Probate & Trust Law Section Conference Manual ... - Minnesota CLE

called upon to purchase groceries once a week based on the beneficiary’s need, or may not be
called upon to make any distributions for extended periods because the beneficiary is able to
manage day‐to‐day finances on his or her own, or the beneficiary may be so disabled and
unable to participate in extra life activities that it is difficult to identify any expenditures that
will provide a supplemental benefit. It is incumbent upon the Trustee to become familiar with
the beneficiary’s life circumstances to identify where the resources of the Trust can be put to
best use, supplementing the assistance he or she receives for daily needs while, whenever
possible, providing life enriching opportunities that the resources of the Trust can afford.
iii.
Loss of "Goodwill" With Family Members
Trustees for Supplemental and Special Needs Trusts include family, friends, spouses,
professional fiduciaries, accountants, attorneys, financial planners, corporate trustees and nonprofit
organizations for Pooled Trusts. Professional, neutral, third parties with a commitment
to close personal service serve best. The inevitable frustration of a beneficiary who views the
Trustee as standing in the way of “my money” can more easily be deflected by an objective
professional. Of course, professional trustees create additional administrative expenses and
cannot, under any circumstance, have the kind of intimate understanding of a beneficiary’s
needs that family and friends carry with them as a natural byproduct of associating with the
beneficiary for a lifetime. Family members can serve as Trustees and do it well, but the risk of
marring a long‐standing relationship over the necessary control of the beneficiary’s funds is
high. Many family member Trustees quickly loose the goodwill of the beneficiary because they
carefully administer the Trust to maintain eligibility for public assistance. The Trustee has to
say no to direct distributions to the beneficiary, no to items that a government program might
provide at a lower quality or quantity than desired, no to gifts of any kind being given from the
Trust, no to support of any kind for other family members, including spouses and children, and
no to a whole host of other possibilities. Family members need to understand the risks of
taking on this responsibility and pledge to put preservation of eligibility above the desires of the
beneficiary. Family members need to understand that they lose some of their ability to be just
a sister, or uncle or niece when they also choose to wear the Trustee hat.
The typical exception to this family‐member‐as‐trustee conundrum is parents serving as
Trustees for a Supplemental Needs Trust that they create. Parents of a child with a disability
often have a lifetime of experience providing for the child in supplemental ways and the
Supplemental Needs Trust simply caries that practice forward in a formal manner. The
selection of a successor Trustee for the Supplemental Needs Trust, however, comes with all of
the concerns and pitfalls inherent any time a family member considers taking on the role of
Trustee.
15 Supplemental & Special Needs Trust Basics | Jeffrey W. Schmidt