to handle the estate on his behalf. There are also some cost of the trust. Besides the initial set up costs, the trustee is entitled either to a reasonable fee or to a fee set by the trust. The pros of the trust: it acts independently of the courts. The con: court supervision can provide a "fish bowl" effect so that everyone knows what's going on. That isn't the case with the trust, although court intervention can be requested when necessary. If there is a problem, someone would need to bring an action in probate court on the beneficiary's behalf. In conclusion then, the pros of the conservatorship are the court supervision requirement which assures that everything is on the up and up. Usually, the conservatee has his own attorney who looks out for the conservatee's rights. The con is that the required reports can be unwieldly and usually require assistance to prepare. Plus, there are the ongoing expenses previously mentioned. I hope this helps you.